The team have spent yesterday afternoon working through the Government’s COVID-19 response package. A couple of the staff are in self-isolation, so we’ve well and truly rehearsed using the virtual technology in preparing this note and our media commentary.

In summary, the package is not as comprehensive as many economists were expecting. On the eight measures we have been lobbying for, the Government has picked up some of the ideas but left many out. Grant Robertson has signalled more is to come on Budget Day (14 May) or even before then.

Overall, yesterday's package is not as focused on protecting jobs as we were expecting. For example, the wage subsidies to employers are effectively limited to organisations with 20 or fewer staff.

The Government also appears to have used COVID-19 to make some permanent policy changes. For example, while temporary boosts to income for beneficiaries and those most vulnerable are justified, the Government has increased benefits by $25 per week on a permanent basis (that is in addition to the normal annual adjustment for wage inflation). 

The Winter Energy Payment (paid to all on any non-student benefit or NZ Super) is also being doubled to $40.91/week for singles and $63.64/week for couples. But in this case, just for this year.

Summary of Government's response package:

• $500 million boost for health (the cost is equal to $278/household)

• $5.1 billion in wage subsidies for affected businesses in all sectors and regions, available from today ($2,833/household)

• $126 million in COVID-19 leave and self-isolation support ($70/household)

• $2.8 billion income support package for our most vulnerable, including a permanent $25 per week benefit increase and a doubling of the Winter Energy Payment for 2020 ($1,556/household in the first year)

• $100 million redeployment package ($56/household)

• $2.8 billion in business tax changes to free up cashflow including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax ($1,556/household)

• $600 million initial aviation support package ($333/household).

Our take:

The New Zealand Taxpayers' Union is welcoming the temporary measures to ease pressure on employers contained in yesterday's economic relief package.

Yesterday's relief package is a vindication of the long-term fiscal prudence by a generation of finance ministers. Measures like temporary wage subsidies are extremely costly, but can be afforded thanks to successive governments' commitment to low public debt.

We're pleased to see the waiving of interest for late tax payments, and the increase to Winter Energy Payments which will help keep vulnerable older New Zealanders at home. We recommended these changes in our briefing paper released Monday. The lift in the threshold for provisional tax will also be a welcome relief to small businesses.

We’re open to increasing benefits for the duration of the pandemic, but COVID-19 is not an excuse for locking it in. For context, the cost of the benefit hike is around $2.3 billion — almost five times as much as the boost to the health system. Every extra dollar spent here means one fewer for the productive sector and frontline health services.

There are also policy measures such as the changes to depreciation treatments which, although we support them, seem totally unrelated to the immediate threats to business cashflow and New Zealand jobs. It suggests this was very much policy designed to be seen to be doing something, rather than policy targeted at the specific challenges we face now.

Elephant in the room: 1 April minimum wage hike

The big hole in this package is supporting businesses faced with higher costs due to the minimum wage going up on 1 April. The people who get slammed most will be the working poor, earning the minimum wage or close to it, who work for a large employer that doesn't qualify for the wage subsidy package or will only receive limited assistance. 

The obvious measure is to pause the minimum wage hike until economic conditions allow.

More information:

For convenience, we have copied links to the Government’s announcements and factsheets below.

Government's media releases:

• • Economic package to fight COVID-19

  • Hon Dr David Clark: Backing our Health systems to battle COVID-19

  • Hon Grant Robertson: $12.1 billion support for New Zealanders and business

Minister's speech to Parliament

• Hon Grant Robertson: Statement to Parliament on the Economic Response to COVID-19

Policy factsheets:

• • Health Package Factsheet

  • Business Cash Flow and Tax Measures Factsheet

  • COVID Leave Support Factsheet

  • Income Support Factsheet

  • Wage Subsidy Scheme Factsheet

Responding to the developing threat of COVID-19 to the New Zealand economy, the New Zealand Taxpayers’ Union has released a paper outlining its recommendations in advance of the Government’s package being announced tomorrow.
 
As fiscal conservatives, it does not come naturally to call for a dramatic expansion of the size of state spending. However, a core role of government, and why we pay taxes, is to protect the citizenry at times of national systematic shock such as war and pandemic.

COVID-19 is the biggest economic event of my lifetime. It is essential that the Government takes all steps to protect lives and livelihoods now, but also our ability to recover quickly once the health crisis is over. It is with that in mind that our economic team has drafted these recommendations for emergency measures.
 
We accordingly urge the Government to adopt the measures outlined below, which are explained in our paper:

• Provide all New Zealand employees with one month of sick leave in addition to existing rights for the rest of 2020, paid for by the taxpayer;
• Use buyouts rather than bailouts. Taxpayer funds paid must be in return for the Crown taking a significant/majority or total shareholding;
• Scrap the 2020 increase to the minimum wage — but if the Government insists on going ahead, have it meet the costs to employers for the next 18 months;
• Fund unlimited childcare for health workers, aged care workers, and Police staff for the next 18 months;
• Partner with Progressives, Foodstuffs and Uber to make grocery delivery free;
• Give lump-sum payments to taxpayers by retrospectively cutting the bottom tax rate from 10.5% to 5% for the 2019/2020 tax year;
• Expand 'Winter Energy Payments' to begin immediately and continue through winter 2020; and
• Suspend interest and penalties for late tax payments from employers.

The New Zealand Taxpayers' Union can reveal that Creative New Zealand and Museum of New Zealand Te Papa Tongarewa are providing nearly $900,000 in taxpayer money for artists and curators to attend the Venice Art Biennale in 2021.

Showing off to Italian art collectors might be glamorous and good fun, but taxpayers shouldn't be forced to cover the cost of the lucky few who get to do it.

Opening night alone comes with a $100,000 fee. Outrageously, that’s the least of taxpayers’ worries, because another $770,000 is set to be frittered away on flights, freight and hotel rooms.

Not a single expense was spared for the truly needy in our society: artists and gallery curators.
 
With tough economic times coming, this ‘nice to have’ spending needs to be stopped.

The Taxpayers' Union can reveal that The Quit Group – the charity originally commissioned to run Quitline – continue to hold $2.8 million in taxpayer funds, despite having lost their government contract in 2015.

The Quit Group promised to hand the funds over to anti-smoking initiatives. They have failed to keep their promise, and the Ministry of Health has failed to hold them to account.

In fact, since 2015 the Quit Group have been using the funds to collect investment income and pay board membership fees to themselves – $72,000 per year, or $18,000 per board member.

To make things worse, the Chair of the Quit Group is Chris Cunningham, who has recently been investigated by Charities Services for running up $128,000 in travel expenses as Chair of the Hepatitis Foundation.

The detail:

In 2016 RNZ reported: The Ministry of Health called in lawyers for advice and has since reached an agreement with the Trust on using the money to support the government's goal to make New Zealand smoke-free by 2025. Ministry spokesperson Grant Pollard said that any Ministry funding remaining with the Quit Group Trust must be used for the purpose of supporting the 2025 Smokefree goal. He said the specifics of how the funds would be used have yet to be decided and is still being worked through. "The Ministry still has the option of auditing the Trust if an agreement can't be reached on how the funds will be utilised."

In 2017, the Ministry conducted this audit, but was hampered as the group claimed to have archived its records with no IT platform for retrieval. However, based on 'assumptions and estimates', the Ministry concluded that The Quit Group had received a funding surplus of $435,700 between 2007 to 2016.

Moreover, according to The Quit Group’s latest financial statements, it still has assets totalling $2,726,737, down from $3,164,394 in 2016. The Group has no staff, but continues to gain investment income from these assets and has paid out $702,296 in expenses since 2016. These expenses include $72,000 per year in fees for the four board members. The Group's four board members are Chris Cunningham, Janet Pearson, Mary McCulloch, and Annette Milligan.

An information response released to the Taxpayers' Union makes for disturbing reading. The Ministry concedes that it failed to stipulate any timeframe in which the group would have to use its funds. The Ministry does not plan to refer the group to the Charities Commission, and will instead "encourage the Trust to commit to spending the reserves. . .in a timely and appropriate matter."

This beggars belief. The Ministry has already let this group off the hook for four years. All this time, The Quit Group's board members have hoarded three million dollars, eating away at it by paying themselves board fees for doing stuff all. It's an insult to the ailing New Zealanders who desperately need anti-smoking support and other core health services.

The Minister of Health needs to step in to refer The Quit Group to Charities Services, so that the Government can repossess the funds on behalf of taxpayers.

Finally, the gravy train has to end for Chris Cunningham. He should by now be discredited from holding any of his taxpayer-funded positions. These include:

1. Hepatitis Foundation (board member)
2. The Quit Group (Chair)
3. Maori Knowledge and Development Panel (Chair)
4. Massey University’s Research Centre for Maori Health and Development (Chair)

Just how badly can one man rip off taxpayers?

The $6,254,064 cost of rebranding New Zealand’s fire services is a shocking indictment on the merger of rural and urban services, which was meant to save taxpayer money.

The spending figures were tabled to select committee this month and can be found on page seven of this document. The expense covers signage and uniforms – not the restructure process itself. The rebrand is ongoing, so figures will increase.

“We have consistently opposed government rebrands, which always suck resources away from core services. But the price of this rebrand has left us stunned – we’ve never seen anything like it. This money could have paid a year’s salary for 145 trainee firefighters.

And the culture of waste within FENZ isn’t limited to rebranding. Delving deeper into the Select Committee report reveals further incredible expenses.

1. In the previous two years, FENZ spent $31 million and $32 million on external contractors. (p45)
2. In the previous two years, FENZ spent $1.7 million and $2.1 million on public relations/communications personnel. (p36)
3. FENZ has spent $122,731 sponsoring TV Three’s “The Block”. (p35)

This absurd level of spending reinforces the findings of our latest research report Cash to Ashes, which found that FENZ expenditure is skyrocketing, as it can spend its insurance levies without Budgetary scrutiny. The funding model for FENZ is simply not fit for purpose. We’re calling on Minister Tracey Martin to scrap the fire levy entirely, and set a reined-in budget for FENZ through the standard Budget process.

The New Zealand Taxpayers’ Union can reveal that Tuturumuri School in the Wairarapa is currently open and employing four staff – despite having zero students. The Union tells this story in video form below.

This revelation is the result of a tip-off from a concerned taxpayer. The school is costing taxpayers $1,300 a day, and the school confirms two full time staff (a teacher and an aide) are required to be on site each day. Two part-timers (a caretaker and cleaner) are also still on the payroll.

After the school’s roll dwindled from seven at the beginning of last year down to two, the board voted to close the school. However, the Minister of Education has stepped in at the last minute to insist on yet another round of consultation (despite the school having gone through a similar process in 2018).

Taxpayers’ Union spokesman Louis Houlbrooke, who visited the school last week, says: “The situation at Tuturumuri is bizarre. Two staff members are forced to show up each day at a ghost school, twiddling their thumbs while they wait for the Minister to make a decision. This is a case of provincial politics overriding common-sense. Clearly, the school has an important place in the region’s history, but now it’s time to turn off the taxpayer-funded life support.”

After contacting the Minister’s office, the Union received the following response:

“After consideration, I agreed to close it two years ago but was lobbied heavily to reconsider, including by National Party MPs, and I am doing that. There is a statutory process that must be followed when consideration is being given to closing a school. While this process is underway, the school remains legally open and the staff remain employed. I received a report on a potential closure from the Ministry of Education at the end of last week. It does not need to go to Cabinet.”

The Union has requested further information about costs and the Ministry’s consultation process. We await a response.

The 2017 amalgamation of urban and rural fire services has delivered huge cost increases for taxpayers, finds a new report from the New Zealand Taxpayers’ Union.

Cash to Ashes: The inefficiency of fire service reforms can be read here.

Key findings:

1. The merger and centralisation of urban and rural fire services was meant to produce $47.7 million in efficiency savings by 2021/22. In practice, there have been no efficiency savings, and Fire and Emergency NZ (FENZ) has cost taxpayers $338 million more in its first three years than was forecast to Cabinet in 2016.
2. $163 million of the $205 million increase in forecast expenditure between 2017/18 and 2018/19 was dedicated to ‘Support Services’ – i.e. back office bureaucracy.
3. FENZ has increased spending by $43 million on ‘communications and computers’ over three years.
4. FENZ is spending $27.4 million on external consultants over three years.
5. FENZ is ‘gold plating’ its infrastructure. New stations in Lake Okareka and Wanaka cost $1.9 million and $4 million respectively, far more than comparable volunteer stations in Australia. FENZ has even opened a double-bay station, complete with training space, laundry, and kitchenette, in Tinui, a town of 20 people.
6. FENZ spent $17 million responding to the Pigeon Valley Forest fire – more than 17 times more than the response to the remarkably similar Hira Forest fire in 1981.
7. FENZ does not have to justify wasteful spending to Cabinet, as it collects revenue through the fire insurance levy, bypassing the Budget bid process.

Cash to Ashes recommends that FENZ be required to go through the scrutiny of the Budget bid process to secure its funding. The report also proposes abolishing the fire insurance levy entirely, and collecting revenue for FENZ from general taxation.

Former National Rural Fire Officer Murray Dudfield, ONZM, consulted on the report. Reflecting on its findings, he says:

“The annual rural fire costs in 2015/16, to local government rate payers, was $29 million. In addition the 2017 PWC report concluded that the 2015/16 expenditure of $389 million was appropriate for the NZ Fire Service functions and output responsibilities. Following the merger of urban and rural fire services on 1^st July 2017, the latest FENZ forecast of expenditure is showing a hefty spend of $617 million in 2020/21. The FENZ Board, in just year four of this merger, are planning an additional $228 million more than the 2015/16 budget. The merger was intended to produce savings and deliver cost effective benefits to all New Zealanders. However these savings and benefits are now disappearing in a puff of smoke unless the Minister gets involved. On behalf of all New Zealanders the Minister of Internal Affairs, Tracey Martin, must take urgent steps to ensure FENZ delivers the savings identified by Government in 2016.”

Mr Dudfield also joined Duncan Garner on The AM Show to discuss the report.

In a foreword to the report, Insurance Council Chief Executive Tim Grafton asks, “Why should those who insure be the ones that fund FENZ? Everyone benefits from FENZ services, not just those who take responsibility to insure themselves.”

Kiwi taxpayers in China have no one to turn to with New Zealand Embassy Officials having remained on holiday despite the Wuhan Virus turning New Zealanders’ lives in the province upside down.  The Embassy in Beijing remains closed for Chinese New Year.

This afternoon the Taxpayers’ Union received a tip-off that Kiwis in China cannot get a hold of any of the hundreds of New Zealand officials who work in the country.  “We called the Embassy and couldn’t believe that at 1pm Beijing time, despite the developing situation, the Embassy is closed,” says Jordan Williams, a spokesman for the Taxpayers’ Union.

“While Australia’s Minister of Foreign Affairs works with the Chinese Government to evacuate Australian citizens from Wuhan, New Zealand’s Foreign Affairs officials are quite literally still on holiday. It’s an incredible situation given events over recent days.”

“What is the point of a diplomatic post, if it’s not open when New Zealanders actually need it?”

“In Australia the Foreign Affairs Minister is front and centre in efforts to extricate Australians.  Here, not a word from MFAT or our Minister.”

“If you call our Embassy in Beijing, you are told it is closed for Chinese New Year, and to contact the MFAT’s emergency line based in Wellington.  We called the line asking who on the ground Kiwis stuck in Wuhan could contact.  MFAT advised us that New Zealanders should contact the World Health Organisation, or the New Zealand Ministry of Health.”

“According to MFAT, $50 million of taxpayers’ money was used for ‘elegant and sustainable new building to be the heart of its official presence in China’ on ‘a quiet leafy street in Beijing’. But at the very time New Zealanders most need help, the doors are locked.”

“And it’s not just people stuck in Chinese provinces.  We are hearing of widescale cancellations of orders from China for New Zealand goods and last minute cancelations of tour group bookings following the Chinese Government’s travel restrictions. These are the very officials Kiwi businesses rely on for advice.”

“If the sample of businesses we have spoken to is reflective of the potential economic impact, MBIE and MFAT should be hands on deck, not on holiday.”

“Minister Winston Peters, and the Ambassador Clare Fearnley, need to end their holiday and get back to work.  Chinese New Year or not.”

Sources:

Australian response: https://www.9news.com.au/national/coronavirus-australian-government-extricate-nationals-trapped-in-wuhan-health-news/b236a1dc-e019-46a0-a063-348bf236cb25

Cost of Embassy $50 million source https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12179737

Quote from MFAT website: “Our place in Beijing” https://www.mfat.govt.nz/en/countries-and-regions/north-asia/china/new-zealand-embassy/our-place-in-beijing

Embassy contact details: https://www.mfat.govt.nz/en/countries-and-regions/north-asia/china/new-zealand-embassy/contactfull

ENDS

The New Zealand Taxpayers’ Union has formally submitted its design proposal for a 3.5-metre artwork in the Beehive entrance, pictured below.


The Union will refuse the $15,000 commission fee should its submission be chosen.

Perfectly placed to greet MPs and Ministers arriving for work, Don’t Waste It serves as a warning to would-be money-wasters in the heart of government.
 
For those New Zealanders not lucky enough to earn a politician’s salary, a five dollar note represents a meal, or the bus fare for a job interview. That small sheet of polypropylene can be the difference between hunger and happiness, poverty and opportunity.
 
Taxpayers understand the value of money, because they work for it. But too often, politicians take money from us only to fritter it away on pet projects, political fads, and minor extravagances. The taxpaying public can never be too firm in its opposition to government waste. It is in this spirit that we submit our proposal.

For most of us, Christmas is about giving. For the Tax Man, it’s all about taking.

Islay wraps up the year with a special episode of Taxpayer TV, revealing the incredible reach of the “Tax on Christmas”.

You can view the video on Facebook here.

Taxpayers can now browse the specific pay rates, ranked, for public sector chief executives.

This year taxpayers will pay $62 million in salaries for the 140 public sector CEOs. The average is paid $443,000, and 53 earn more than the Prime Minister.

Many of these individuals make major decisions about services that impact millions of taxpayers' lives. Publicising their salaries serves to promote accountability and transparency at the highest level.

Other Rich-Listers lead obscure QUANGOs (quasi-autonomous non-governmental organisations) that generate little value for taxpayers. We hope the Public Sector CEO Rich List provokes debate over the necessity of these positions.

Taxpayers can also download the table as a spreadsheet to sort by type – such as Tertiary Education, DHBs, and so on.

The publication of this Rich List comes after the State Services Commission agreed to release this year's Senior Pay Report using specific pay rates rather than salary 'bands', in light of correspondence from the Taxpayers' Union and the Ombudsman.

Figures relate to the 2018/19 and 2017/18 financial years and were provided by the State Services Commission's Senior Pay Report. The Report uses estimates in cases where the final remuneration level is not yet determined.

CEOs that did not hold their position for the full year have had their salary figures annualised by the Union.

The list excludes local government (ratepayer-funded) chief executives.

This op-ed is written by Louis Houlbrooke, Communications Officer at the New Zealand Taxpayers’ Union.

The wistful days of Jacinda Ardern’s “no new taxes” pledge are long gone.

Last week, Associate Environment Minister Eugenie Sage proposed lifting landfill levies from the current $10 per tonne to $60 per tonne by 2023.

Like higher fuel taxes and road user charges, Sage’s proposed rubbish tax will eat directly into family budgets, through more expensive rubbish bags, higher rates, fees at the landfill, and costs passed on by businesses.

Her tax is expected to swell government and council revenues by $220 million a year, or more than $120 per household. And that’s on average – the tax will hit harder for larger families who produce more waste and tend to be poorer. By itself, the cost could be tolerable, but it comes on top of other new taxes, higher rates, and generally increasing living costs.

Intensifying poverty is the obvious downside to any tax, but a rubbish tax has further consequences – results that fly right in the face of Sage’s environmental focus.

Despite the bad rap landfills get, their use is often a best-case scenario. Take the five million-plus mattresses on which Kiwis currently sleep: these will not last forever, and they cannot be recycled. It is simply irresponsible to punish New Zealanders for sending these mattress to a landfill when the next-most-likely alternative is dumping it at your local park, river, or roadside.

Even in the case of rubbish that can be recycled, we cannot rely on wishful thinking about flawed, real-world human behaviour. The bane of illegal dumping faced by councils up and down the country suggests that even now, the ‘tidy Kiwi’ stereotype doesn’t hold up the way we like to imagine.

Have you ever called your council to get rubbish on your street cleared? Good luck with that. It’s not hard to guess what will happen when littering is made even more attractive.

Finally, there’s the question of what happens to the revenue that is collected. While half will be sucked directly into the budgets of local councils, the remaining funds go to the Government’s ‘Waste Minimisation Fund’.

This slush fund pays out large quantities of our money to companies embarking on eco-friendly projects. Recipients include large businesses like The Warehouse, Z Energy, and Fletcher, sometimes taking millions at a time for projects like tyre recovery and recycling old TVs.

There is no clear-cut way to judge which of these projects are mere PR stunts, and if they actually need funding or could have simply proceeded without taxpayer help.

So far, the fund is limited to $10 or $12 million a year, and has escaped serious political scrutiny. If Sage gets her way and the size of the fund balloons, it will need close monitoring as businesses up and down the country judge how to get their hands on this dosh.

In other words, we can expect the Government to have powerful allies as it pushes its tax through Parliament. Those families bearing the cost will need to push back hard – and the Taxpayers’ Union will be joining them. Submissions on the proposal are now open to the public.

The Taxpayers’ Union is questioning why the Wellington City Council pays $4,000 a year to the left wing “Living Wage” campaign.

According to an official information response, the price includes $2,500 in annual accreditation fees, plus $1,500 in administration fees.

The only thing the City Council gets for this spending is a pat on the back from unions on the Left. It’s ratepayer money down the drain and back-door funding of a political group.

Wellington City Council isn’t like a private businesses that needs PR stunts to compete for attention – it already has a captive customer base of ratepayers. If the Council wants to inflate its employees’ wages, it can simply do it. There’s no need to pay for a gold sticker.

The overall plan to implement the Living Wage is expected to cost ratepayers $3.4 million over 10 years.

Paying a group of activists to lobby other councils is wrong. New Mayor Andy Foster should cut this spend.

Here is the full official information response from Wellington City Council:

Dear Mr Houlbrooke,

Thank you for your email dated 27 August 2019 in which you requested information relating to the Accreditations held by the Council and the annual costs associated with those Accreditations.

Further to my decision email dated 24 September 2019, I can now provide you with the information we have collated. Please note: only two of the Council Controlled Organisations hold accreditations. These are provided below.

The Council holds the following Accreditations:

Wellington Zoo holds the following Accreditations:

Zealandia holds the following Accreditations:

The two year media reviews of the Labour led coalition agree it is struggling to get enough runs on the board.   Why is this so?

After nine years of opposition it can be expected there would be a running in period.   However that doesn’t adequately explain why they are delivering less than they had hoped.

While it is natural to expect Labour would have a modest understanding of how business works, it was a surprise to me also, that far too few Ministers actually understand how Government works.  So many don’t understand the mechanisms of government which means they failed to make best use of their time in opposition.   Not only that, its apparent they don’t understand the most important law of all – the law of unintended consequences.

In opposition I had several meetings with Phil Twyford and found him to be personable and passionate about his policy areas of transport and housing.   As a Minister however he has come across as arrogant, dismissing Treasury officials early on for their questioning of his Kiwibuild targets.   “Wet behind the ears” he said.   That may or may not have been true, but it is now apparent Treasury wasn’t pessimistic enough.

The Auckland tram (or light rail) project is a true “train wreck” in public policy making.   Good journalism from Stuff and others including the Herald’s Matthew Hooton, reveal a picture of chaotic decision making.   Early on Transport Minister Twyford transferred responsibility for the City-airport link from Auckland Transport to NZTA.   Then an “unsolicited bid” for a quite different proposition emerged from the NZ Super Fund together with a Canadian infrastructure fund (CDPQ Infra), jointly known as NZ Infra, which NZTA was asked to evaluate.

Apparently NZTA decided this proposal lacked merit and continued with its tram project along Dominion Road.  Various business entities invested in the NZTA concept in anticipation of bidding for work.

The situation now is the Ministry of Transport and The Treasury are going to evaluate both concepts and Cabinet will decide their preference early next year.  They will need to also get NZ First on board, because the project is not part of the coalition agreement.

To further complicate matters Hooten claims that the recently appointed NZTA chair Sir Brian Roche, was informally involved with the NZ Infra proposal along with Sir Michael Cullen at its beginning.   He is said to be very enthusiastic about it.

While Brian Roche (a personal friend) is well qualified to navigate his way through this quagmire, the integrity of government procurement processes have taken a serious reputational hit.

Minister Twyford has criticised previous NZTA actions regarding NZ Infra.   However it appears NZTA officials repeatedly asked the Minister to clarify the project’s objectives as to whether the focus was in getting to and from the airport in the fastest possible manner or having a tram/train to the airport, which would allow for housing densification.

Twyford thinks we can have both and has referenced London’s tube service from Heathrow to London.  I have used the regular tube from Heathrow to the city, which was a nightmare after a long flight and takes about 50 minutes.  There is a fast 15 minutes service from Heathrow to Paddington which leaves every 15 minutes from Heathrow and has no stops until it reaches Paddington.

I doubt a service every 15 minutes from Auckland going non stop to say Britomart, would be justified by the numbers of customers, so he really need to make up his mind about what’s required.  And while its very easy to publicly slag off officials who cannot publicly answer back, I think it is an unwise practice.  Officials can find ways of biting Ministerial critics.

The billion extra trees, which may or may not be additional to what the private sector would have planted, has also created picture of confused policy making.   The main justification appears to be to create carbon soaks to help NZ achieve the net carbon emission goal by 2050.

As I understand it pine forests will only buy us time over the first 30 years because once harvested they will have to be replanted.   Many in the rural sector don’t like the idea of the landscape being dominated by pine trees and say it will destroy local communities.

Both NZ First and Labour don’t like land being sold to foreigners, but we now have this strange situation where the Green Minister Land Information has allowed Japanese company Pan Pac Forest Products to buy around 20,000 hectares of land for forestry blocks.  This decision followed from a 2018 law change which allowed the Minister to by-pass the Overseas Investment Office, the agency responsible for regulating foreign direct investment into New Zealand.  Other land has being sold to foreigners who want to take advantage of this Government’s policies in respect of climate change and forestry.

As National’s Paul Goldsmith said: Foreign investors can’t buy farm land to farm, or to convert to horticulture or vineyards, but they can buy productive farm land on a massive scale to put into forestry blocks”.  He said “this is creating massive distortions in land use decisions in rural New Zealand”.

In defence Winston Peters said forestry is good for marginal land.   But it’s is not clear all the sales to foreigners are for land that is marginal for pastoral farming or horticulture.   Meantime Shane Jones has indicated he is sensitive to rural concerns about the impact of forestry on their communities.

This saga indicates a Government that is not thinking through conflicting goals in a rigorous manner.   If a National Government had made these forestry decisions there would have been a ballistic response from the parties now in the coalition.

Barrie Saunders is the Chairman of the New Zealand Taxpayers’ Union.  This opinion piece original appeared at https://barriesaunders.wordpress.com/

The following op-ed is written by Taxpayers' Union Executive Director Jordan Williams and is also available on the NZ Herald website (Premium) here.

Conventional wisdom says oppositions don't win elections – those in power lose them.

So much for conventional wisdom. If ever someone in power had set themselves up for a voter revolt, it was Phil Goff. After promising to eliminate wasteful spending and keep rates under control, his new local fuel tax, targeted rates, and waste charges worked to extend Len Brown's legacy of costly council bloat.

The undercurrent of ratepayer resentment had become a torrent of vitriol, judging by jeers at town hall debates. Going into the campaign, Phil Goff's net favourable/unfavourable rating according to internal National Party polling was negative 30 per cent – even lower than the hapless (now former) Wellington Mayor Justin Lester.

And yet Phil Goff's victory on Saturday was a trouncing. He brought in more than twice the votes of his closest challenger. Clearly, even with a deeply unpopular status quo, voters expect a palatable alternative to rally behind.

With the benefit of hindsight, we can see John Tamihere failed this basic test. Why would Aucklanders on the centre-right rally around a former Labour Minister, risking betrayal and disappointment? And why would more moderate voters elect a man who casually drops Nazi slogans into election debates?

Voters who this year should have led a ratepayer revolt opted to keep a clear conscience, voting for protest candidates like Craig Lord, or skipping the vote entirely.

Even so-called centre-right ticket "C& R Communities and Residents" could barely get more than a few candidates over the line outside of its Ōrākei stronghold. Its campaign was confused, even going so far as urging candidates not to give any specific commitments on rates and spending, despite this being the key issues it was running on. What should have been its campaign strength, and Goff's weakness, was given away.

Results outside of Auckland for the centre-right weren't much better. Christchurch re-elected the Labour-aligned Mayor Lianne Dalziel, Wellington's National Party-aligned "Wellington Party" failed to fire, and Dunedin elected the Green Party's Aaron Hawkins. In Hamilton a solid centre-right mayoral candidate was sidelined by a contest between two middling ones. The one place a Labour mayor has been booted out, in Wellington, it's in favour of a career councillor who in 2017 stood for New Zealand First.

So where are our palatable centre-right alternatives? Or to make the point more obvious: where the hell is the National Party?

Every central government election since 2002 has proven that the National Party brand is, at the very least, recognisable and palatable for centre-right voters. Faint praise indeed, but this is stellar compared to the performance of hodgepodge local tickets.

The constitutional role of political parties is to identify candidates on behalf of their supporters, to act as a quality control, a signal, and symbol. Without the National Party, every centre-right candidate has to start from nil to build recognition, and a campaign infrastructure.

No wonder the high profile candidates that were urged to stand for the Auckland Mayoralty by senior National Party figures turned it down – the party could not be relied upon to do anything to help them. This is what happened in 2016 to Vic Crone, who was well-meaning but naively talked into standing for Mayor by National Party figures who had no intention of helping her.

Even as someone who has an interest in local government, I struggled to work through the laundry list of candidates to figure out who to vote for. The Taxpayers' Union was bombarded with enquiries from members across the country asking us to issue "voting guides".

Labour and the Greens have long since cottoned on that local government matters, throwing their branding and resources at candidates they deem electable and ideologically sound. It works: On Saturday in Auckland, four Labour-branded councillors were elected, plus 27 local board members.

Those of us on the centre-right might not like the effectiveness of this strategy, but we ought to respect it. If you believe in your cause, why wouldn't you take advantage of the most valuable commodity in marketing – name recognition?

National's refusal to fly its colours in local elections is timidity bordering on negligence. Long suffering ratepayers and businesses in neglected territories from the Far North to Invercargill are more than capable of rallying behind change: they just need to see that choice on the ballot paper.

If National truly believes its principles of limited and accountable government are important, then entering local elections is a moral necessity.

The New Zealand Taxpayers’ Union is calling on former Porirua Mayor Mike Tana to repay money clocked up on his ratepayer-funded fuel card for personal travel.

The Ernst and Young report released yesterday reveals that, within less than three months, former Porirua Mayor Mike Tana used his ratepayer-funded fuel mileage for 1,820km of personal travel, including five round trips to Palmerston North to transport his son.

Based on the Remuneration Authority’s 73-cent-per-kilometre compensation rate, Mayor Tana would have charged $1,328 in personal mileage to the ratepayer.

This level of private benefit from a ratepayer-funded fuel card is not reasonable. Running small personal errands in the work car is one thing, but if you’re embarking on a three-and-a-half hour drive for family reasons, you’d be pretty bold to charge that to your employer. In this case, the employer is the poor old Porirua ratepayer, and Mayor Tana chose to whack ratepayers not once, but on five separate occasions in just a couple of months.

There’s a simple way for Mayor Tana to clear his reputation: pay the money back. It’s not a huge sum, but it’s the decent thing to do.

The New Zealand Taxpayers’ Union is calling on Deputy Prime Minister Winston Peters to veto Cabinet’s proposal to give special preference to iwi and ‘indigenous firms’ during procurement processes.

Taxpayers’ Union Executive Director Jordan Williams says, “Buried in MBIE’s briefing to Phil Twyford [para. 27] as incoming Minister for Economic Development is perhaps Cabinet’s maddest idea yet: ‘indigenous procurement’ policies that ‘seek to actively increase government contracting to indigenous firms’.”

“When the Government decides who to hire, its sole consideration should be value for taxpayers. It should not use procurement as a way to do favours for particular groups.”

“Iwi authorities like Ngāi Tahu and Tainui are not little guys in need of a handout. Māori authorities already enjoy a special discounted corporate tax rate. This policy will inflate prices for taxpayers, and punish Kiwi businesses trying to compete fairly for government contracts.”

“Winston Peters always campaigns on ‘one law for all’, but does he mean it? This is a great opportunity for Mr Peters to act as a moderating influence and nip this dodgy idea in the bud.”

Editors' Notes:

The relevant paragraph of the BIM states:

1. When deciding on procurement, Cabinet agreed that you and the Minister for Māori Development should jointly report back on indigenous procurement policies. Indigenous procurement policies seek to actively increase government contracting to indigenous firms. One option under consideration is to broaden the supplier diversity focus to include other disadvantaged groups (e.g. Pacific firms). We are preparing advice to support you in an initial meeting with the Minister for Māori Development on procurement diversity options.

We can reveal that the Government has halted its funding of Clinton Foundation subsidiary the “Clinton Health Access Initiative” following nearly three years of campaigning on the issue by the Taxpayers’ Union.

New Zealand taxpayers, to date, have shovelled more than $10 million to the Clinton Health Access Initiative. Had the Government continued to make payments in accordance with the grant agreement, taxpayers would have been on the hook for millions more.

Soon after Hillary Clinton lost the Presidential election to Donald Trump, many western nations that were funding this diplomatic rort pulled out. Australia stopped its funding in late 2016, but New Zealand was one of the few to continue the claim that the funding was for genuine aid.

Taxpayers will celebrate the decision to finally stop using NZ Aid money to fund this scandal-plagued charity. So too will the nearly 7,000 Kiwis who signed our petition on the issue.

Official Information Act response from the Ministry of Foreign Affairs and Trade below. 

Today at Parliament, the New Zealand Taxpayers' Union hosted the 2019 Jonesie Awards, an Oscars-style ceremony celebrating the best of the worst of government waste.

The Jonesie Awards are our annual celebration and lamentation of the weird and wackiest ways taxpayer money has been wasted in the last 12 months.

The Jonesie Awards are presented with a tongue-in-cheek entertainment Hollywood style ceremony complete with black ties, evening gown, and the Union's lovable mascot 'Porky the Waste-hater' appropriately dressed in a tuxedo.

While we have fun at the Jonesies, there is, of course, a serious underlying message: all of the spending is taxpayer money, time, and sweat. This ceremony is a warning to our malevolent money wasters in Parliament and town halls: rein it in, unless you want a golden porker of your own to mark your disturbing disrespect for taxpayers.

Local Government Nominees

• Orakei Local Board: Creative grants – gardening for mansion owners and Tinder for the elderly. Property owners in New Zealand’s wealthiest suburbs of Remuera, Orakei, and Mission Bay are being given ratepayer-funded grants of up to $2,000 to cover the cost of pruning trees on their property. This Local Board has also funded online dating workshops for the elderly.
   
• Palmerston North City Council: Corporate welfare for Toyota New Zealand. Ratepayers in Palmerston North forked out $391,000 to appease the world’s largest car manufacturer after it threatened to move its offices to another city. The decision was made in a closed council session and was only publicised after a Taxpayers’ Union information request.
   
• Wellington City Council: $21,000 for studying bike lights. The lycra lobby is alive and well in Wellington. Wellington City Council spent $21,750 on not one, but two studies into different brands of bicycle lights. Sixty-one types of bike light were reviewed for battery run-time, light output, ease of charging, lighting modes, and water resistance.
   
• Auckland Transport: $1.3 million for a doomed ride-sharing app. Auckland Transport produced an-Uber style app to taxi the wealthy citizens of Devonport to the ferry terminal. For each trip, the user pays $2.50, while ratepayers pay a $41 subsidy. The app was hoped to reduce congestion, but a survey shows it is mainly used by former cyclists, walkers, and bus users.
   
• Joint nomination: Local councils fighting climate change with air miles. Local councils across the country collectively spent $2.4 million on international flights in 2017/18. Auckland Transport flew business class to a “low emissions vehicle workshop” in Madrid, and Nelson Mayor Rachel Reese visited a “Climatorium” in Copenhagen. Meanwhile, Whangarei ratepayers paid for 11 art museum staff to look at architecture in Vienna. All three councils have declared climate emergencies.

WINNER: Palmerston North City Council's corporate welfare for Toyota New Zealand.

Central Government Nominees

• Hon Nanaia Mahuta: Local Government Minister forgets about ratepayers. When we heard that ratepayer groups could not get a response from the Local Government Minister, let alone a meeting, we dug deeper. An information request revealed that, despite a paycheque of $296,000 to look after the nation’s ratepayers, Nanaia Mahuta has not met with a single ratepayer association. Meanwhile, she is happy to meet with the council bureaucrats paid with ratepayer money.
   
• Energy Efficiency and Conservation Authority: $65,000 for bunker oil energy. A “low emissions vehicle” grant was given to Interislander so it could install electric vehicle chargers on its ferries. The chargers are of course powered the same way as the rest of the boat: with emissions-spewing heavy bunker oil. Other grants totalling $4.5 million were given to companies like The Warehouse, New World, and Vector.
   
• Prime Minister Jacinda Ardern: Fuel price inquiry hypocrisy. The Prime Minister says that New Zealanders are being “ripped off” at the petrol pump, and we agree. But the Commerce Commission investigation she ordered is not allowed to consider the effect of excise tax. So, while the companies take a sliver in profit, Jacinda Ardern gets to keep the 50 per cent of tax that inflates every petrol bill.
   
• Hon Tracey Martin: for thinking deaf people can’t read. Our Associate Education Minister decided it would be wise to spend $800 of your money on a video of a sign language interpreter. This would make sense for a speech, but it this case, it was to translate one of her written press statements. $800 is our smallest nominated spend, but Jonesie adjudicators were stunned that a Minister evidently thinks deaf people are illiterate too.
   
• Finance Minister Grant Robertson: $133,000 Wellbeing Budget document. The Government’s annual Budget should set the fiscal tone for all taxpayer spending. The official printed document is usually sparse, but the Wellbeing Budget incorporated glossy graphic designs and photography, blowing out costs by more than 50 percent compared to 2017. The model posing on the Budget’s front cover now lives in Australia, seeking better economic opportunities.
  

WINNER: Prime Minister Jacinda Ardern's fuel price inquiry hypocrisy.

Lifetime Achievement Award

Invercargill Mayor Sir Tim Shadbolt took home the most heinous ham: the Lifetime Achievement Award for excellence in government wast

His feats are new and old.
 
Sir Tim was arrested 33 times as a protestor in the 1960s and ‘70s, before running for Mayor of Waitemata City in 1983, where he unexpectedly won. After famously losing his mayoral chains (literally) twice, he was voted out in 1989. He then failed to get elected as MP for West Auckland, as Auckland Mayor (twice), and as MP for Wellington Central, before in 1993 finally finding the one group of voters who would accept him: the forgiving folk of Invercargill.
 
He famously said, “I don’t care where, as long as I’m Mayor”.
 
But Sir Tim wanted more. The very next year he unsuccessfully ran for Parliament again, was voted out as Mayor, ran for Parliament once more for the Legalise Cannabis party, and finally was welcomed back to the Invercargill mayoralty in 1998, where he has remained ever since.
 
Sir Tim is now a household name, and has supplemented his ratepayer-funded mayoral salary with a range of celebrity gigs, and even receives public money through his positions as ambassador for the Southern Institute of Technology and director for Invercargill Airport.
 
Sir Tim’s career has recent highlights: in 2015, his Council flew four staff members to China to buy Christmas lights, only to bring them home and discover the lights failed to meet New Zealand standards and were scrapped. A replacement set of lights cost ratepayers $250,000.
 
Sir Tim also has the honour of owning the country’s most expensive mayoral vehicle, a Chrysler 300C.
 
His Mayoral expenses this term alone include $3,100 maintaining his Chrysler, $19,500 on books (mostly books about himself to give to other people), $2,600 on donations to private charity, $8,000 on conference fees, $1,800 at local liquor stores, and $3,200 on custom made rubber wristbands that say, “I met the Mayor”.
 
This year, Mayor Tim was finally knighted. And adding to his prestige, today he enters the pantheon of government waste, alongside last year’s inaugural lifetime achievement winner, the Honourable Shane Jones.

Figures obtained as part of the 2019 Ratepayers’ Report league tables reveal that local councils across New Zealand employ 30,497 staff – 5,376 of whom earn salaries north of $100,000.

Taxpayers’ Union spokesman Louis Houlbrooke says: "The sheer scale of council bureaucracy is stunning. Ratepayers are forking out salaries for a population the size of Timaru, or double the size of the New Zealand Defence Force. And one in six of these staff members earns a salary higher than $100,000. In the Auckland Super City it is one in four."

Some councils are less efficient in their staffing than others. Ratepayers' Report looks at staffing costs per household, to compare how bloated each council's bureaucracy is on an apples-to-apples basis. We also present staff-to-household ratios.

“Westland District Council ranks the least efficient in New Zealand in terms of both its staff costs and numbers. Meanwhile Rangitikei and Central Hawke's Bay District Councils appear to be getting the most from their staff.”

“Westland, at least, has the excuse of a large geographic area, and a small population means it lacks economies of scale. Ratepayers in Wairoa, Waitomo, Waitaki, and Christchurch should ask what their councils’ excuses are.”

“Often councils will justify rates increases on the basis of infrastructure spending, when in reality the spending is sucked up by rising payroll costs. Auckland ratepayers in particular have cause for concern, with an incredible 2,473 council employees paid more than $100,000. These costs are an obvious place to cut waste, especially as ratepayers suffer under higher rates and other charges.”

Total personnel costs per household (including CCOs):

Highest personnel cost per household:

1. Westland District Council: $3,643
2. Wairoa District Council: $3,319
3. Waitomo District Council: $3,160
4. Waitaki District Council: $3,143
5. Christchurch City Council: $3,134

Lowest personnel cost per household:

1. Rangitikei District Council: $622
2. Upper Hutt City Council: $693
3. Whangarei District Council: $718
4. Tararua District Council: $723
5. South Wairarapa District Council: $724

Average personnel cost per household: $1,364

Lowest and highest household-to-staff ratios (including CCOs):

Least efficient (households per staff member):

1. Westland District Council: 19
2. Waitomo District Council: 20
3. Buller District Council: 26
4. Hurunui District Council: 26
5. Wairoa District Council: 34

Most efficient (households per staff member):

1. Central Hawke's Bay District Council: 112
2. Masterton District Council: 104
3. Whangarei District Council: 102
4. Rangitikei District Council: 102
5. Hutt City Council: 100

Average (households per staff member): 67

Numbers of staff earning over $100,000 (including CCOs):

1. Auckland Council: 2,473
2. Christchurch City Council: 534 (excludes CCO staff, council failed to supply)
3. Wellington City Council: 261
4. Tauranga City Council: 138
5. Hamilton City Council: 124
6. Palmerston North City Council: 83
7. Hastings District Council: 79
8. Dunedin City Council: 79
9. Waikato District Council: 69
10. Queenstown-Lakes District Council: 62

Nationwide: 5,376
Nationwide (all salary levels): 30,497

The New Zealand Taxpayers' Union, in partnership with the Auckland Ratepayers’ Alliance, has today published this year's Ratepayers' Report  – online local government league tables – at www.ratepayersreport.nz.

With these league tables, New Zealanders can easily compare their local council performance and financial position for 2017/18 against similar-sized councils and types.

Setting out more than two thousand data points, the Ratepayers' Report provides transparency, and per-household figures ensure fair comparisons between councils. The league tables rank Councils on metrics including average residential rates, staffing costs, and Council liabilities among others.

Taxpayers’ Union Executive Director Jordan Williams says, “Some councils do very well in the league tables, some far less so. All figures were sent to councils twice to double check before release.”

“Rates are still on the rise. On average, councils have increased their rates by $90, with the highest rates increase coming from Manawatu District Council which increased rates by $364, or 14%.”

“The data suggests Auckland ratepayers in particular have cause for concern, with the highest average rates in the country, and council liabilities of $21,941 per household. Auckland Council’s liabilities are second only to earthquake-affected Christchurch, and over three times the national average.”

“Every dollar spent by a Council was earned by a hard-working ratepayer. Ratepayers' Report allows ratepayers to understand if they could be getting a better deal.”

Notable Findings:

• Christchurch City Council continues to have the highest liabilities per household compared to any other council ($25,402). Auckland Council follows in second place, with liabilities per household of $21,941. "That alone is an incredible figure," says Mr Williams. "Think about every letterbox in Auckland having a $21,941 credit card bill in it thanks to Len Brown and Phil Goff."
• The average liabilities per household of all councils is $6,197.
• Auckland Council ranks highest for average residential rates at $3,387. There are 2,473 staff paid salaries greater than $100,000 at Auckland Council and its CCOs.
• The lowest average residential rates in New Zealand are levied by the Southland District Council ($1,737).
• The least efficient council in terms of staffing is Westland District Council, with a staff member for every 19 households. The most efficient is Tararua District Council, with a staff member for every 117 households.
• Only five Councils meet the full criteria for prudent Audit and Risk Committees. Two Councils, Palmerston North City Council and Waimakariri District Council, fail to meet any of the recommended oversight policies. Western Bay of Plenty fails to even have a separate Audit and Risk Committee, which is considered basic financial prudence.

Press releases:

Highest and lowest average rates

Highest and lowest liabilities

Auckland highlights

Wellington highlights

Canterbury highlights

Editors' notes:

Data for the report was compiled by the Taxpayers' Union and was supplied to all councils for review prior to publication.

Ratepayers' Report facilitates straightforward comparison of average residential rates via a formula first used by Napier City Council which allows for an 'apples to apples' comparison of average residential rates and charges, based on each council’s definition of a residential rating unit. Only Westland, Buller, and Waikato district councils were unwilling to provide the Taxpayers' Union with the necessary rates information.

For non-rates figures (i.e. liabilities, personnel costs) we have this year assessed council data using Stats NZ’s 2018 household estimates, with some councils opting to replace this estimate with an exact figure. We have done this because councils have different definitions of what constitutes a residential ratepayer or ‘rating unit’.

Queenstown-Lakes, Taupo, and Thames-Coromandel District Councils objected to the use of Stats NZ’s household figures, as these tend to exclude properties left empty, i.e. baches. As a result, per-household figures for these districts may be somewhat inflated.

Q & A

What is the purpose of Ratepayers’ Report?

Ratepayers' Report provides accountability and transparency to New Zealand ratepayers by allowing them to compare their local territorial authority with others around the country.

Where was the data sourced?

The Taxpayers' Union compiled the data in Ratepayers' Report after reviewing each council's annual report for the year ending June 30, 2018.

Other figures were mostly obtained under the Local Government Official Information and Meetings Act, and cover the 2017/18 financial year.

The data has been sent to each individual authority for their review and error checking prior to public launch.

Population and household data is from Stats NZ.

Where did the group finance figures come from?

They are taken from each Council's annual report. They are council figures, plus all those of subsidiary council-controlled organisations.

Which councils are assessed in Ratepayers' Report?

Of New Zealand's 67 territorial authorities, 66 are examined in Ratepayers' Report. That includes all city, district, and unitary councils, with the exclusion of the Chatham Islands Council (due to concerns surrounding that Council's workload pressure and unique position).

What about regional councils?

While we anticipate including regional councils in future editions of the Report, the data we have on their average residential rates bills is at this stage incomplete. Our research suggests that regional councils charge anywhere from $42 to $553 per residential ratepayer on top of the bill charged by territorial authorities. Gaps in the data and different definitions for residential ratepayers dictate that these figures should be considered as supporting evidence, rather than determinative.

Ratepayers’ Report does, however, include Regional Council information in its analysis of Audit and Risk Committees.

Is this the first Ratepayers' Report?

No. Ratepayers' Report was first published in 2014 jointly by the Taxpayers' Union and Fairfax Media. The Taxpayers’ Union have since published updated versions in both 2017 and 2018. This is the fourth edition.

How are the councils grouped?

Unitary authorities – the 5 territorial authorities which also carry out the functions of a regional authority are grouped.
Metropolitan – the 5 large councils with a population of over 120,000.
City – 6 smaller metropolitan councils with populations between 40,000 and 120,000.
Provincial – the largest group, 27 non-metropolitan councils with population over 20,000.
Rural – the remaining 23 councils.
Regional – the 11 Councils that make up the regions of New Zealand.

How was the average residential rate calculated?

Calculating an 'apples to apples' figure for residential rates is difficult because councils use various mixes of rates, levies, and user charges. Our approach is based on work by Napier City Council to find an average residential rate. The methodology councils were asked to use to calculate the figures disclosed in Ratepayers' Report is available here.

While we think this approach is useful and fair, the average residential rates figure should be a guide only. It does not, for example, factor in councils' reliance on commercial rates.

Unitary authorities (Auckland Council, Nelson City Council, Gisborne, Tasman, and Marlborough District Councils) perform the functions of a regional council and therefore can be expected to have higher rates than other territorial authorities.

Were councils consulted in the process?

Yes. Every council was sent a draft version of their respective page to review.

Can the results of the 2019 report be compared to the 2018 edition?

This year, for non-rates figures (i.e. liabilities, staff) we have assessed council data using Stats NZ’s 2018 household estimates, with some councils opting to replace this estimate with an exact figure. We have done this because councils have different definitions of what constitutes a residential ratepayer or ‘rating unit’.

The updated methodology means that (aside from the average rates metric which remains unchanged) the per-household figures should not be compared to the per-ratepayer figures in last year’s report. Nevertheless, we can provide the comparable time-series data for individual councils on request.

After putting some feelers out, the New Zealand Taxpayers’ Union can reveal that Wellington regional ratepayers have paid almost $6,000 for “Frank the Crayfish”, a man in an elaborate crayfish suit who scolds ratepayers for their environmental habits.
 
Frank stars in Greater Wellington Regional Council’s ‘quirky’ environmental ads, currently warning against burning treated wood. The crayfish suit itself set ratepayers back $3,465, plus $2,500 for the actor.
 
For comparison, the work attire for Taxpayers’ Union mascot Porky the Waste-hatercost just USD100 on Alibaba.
 
Including video production and advertising, the full campaign has cost ratepayers $26,302 so far. Once another two more ad campaigns are completed, the Union estimates Frank will have set ratepayers back by around $67,000.
 
In its official information response to the Union, the Council says that a grown man in an “elaborate” crayfish costume adds “some humour” to serious environmental issues.
 
A crayfish was chosen as mascotbecause crayfish are “sensitive to water quality changes”. It is unclear how this relates to wood burning. The name Frank was chosen in service of the tagline, “Let’s have a frank conversation.” Campaign ads warn against making Frank “cray cray”.
 
The Council also confirmed that it is not sharing campaign costs with any other regional councils, missing an obvious opportunity to save ratepayer money.

This is yet another example of a council trying to emulate corporate gimmickry. Unlike corporate advertisers who need to stand out from competitors, the Council is a monopoly service provider. It could have settled for a cheap, no-frills and less confusing marketing campaign.

For the ratepayers who worked hard for that money, this spending is rock bottom stuff.

The Council's responses to our official information requests are available below.

Response_letter_to_Jordan_Williams_NZ_Taxpayers_Union_OIA_2019-257.pdf

Response_letter_to_Luke_Redwood_(New_Zealand_Taxpayer’s_Union)_OIA_2019-264.pdf

The following op-ed is written by Taxpayers' Union Economist Joe Ascroft.

On Wednesday, the Government finally announced its KiwiBuild reset. The target of 100,000 homes over ten years has been scrapped and replaced in part by a $400 million “Progressive Homeownership Scheme”, which would distribute additional deposit subsidies for first-home buyers and – subject to some conditions – allow first-home buyers to access government-backed mortgages with just five percent deposits.

The scheme is essentially an expansion of the National Government’s “Welcome Home Loan” policy, which backed mortgages for low-income households albeit with higher deposits and lower subsidies.

The scheme has good intentions. The Government is rightly concerned that many families are locked out of the housing market. However, the details of the scheme are deeply worrying.

First, the plan does nothing to address housing supply. Unless the Government introduces regulatory reform to make housing construction easier and cheaper, introducing additional subsidies and government-backed credit will simply be capitalised into house prices. Unless the underlying factor driving housing unaffordability is solved (not enough houses) the real winners will be existing home owners who will receive a capital gain.

Secondly, the scheme is hugely risky for taxpayers. The policy is specifically targeted at families who are struggling to save for a deposit due to – in Green Party co-leader Marama Davidson’s words – “high rents and low wages”. In other words, these are financially precarious households, who struggle to save and invest.

Granting those families low-deposit mortgages will not increase their incomes or change their savings behaviour. With very little savings or equity, their ability to meet mortgage repayments in the event of a recession or a substantial increase in interest rates is likely to be very poor – just as we saw in the United States in the mid-to-late 2000s, when NINJA (no income, no job or assets) home-owners defaulted on their mortgages at spectacular rates when interest rates climbed.

Worryingly for taxpayers, the Government has agreed to back these mortgages. In short, in the event of defaults any difference between the outstanding value of the mortgage and any capital recovered from a mortgagee sale would be met by taxpayers. In an environment of steadily climbing house prices, any risk to the Crown balance sheet might seem remote, but that can change quickly.

When mortgage defaults climbed in the United States, house prices began to fall and banks were unable to recover their losses. Government-backed lenders Fannie Mae and Freddie Mac, which targeted low-income borrowers in an eerily similar fashion to plans announced on Wednesday, fell over leaving taxpayers to pick up the pieces. The cost of the Fannie Mae and Freddie Mac bailout was $191 billion USD.

Simply, if the answer is subsidised, low-deposit government-backed mortgages for families with low incomes and very few assets, you have asked the wrong question.

The solution to easing the burden of high rental costs on low-income families is to radically reform building regulations and make densification significantly easier. That will involve making politically difficult decisions about the Resource Management Act and other planning laws. Crucially though, it will work and it won’t impose significant financial risks on taxpayers.

The Government has used taxpayer money to hire its left-wing mates as the Friendship Police, reveals the New Zealand Taxpayers’ Union. 

In May 2019, Netsafe granted $15,000 in taxpayer funding to left-wing campaign group ActionStation, according to information obtained under the Official Information Act.

The payment breaches Netsafe’s commitment not to fund political organisations with Ministry of Justice money.

This is the same group that helps out Labour and the Greens during election campaigns. The cushy contract makes a lie of ActionStation’s claimed independence from government funding.

Taxpayers are unknowingly supporting ActionStation to tell New Zealanders how to have “better, safer and more productive conversations online around Māori, refugees, NZ history and Tiriti”. But the Government shouldn’t be boosting the bottom line of any political lobby group.

People on the left would rightfully be outraged if a National government contracted the Maxim Institute to teach sex-ed in schools, or the New Zealand Initiative to draft the Budget. In principle, this cosy payment to ActionStation is no different.

The Taxpayers’ Union is calling on ActionStation to refund the payment, and front up about any other taxpayer funding it receives or has applied for.

Earlier today our economist Joe Ascroft submitted in person to the Environment Select Committee on the Zero Carbon Bill. 

The Bill sets out expectations for reducing New Zealand's emissions profile as part of a global effort to limit climate change. 

Joe spoke to our written submission, which is available here. 

Our key contentions to the Committee were that:

1. The economic effects of taxing and limiting emissions are often underplayed by climate activists. NZIER forecasts that real GDP could be between $10.2 and $49 billion smaller by 2050 if we adopt a split-gas approach compared to current emissions targets. Compared to taking no action at all, GDP could be up to 22 percent smaller by 2050.

2. The Ministry for the Environment argues that the economic modelling fails to take into account the impact of climate change on the New Zealand economy, but that critique misses that New Zealand's impact on climate change is likely to be very small. 

3. The poorest households are likely to be disproportionately hurt by any intervention. NZIER modelling indicates the poorest 40 percent are likely to experience six times the harm of the richest 20 percent. 

4. Aggressively targeting our agricultural sector could simply cause production to shift overseas - with no subsequent net impact on global emissions.

Between 2015/16 and 2017/18, DHBs spent $280 million treating patients due to adverse drug reactions, reveals the New Zealand Taxpayers’ Union in its final health productivity briefing paper.

It’s seriously concerning that taxpayers spent $280 million in three years dealing with botched prescriptions and incorrect use of medication. That’s the equivalent of 10 flag referendums, or $150 per household. DHBs need more discipline in setting and meeting targets to ensure drugs are correctly prescribed and patients understand how and when their prescriptions.

This problem needs to be addressed not just for the sake of patients, but for taxpayers who are forecast to be absolutely hammered by rising demands on healthcare services.

Some DHBs are much worse than others. Canterbury DHB alone spent $60 million treating those with adverse drug reactions across the three year period. Waikato DHB spent nearly $40 million.

There needs to be further investigation at Counties-Manakau DHB over treatment related to adverse drug reactions. Their reported rate of treatment and total spend related to adverse drug reactions is much lower than you would expect for a DHB treating such a large population. If their reported data is correct, they are performing extremely well, but they may also not be correctly recording treatment data.

The information was obtained under the Official Information Act and has been released as part of a serious of briefing papers, linked here.

In a submission to the Ministry of Transport, the Taxpayers’ Union reveals that the cost-benefit analysis prepared by Ministry of Transport and used to advise Ministers on the Government’s Clean Car Standard and ‘Feebate’ policies has serious flaws which undermine justifications for the policies.

More than 90 percent of the Ministry’s estimated benefit is attributable to consumer fuel savings, but even in their most conservative assumptions they incorrectly pegged before-tax fuel prices at 40 to 50 cents per litre more expensive than in reality. This was due to their reliance on 2011/2012 price projections from MBIE which have failed to bear out. In short, they got the price of fuel totally wrong – using previous forecasts, instead of current reality. As a result, the proposed savings calculations do not reflect reality.

But that’s not the only mistake.  Even if you ignore the fuel price assumption errors, the Ministry simply assumes consumers are irrational and that the Government needs to intervene to rectify this issue – with no evidence or literature cited to reflect this position.

When preparing the Union’s submission on the clean car policies, we readily found plenty of evidence that consumers do in fact understand the benefits of fuel efficient cars – but none of this evidence is addressed by Ministry officials in their analysis. That’s potentially fatal for the Ministry’s analysis – if almost all the benefits from buying EVs flow through to consumers from fuel savings and consumers understand the value of these savings, there’s no good reason for the Government to intervene.

Finally, officials need to reconsider how they perform cost-benefit analysis. The infamous BERL alcohol paper has become a joke within economic circles in part because they counted all of the costs from alcohol, without taking into account benefits to consumers, like enjoyment. The analysis from Transport similarly counts all of the costs from driving a car which is less efficient than an EV or a Prius, but ignores the benefits to consumers which lead them to make that choice. Consider, for example, a ban on ice cream sales. It would be bizarre to count reduced consumer spending on ice cream as a ‘benefit’ without acknowledging the lost benefits to consumers from ice cream consumption.

The Government’s Clean Car Discount and Standard policies should not proceed until Ministry of Transport officials fix the analysis Ministers relied upon to set the policies.

Full submission:

Email correspondence with the Ministry of Transport: 

In a new briefing paper, the New Zealand Taxpayers’ Union can reveal that in the period 2013/14 through 2017/18, DHBs spent $20.37 million on redundancy payments.

Some redundancy payments are inevitable, but spending an average of $26,800 on 758 payments is a poor use of money. DHBs should be prioritising patient care and services, not golden handshakes to staff who are being let go.

Huge variance in the size of payments between DHBs should ring alarm bells. Waikato DHB, which has since had its board sacked, had the highest average redundancy payment of $47,800. In contrast, while South Canterbury DHB made more than 100 payments in five years, the average payment was only just over $10,000.

There’s no right way to manage redundancy payments – sometimes letting staff go is the efficient option – but DHBs should be careful to keep their average payments low so funding is going to patient care.

This information, obtained under the Official Information Act, has been released as the second of three briefing papers on healthcare productivity. The first briefing paper can be viewed here, along with the introductory report, Productivity in the Health Sector: Issues and Pressures.

The New Zealand Taxpayers’ Union is questioning the value of a $98,876 brand makeover at Porirua City Council. 

The official new avatar for the Council, which you would expect to be emblematic of the rebrand’s quality, is a limp and childlike smiley face. The design was apparently chosen because it ‘connects with the city’s youthful population’. When Porirua ratepayers gaze long enough into the face, the Council’s five percent annual rate hikes gaze back.

Councils do not need to engage in corporate branding exercises. Unlike businesses, councils are monopoly service providers and do not need to market themselves to their ratepayers, who are already a captive audience.

Porirua isn’t the only council to have indulged in an expensive rebrand, but this is no excuse. In our experience, branding exercises are driven by political egos and only serve to distract from inadequate services or rising pressure on ratepayers.

$25,000 was spent on photography alone for this rebrand, according to a response obtained under the Local Government Official Information and Meetings Act.

The New Zealand Taxpayers’ Union is asking DHBs to charge patients who miss specialist appointments, in light of new figures that show missed specialist appointments cost taxpayers $29 million in FY 2016/17.

District Health Boards need to become more efficient if we expect to keep healthcare costs manageable in response to an aging population. Tackling the $29 million annual spend on missed specialist appointments would be one way to meet that goal.

Some DHBs are worse than others: Counties Manakau, Waikato, Lakes District and Auckland each have missed specialist appointment rates above 10 percent. In contrast, South Canterbury DHB has an admirable 2.5 percent missed appointment rate.

DHBs need to work harder to reduce rates of missed specialist appointments. When patients miss an appointment, they contribute to a clogged health system and impose higher costs on taxpayers – in part contributing to the accelerating health costs demonstrated in our recent report Productivity In The Health Sector: Issues And Pressures.

Figures for DHBs across the country were obtained under the Official Information Act and have been released by the Union in a new briefing paper, the first in a series of three papers on healthcare productivity. The Union can provide raw figures for interested media.

The briefing paper makes three suggestions for DHBs:

1. DHBs should charge patients who miss their specialist appointments.
2. Those DHBs that do not measure (or report on the cost of) missed specialist appointments should do so.
3. DHBs should be more active in reminding people of appointments to reduce the number that are missed.

This op-ed, written by Taxpayers' Union Economist Joe Ascroft, was originally published on Health Central.

By 2060, Treasury’s Long Term Fiscal Model forecasts that government debt will reach 205.8 percent of GDP – approximately ten times our current debt burden as a proportion of the economy. Just financing that debt will cost 11 percent of GDP – one in every nine dollars in the economy will be used to just meet the interest cost of government debt.

Clearly that is an unsustainable future. When debt gets that high simply meeting the cost of basic public services like education, law and order, transport, and defence becomes extremely difficult – let alone welfare payments and superannuation.

So what’s driving our future of debt?

The two most important factors are superannuation and healthcare spending. While superannuation (expected to increase from 4.8 to 7.9 percent of GDP) routinely receives coverage in the media, healthcare (expected to jump more aggressively from 6.2 to 9.7 percent of GDP) is actually expected to be more of a burden on taxpayers.

Our aging population is one explanation for both factors. As the population distribution skews older, it’s natural that a greater share of resources will be used to fund superannuation and healthcare.

But population aging is not the only factor driving the accelerating cost of healthcare. When the Office of the Auditor General examined Treasury’s Long Term Fiscal Statement they noted that “non-demographic factors raise healthcare costs 35% faster than normal real output growth and 25% faster than normal consumer price growth. These two factors are behind most of the increase in healthcare costs during the 40-year projection period.”

In short, the OAG claims that a majority of the expected increase healthcare costs is attributable to healthcare cost pressures and higher demand for healthcare coverage associated with income growth, rather than an aging population.

So how can we mitigate those cost pressures if they are not related to demography?

Improving healthcare productivity would be a good start.

Productivity is a measure of how much output we get for the inputs we invest. Typically, we expect productivity to grow in response to new technology and capital investment. Productivity growth is the driving factor behind wage growth and prosperity.

Unfortunately, productivity growth in the health sector has been woeful for the last ten to fifteen years. In the period 2004 to 2015, cumulative health productivity growth was close to zero. In the period 1996 to 2017, labour productivity growth in the healthcare sector was half of the rest of the economy.

Put simply, any increase in output in the healthcare sector in the last two decades is largely attributable to more inputs, rather than any improvement in efficiency. It is wholly unsurprising that Treasury expects debt to climb to impoverishing levels, if one of the largest areas of public expenditure is failing to become more efficient in line with the rest of the economy.

Beating the debt apocalypse by taking on healthcare productivity is possible but might require the Government and DHBs to make difficult choices. Abandoning our public-focused healthcare model in favour of American privatisation would be a big mistake – instead we should focus on implementing a series of small reforms to cut costs while improving output.

The Taxpayers’ Union proposes some of these reforms in a series of papers released in the coming weeks: attempting to limit hospitalisations associated with adverse drug reactions (i.e. becoming ill because you have incorrectly taken prescription medicines), cutting down on missed specialist appointments, and minimising large redundancy payments.

DHBs might also want to consider tying remuneration of board members and executives to the financial health of the organisation, in light of the Government having to call in commissioners to Southern and Waikato DHBs. The Government could also consider increasing the proportion of each board appointed by the Minister, rather than elected by the public in notoriously misunderstood, low-turnout elections. Finally, amalgamating some DHBs might help to cut down on administration costs.

Each of these policies will need to be considered on their merits and none of them are a silver bullet, but if the Government implements no reform, taxpayers will be on the line for eye-watering levels of debt. 

The report can be found by linking directly to the PDF here.

The New Zealand Taxpayers’ Union is calling on the CEO of Invercargill City Council to take responsibility for untraceable cash spending that occurred on a trip to China.

In late 2017, four Invercargill City Councillors visited the sister city of Suqan, China. The CEO withdrew $3,000NZD worth of Chinese yuan for expenses. At the end of the trip, $1,780.45 was returned.

This is not surprising. What is surprising is that when the Taxpayers’ Union asked for receipts, the Council said that none were collected. It is a core responsibility for any CEO to ensure that expenses are recorded. The fact the CEO was ready to untraceably spend up to $3000 is alarming.

When asked for further details about the trip, Invercargill City Council stated that “Chinese currency was purchased for incidentals” and that “no receipts were received.” When asked further, the Council stated the currency went towards taxis and trains.

Quite frankly, the Council’s explanations can never be satisfactory because ratepayers are forced to take them on their word. It’s standard for ratepayer money to be used on incidentals, including booze and entertainment, but without any receipts it’s left to our imagination just how much fun Councillors had on the ratepayer dime.

Most concerningly, the Council says this is standard practice for its sister city visits. Other Councils collect receipts for all travel expenses. We’re calling on the CEO to take responsibility for this basic failure of accountability, and to introduce better practices. In the meantime, ratepayers are left wondering whether this behaviour reflects a deeper culture of arrogance within the Council.

Attendees of the trip included Crs G Lewis, R Amundsen, L Soper and A Crackett. With them was CEO Richard King and a staff member. Venture Southland and Chamber of Commerce officials also attended but paid their own way.

With health spending as a percentage of the economy expected to increase more than 50 percent between now and 2060, the Government needs to put greater focus on efficiency, says the New Zealand Taxpayers’ Union.

Our latest report Productivity in the Health Sector: Issues and Pressures investigates the recent failure to achieve efficiencies in the health sector and offers some possible opportunities for reform. According to Treasury forecasts, debt is expected to hit 205.8% of GDP if we don’t make changes to superannuation or health spending – unsustainable if we want the Government to continue funding public services as current levels.

However, while superannuation receives a lot of attention from politicians, health spending is actually expected to grow at a faster pace – nearly ten cents in every dollar in the economy will be devoted to health spending by 2060. If we can reduce that spending by achieving efficiencies across the sector, public debt will be much more manageable for taxpayers.

Our report argues that the best approach for reform is in line with OECD recommendations: the Government should not up-end the entire sector, or introduce American-style private markets, but instead seek to introduce incremental reforms that deliver better returns for every dollar the taxpayer spends. In each of the next three weeks, we will be releasing an issues paper focusing on wasteful spending at DHBs – eliminating those instances of waste would ensure funding could go to more surgeries and better care for those that need it.

Key figures:

1. Health spending is expected to grow from 6.2% of GDP in 2016 to 9.7% of GDP by 2060, contributing to debt hitting 205.8% of GDP by 2060.
2. Between 2004 and 2015, there was zero cumulative growth in healthcare productivity.
3. Between 1996 and 2017, labour health productivity growth (0.9% per annum) ran at half the rate of the rest of the economy (1.8% per annum).

Further to this report, the Taxpayers’ Union will release three briefing papers containing original research on areas of waste in the health system.

Tuesday 6^th: Missed Specialist Appointments
Tuesday 13^th: DHB Redundancy Costs
Tuesday 20^th: Adverse Drug Reactions

The New Zealand Taxpayers' Union can reveal that the Government spent $133,530 on producing its ‘Wellbeing Budget’ document, a cost blowout largely driven by spending on graphic design and photography.

The $133,530 price tag compares to $86,268 for the 2017 Budget – an increase of 54.8%.

The Government spent $31,682 on external designers and photographs. These costs were zero for the 2017 Budget, which the Taxpayers’ Union asked about for a comparison.

Even general printing and proofreading costs increased for the Wellbeing Budget compared to 2017.

The Wellbeing Budget was a great gig for the beret-wearing hipsters who designed it, but not so great for taxpayers, who were forced to pay for the PR blitz.

It’s a minor spend in the scheme of things, but it is concerning because this document, prepared by the Finance Minister, sets the fiscal tone for the rest of the Government. If Grant Robertson starts splashing out on glossy design, other departments might think it’s okay to do the same.

The New Zealand Taxpayers’ Union has identified an absurd case of mission creep at Wellington City Council: the decision to spend $21,750 on two Consumer NZ investigations into different brands of bike lights.

Information released to the Union reveals that Wellington City Council initially paid Consumer NZ $10,600 for a comparison of bike lights in 2017 and paid the organisation a further $11,150 for an updated version of the report this year, totalling $21,750.

Consumer NZ purchased 61 bike lights and tested their battery run-time, light output, ease of charging, lighting modes, water resistance and fitting.

This sort of spending says the lights are on, but no-one is home. Consumer NZ’s product comparisons are a service to its subscribers, so why should Wellington ratepayers be the ones forking out?

$20,000 might only be a drop in the Council’s budget, but this is a worrying case because it hints at a culture of mission creep. The Council’s decision to get involved in niche consumer matters, that would usually be dealt with privately, only results in more neglect of core services like roads and rubbish.

The Wellington City Council would be wiser to conduct a comparison of the value of its own spending projects, particularly while it’s hiking rates and dealing with unexpected costs from the Town Hall and Library.

Raw information:

Proposal
Email chain

Update: New Plymouth District Council has corrected information it gave the New Zealand Taxpayers’ Union regarding ratepayer-funded flight expenses in 2017/18.

A Council spokesperson states:

Former Govett-Brewster Art Gallery/Len Lye Centre director’s Simon Rees’ overseas travel was not ratepayer funded.  Supplied information should not have included three overseas trips by Mr Rees, which were funded by the Molly Morpeth Canady Fund. This funds all the director’s travel and associated expenses.

Therefore, the updated total of the Council’s 2017/18 flight spending is $279,355, $23,121 of which was international travel. The Council keeps its place as the country’s fourth-highest spender on air travel for 2017/18.

---

The Taxpayers’ Union can reveal that New Plymouth District Council was the fourth highest-spending council in the country when it game to air travel in the 2017/18 financial year. The Council spent $285,391 on flights, $256,235 of which was domestic, $29,157 international.

Click here to view the Council's information release.

For comparison, that is more than twice Palmerston North City Council’s spend, and even slightly higher than Christchurch City Council.

International destinations included LA, Vancouver, Sydney, and Brisbane.

New Plymouth District Council’s travel habits are eye-wateringly expensive, both in real terms and relative to other Councils.

The Council will argue that it faces higher costs due to its remote location, but that’s also true for Councils like Whangarei who managed to keep costs down. The question ratepayers will be asking is why is so much travel necessary in the first place? Every day spent travelling outside the district is less time focused on local needs.

Flight expenditure is important because it reflects the culture within the Council. How can ratepayers be assured they’re getting value for money on roads and rubbish when staff fail to display frugal attitudes on less important spending like travel?

This information has been collected as part of the Taxpayers’ Union’s annual Ratepayers’ Report, which will be released in full later this year.

The Taxpayers’ Union can reveal that Invercargill Mayor Tim Shadbolt has racked up $147,243 in mayoral expenses since late 2016 (the beginning of this term in local office).

Tim Shadbolt has shown considerable fiscal irresponsibility in his latest term of office, spending inordinate amounts of money on frivolous or personal things.

Seven different times, his card was used for ‘accommodation for Mayor Shadbolt and Family’. Ratepayers might be surprised to learn that the Mayor is using their money to take his family on junkets.

Other expenses included spending $19,534 on books and magazines, $8,051 on conference fees, $3,256 on wristbands, $2,662 in donations to private charity, and $1,854 at liquor stores.

Mayor Shadbolt also spent nearly $3,113 on maintenance for his famous ratepayer-bought Chrysler 300C, revealed earlier in the year to be the most expensive mayoral vehicle in the country. It’s no wonder that the Council is reviewing the cost of its fleet if existing vehicles are kicking up so much in maintenance costs.

We sent the same request to other councils but Mayor Shadbolt’s indulgence dwarfs that of others.

Ratepayers might be concerned that the Mayor uses so much public money on gifts and personal adventures. Perhaps in the future he could personally pay for his family getaways and bottle shop runs?

The full spreadsheet of expenses, obtained under the Local Government Official Information and Meetings Act, is available here.

The New Zealand Taxpayers’ Union has started a petition calling on councils across the country to reject the Childcare Allowance just introduced by the Remuneration Authority, which allows councillors and local board members to claim up to $6,000 per year from ratepayers for childcare.

“Ratepayers should not be forced to pay for local politicians’ nannies and housekeepers,” says Jordan Williams of the Taxpayers' Union.

"In very few jobs does the employer stump up for childcare. Why should politicians receive ratepayer funded benefits very few ratepayers are afforded?"

"Where does it stop? What about councillors with elderly dependents, or councillors without a partner to split household bills? Many politicians have costly personal circumstances, but we expect them to manage these costs privately.”

"I was brought by a single Mum on the District Council before I was even school aged.  The idea that ratepayers would be responsible for hiring a nanny is entitled nonsense."

The New Zealand Taxpayers’ Union is questioning Porirua City Council’s decision to spend $9,218 on flights to Canada for an ‘indigenous art exchange’.

The spending details have been released as part of a Taxpayers’ Union investigation into 2017/18 travel expenses at councils across the country.

It’s ridiculous for Porirua City Council to spend money this way when its average residential rates are 28% above the national average. Many ratepayers will be appalled that their money isn’t being used to improve the council’s financial position or maintain basic services.

Instead, ratepayers forked out for artists and Council staff to enjoy a junket to Winnipeg, for an ‘indigenous art exchange’ involving ‘demonstrations of how digital media can be used to empower indigenous communities’. This all sounds fascinating, but it is entirely unclear how it delivered value for Porirua ratepayers. In fact, the only clear beneficiaries of the spending were the two artists who got a profile boost, and the two Pātaka museum staff who even received $70 per-day spending allowances for the 14 day trip.

We understand that the Council is currently being lobbied to declare a ‘climate emergency’. If it does this, it should show it’s serious by swearing off unnecessary, feel-good junkets and air travel.

The Canada flights were purchased on top of a significant $38,950 spend on domestic flights, meaning the Council spent a total of $48,168 on air travel in 2017/18.

Using figures obtained under the Local Government Information Act, the New Zealand Taxpayers’ Union can reveal that Dunedin City Council was the country’s third-highest spending council in terms of air travel in the last financial year.

The Council spent $347,885 on air travel in 2017/18 – $214,067 of which was domestic, $133,818 of which was international.

“This is incredible hypocrisy,” says Taxpayers’ Union spokesman Louis Houlbrooke. “You have to wonder how Councillors who voted for the ‘climate emergency’ did so with a straight face. On one hand they’re telling ratepayers to expect major lifestyle changes and sacrifices, on the other hand they and their staff are burning jet fuel at a rate that would make NASA proud.”

“We would love to know how or why the Council racked up this eye-watering expenditure, but the Council has refused to release the destinations of its flights, despite multiple requests. Almost every other council in the country has been able to provide this information, so why is Dunedin City Council refusing to be transparent? Is it ashamed of the extravagance of its ratepayer-funded, emissions-spewing junkets?”

“What we can say is that we see Dave Cull in the fashionable cafés of Wellington every other week. Perhaps Mayor Cull has passed on the jet-setting culture of Local Government New Zealand to his local Council, at the expense of Dunedin ratepayers.”

The first and second-highest spending Councils were Auckland and Wellington, which spent $1,221,571 and $591,310 respectively.

The Taxpayers' Union will be contacting the Ombudsman regarding Dunedin City Council's failure to release information on flight destinations.

The New Zealand Taxpayers’ Union can reveal that, despite plans to declare a ‘climate emergency’, Wellington City Council spent a massive $623,296 on air travel in the previous financial year.

This makes Wellington City the country’s second highest-spending council behind Auckland City ($1,221,571). Notably, Wellington City’s air travel spending is more than double that of Christchurch City ($278,316), despite Wellington City’s considerably smaller population base.

A major contributor to the air travel blowout was economic development agency WREDA, which spent $201,464 – $168,672 of which was international.

For Justin Lester to declare a ‘climate emergency’ is incredible hypocrisy. He needs to look in the mirror: his Council and CCOs have been spewing emissions at a massive rate while enjoying ratepayer-funded junkets to the likes of Switzerland and Shanghai.

Ratepayers will be looking on with envy at the lucky bureaucrats who flew premium economy to Texas for the South by Southwest Festival, or London for a live music conference. It’s completely unclear how this relates to delivering value for ratepayers, or how it aligns with the Council’s virtue-signalling on climate. In fact, it’s out of touch on every level.

What’s so special about Wellington that its Council needs to spend almost twice as much as Christchurch on air travel? Councillors ought to be embarrassed and must demand changes in policy and culture inside the Council and its CCOs.

Wellington City Council Group air travel, 2017/18

• Domestic: $275,269 (1,438 flights)
• International: $348,027
• Total: $623,296

Sub-groups (click titles for raw documents):

Wellington City Council (Destinations)

• Domestic: $145,736 (973 flights)
• International: $99,488
• Total: $252,224

WREDA

• Domestic: $32,792 (136 flights)
• International: $168,672 (107 flights)
• Total: $201,464

Wellington Water

• Domestic: $50,979 (136 flights)
• International: $7,977
• Total: $58,956

Wellington Zoo

• Domestic: $10,511 (36 flights)
• International: $41,677 (23 flights)
• Total: $52,189

Experience Wellington

• Domestic: $16,963 (47 flights)
• International: $19,843
• Total: $36,806

Wellington Venues

• Domestic: $13,225 (87 flights)
• International: $9,901
• Total: $23,126

Wellington Cable Car

• Domestic: $3,782.14 (11 flights)
• International: Nil
• Total: $3,782.14

Zealandia

• Domestic: $1,281 (12 flights)
• International: $469
• Total: $1,750

Basin Reserve Trust

• Total: Nil

The number of international flights is not available for every agency.

Within the first weeks of becoming leader of the Labour Party, Jacinda Ardern made the call not to defend Metiria Turei’s self-confessed cheating of the welfare system. It was the right move. Workers rightly resent the idea that beneficiaries game the system while others work long shifts, pay secondary tax, and contribute to society with the aim of getting ahead or giving their children a better life.

So it was shameful when in Budget 2019 the Government announced a linking of benefits to average wages. Now, beneficiaries will get payment increases in line with the wage rises that others earned and sacrificed for.

Benefits have already been annually adjusted for inflation: that’s enough to keep up with increases in the cost of living. But last week’s change means beneficiaries will now share the cream of economic growth, automatically, every year – without having to get off the couch.

Treasury estimates the change will cost working taxpayers $320 million in the first four years (that’s $143 per worker), with costs climbing every year after that.

The Government could justify the cost to taxpayers by comparing benefits to superannuation, which has been indexed to wages since 1977, but experts acknowledge that’s increasingly unaffordable and will eventually need reform.

If the Government was consistent with indexation, it would turn its attention to tax brackets. If the top tax bracket was indexed for wages since it was set at $70,000 in 2011, it would now be set at $87,755. Likewise, instead of paying 30 cents on the dollar in tax from $48,000 a year, the second-highest rate would not kick in until $60,000.

In other words, average income earners would be in for significant tax relief.

If that seems too generous, bear in mind that it’s the same principle that now applies to both superannuation and the benefits system. Unfortunately for the taxpayers who fund these programmes, the Government cries poverty when it comes to taxes, refusing to even go so far as to adjust brackets for inflation.

This means that every year, a portion of our income is pushed by inflation into higher tax brackets, meaning we’re taxed harder even though we’re no richer. As a result, in just two or three years the average wage earner will be paying tax in the top 33 percent tax rate – meaning the Government snatches a third of any pay rise or overtime.

Grant Robertson could have used the room in his Wellbeing Budget to treat taxpayers fairly, like superannuants and beneficiaries. Instead, by ignoring the pain of inflation on taxpayers, and boosting benefits, he’s doubling-down on the unfairness of the wealth transfer system.

Labour is now giving its working base a clear message: we’ll keep increasing the penalty for your hard work, and endlessly boost the reward for unemployment. This does not bode well for wellbeing.

Dear Supporter,

Our team has just returned from the Beehive, where we attended the media and analysts' lock-up event for the Government’s new “Wellbeing Budget”. This year’s Budget was accompanied by some level of turmoil, with leaks, alleged hacks, and a (very brief) police investigation all entering the headlines throughout the week.

We’ve had two and a half hours to file through the fiscal documents and spending announcements. We now want to give you an insider’s look, before the spin on the 6pm news.

Our overall impression of this Budget is, glossy marketing aside, it is a classic welfare-spending, rail-worshipping, Michael Cullen-style Budget.

You can read Jordan's headline media statement here.

The Government is holding up its big spend on mental health services as evidence of a fresh new “wellbeing” approach, but the figures tell a different story. The Government is spending almost three times as much on rail ($2.14 billion / $1,175 per household) – including KiwiRail, regional rail and the Auckland City Rail Link – than on direct mental health spending ($823 million / $452 per household).

The “wellbeing” focus appears to be nothing more than a communications strategy from the Government. Budget 2019 is indistinguishable from any other normal Labour Budget, with more money for welfare recipients and no room for tax relief.

The big-ticket items

KiwiRail: An additional $1 billion ($549 per household) is being allocated for KiwiRail including $375 million for new wagons and locomotives and $331 million for new track and infrastructure. As a State-Owned Enterprise, KiwiRail is expected to be profitable – but it has never paid a cent in dividends to the Government. An additional billion dollars will not change reality – KiwiRail is a fundamentally unprofitable enterprise. Click here for my comments to the media.

Mental health: An extra $823 million ($452 per household) is being spent on mental health and addiction services. It has high aspirations, but few plans for judging value for money. As Scotland learned in the 1990s, a lot of extra money can go into mental health with little or no effect on measured outcomes. Click here for Louis' comments to the media.

Venture Capital Fund: Wealthy tech entrepreneurs rejoice! The Government is allocating $300 million ($164 per household) for a venture capital fund to help tech entrepreneurs who can’t convince investors or the bank to fund their projects. Worst of all, the project is being routed through the New Zealand Super Fund, which should be focused on delivering returns for future retirees. We say socialism for tech nerds is still socialism. Click here for my comments to the media.

Maori, Pasifika initiatives: Much of the spending on education, health, and even business is targeted on the basis of race, including an $80 million ($44 per household) injection for the Whanau Ora programme. We say targeting spending on race will lead to unfair and inefficient outcomes. Click here for Louis' comments to the media.

Welfare changes: Following the release of the Welfare Expert Advisory Group’s report, the Government has chosen to spend $535 million ($293 per household) to boost up the welfare system. Benefit sanctions for breaking the rules are being withdrawn and beneficiary payments will be adjusted upwards annually in line with wages, rather than inflation. Click here for my comments to the media.

As for the economy…

The economy itself is expected to track slightly weaker in coming years (forecast GDP growth is set to average 2.6 percent in the next five years) but is not projected to enter recession or enter serious headwinds. Business investment growth, however, is expected to fall off a cliff in 2019 (0.7 percent growth) compared to 2018 (6.8 percent growth), which could be a reflection of weak business confidence in response to plans for a capital gains tax and international trade sentiment. The Government also still expects to meet its self-imposed Budget Responsibility Rules, including reducing net debt to below 20 percent of GDP by 2022.

Click here to read my media statement on the economic/fiscal update.

There’s a lot of information we’re still absorbing, so watch out for our next newsletter which will pick up some of the smaller-ticket items.

Until then,

Joe Ascroft Economist New Zealand Taxpayers' Union

The Taxpayers’ Union can reveal that, despite declaring a ‘climate emergency’ on Thursday, Environment Canterbury is the largest spender on combined international and domestic flights of all regional councils, bar Auckland.
 
On one hand, Ecan is making grand gestures indicating ratepayers will have to fork out more for climate change action. But it turns out ratepayers are already paying council staff to create emissions on their way to France, San Francisco, and Germany. One junket in Canada was, ironically, meant to address climate change. Ratepayers will be wishing council staff had just stayed at home.
 
The $21,000 international spend was in addition to a further $241,000 spent on domestic flights. The total $262,000 spent on flights in 2017/18 means Ecan is the seventh-largest spender on flights out of 77 councils across New Zealand, and is (Auckland aside) the highest-spending regional council.*
 
Out of all 77 councils Ecan was also the fourth most frequent flyer with 1,360 domestic flights flown in the 2017/18 financial year.
 
Ecan’s primary functions are local ones, so it’s unclear why any international travel is necessary. Even domestic flights should be limited – in the time of Skype, the cost of constant trips to Wellington is eye-watering and unjustified.
 
The Ministry for the Environment’s advice to those concerned about climate change is very clear: fly less. Ecan should either take this advice, or announce a ‘hypocrisy emergency’ to match its climate one.
 
Background documents:
LGOIMA response
International travel breakdown
 
*Travel expenditure figures for all councils have been obtained by the Union and are set to be released shortly, pending the release of final figures from Auckland Council.

The Mayor of Nelson’s genuine concern for climate change is being questioned, with the Taxpayers’ Union revealing the Mayor flew to Copenhagen for a luxury trip primarily to view a yet-to-be-open climate change museum.

An official information response shows that Mayor Rachel Reese spent four nights at a luxury hotel in Copenhagen costing the ratepayer nearly $2,000, and all ratepayers were left with is the bill and emissions.

Incredibly, there wasn’t even a climate conference, or even a climate conference centre. The Mayor flew to the Norway to look at a 'Climatorium', which is still being built, and a road which absorbs water to heat a kindergarten.

The Climatorium building is not set to be opened until 2020. According to reports, the Mayor hoped to pitch the idea to the European Union of Nelson having their own southern hemisphere Climatorium. In previous public comments, the Mayor has suggest that Shane Jones’ Provincial Growth Fund could foot the bill.

This has all the hallmarks of a classic ‘climate junket’. The Mayor should be sticking to her knitting – Nelson’s roads and rubbish – not swanning off to fight climate change with air-miles.

The New Zealand Taxpayers’ Union can reveal that Waikato Regional Council last year sent out 177 electronic Christmas cards to political insiders – at cost of $9,341*, or $53 per card.
 
The Union was tipped off about the cards by one of the recipients, who was concerned about the extravagance of the ridiculous ‘gesture’. According to the Council, the cards were sent to 177 “leaders of central and local government organisations, Waikato’s ministers [sic] of parliament, and non-government organisations with which Waikato Regional Council works closely.”
 
Investing this much time and money into a feel-good Christmas message for political insiders suggests the Regional Council is either overfunded, or has its priorities completely out of whack.
 
Fellow bureaucrats might have been impressed by the bells and whistles, but ratepayers will be wondering why the money wasn’t instead used for core services like roads and rubbish.
 
This was an unjustifiable indulgence, and the Regional Council needs to confirm it was a one-off. A more ratepayer-friendly option would have been to visit The Warehouse, which is selling 10-packs of Christmas cards for 47 cents.
 
*Including GST and postage.

The New Zealand Taxpayers’ Union has revealed that the Whangarei Arts Museum Trust spent $91,168 – including business class flights to Dubai – for 11 people to visit Vienna and see a Hundertwasser painting.

In total, Whangarei Art Museum Trust – a Council CCO – spent $71,308 flying 11 people return to Vienna via Auckland, and $19,860 was spent on accommodation.

Whangarei Council's purpose for the trip was to ‘gain an insight of what is involved in the realisation of a Hundertwasser creation and construction, and to strengthen relationships with our partners abroad.’ If this was a simple fact-finding mission why were 11 people required and why did they travel business class? Better to call it what it is, a junket.

Councils should be focused on core services – like roads, water, and rubbish – not international art trips for 11 people. Whangarei ratepayers deserve better.

Below is the full official information response from Whangarei District Council.

---

Dear Tabitha

I refer to your official information request of 17 August [reference COP002396] seeking information on flights and international trips.

Your request was referred to Council’s Finance Department for consideration. The responses below are based on data provided by our CCOS, our preferred travel supplier, and a high-level analysis of our general ledger accounts for travel expenses.

Domestic travel
1) the total spend on all domestic flights by your Council in the 2017/2018 financial year.
2) the total number of domestic flights flown in the same period.

International travel
3) the total spend on all international flights in the 2017/2018 financial year;

4) a list of each international itinerary flown in the same period, including the:

5) costs for each international itinerary, please also provide details of all associated:

6) For each international itinerary, please tell us if a domestic partner also travelled with the official.

a)i-iv: No
b): 3 partners also travelled but covered their own costs. These costs are not included in the above.

I hope this information is of some assistance. If you believe we have not responded appropriately to your request, you have the right by way of complaint, under section 27(3) of the Act, to apply to the Ombudsman to seek an investigation and review of the decision.

Yours sincerely,
[Redacted]

Wow!

Louis and I have just returned to the office from the Beehive, where we watched as Jacinda Ardern announced she has completely and totally ruled out a capital gains tax under her leadership.

This wasn't easy for the Prime Minister. She literally told the media she wanted Michael Cullen's capital gains tax. But you wouldn't let her have it. 

All up, more than 5,000 New Zealanders used our tool at www.AxeThisTax.nz to bombard Jacinda Ardern and Winston Peters with messages telling them to scrap this unfair, complex, and costly tax. In addition, our efforts last year ensured that the vast majority of submissions to the Tax Working Group resisted Michael Cullen's efforts. Today's announcement showed that it worked.

The Deputy Prime Minister, Winston Peters, has just told media that the final decision was only taken in the last 'few hours'. That means our campaigning, even in the last few days, made all the difference.

This is why we founded the Taxpayers' Union

Wins like today are why David Farrar and I set up the Taxpayers' Union back in 2013. The 'Axe this Tax' campaign could not have happened without the tens of thousands of people who have donated and supported our campaign efforts over those years.

To our fourty thousand members and supporters, thank you for making it possible.

Two thirds of the forecast revenue from the Tax Working Group’s proposed capital gains tax is the created by the proposal’s failure to adjust for inflation, reveals the Taxpayers’ Union in its new report, Inflating the Cost of Tax: Why failing to adjust capital gains tax for inflation is unfair.

Jordan Williams, Executive Director of the Taxpayers' Union, said:

“Michael Cullen defends his proposal on the basis of ‘fairness’, but it is not fair to tax New Zealanders for inflation that they have no control over. If the Government fails to fix this aspect of the tax, it will be guilty of a cynical revenue grab.”

“This tax will hit New Zealanders at far higher rates than advertised, it would thieve from those who are not necessarily getting any richer, and it would reward politicians who fail to control inflation with extra revenue.”

Joe Ascroft, Economist at the Taxpayers' Union who authored the report, said:

“The compounding effect of inflation creates large ‘paper gains’ on assets in the long term. Under the Working Group’s proposal, these gains would be unfairly taxed, even though they don’t represent any real increase in value.”

“This will result in some asset holders paying real tax rates far higher than the advertised 30 or 33 percent. In fact, in some cases the tax on capital gains will be well over 50 percent.”

Key findings*:

• Over two thirds of the tax’s forecast revenue can be attributed to the effect of taxing paper gains (based on the Working Group’s own assumptions about expected capital gains).

• A typical $500,000 rental property could face a real capital gains tax rate of 55.7 percent when sold after 20 years.

• A typical $450,000 bach could face a real capital gains tax rate of 76.5 percent when sold after 30 years.

• A typical $800,000 family home / lifestyle block could face a tax rate of 30.35% when sold after 10 years.

• A typical $500,000 bach that experiences zero real capital gain could still produce a $64,000 tax bill when sold after 25 years.

* based on an inflation rate of two percent.

The Taxpayers’ Union is campaigning to stop the capital gains tax at AxeThisTax.nz. Inflation adjustment was one of the Five Rules for a Fair Capital Gains Tax published in February.

The New Zealand Taxpayers’ Union today formally launches a major campaign to fight the unfair capital gains tax, proposed by Dr Michael Cullen’s Tax Working Group.

The Union is encouraging New Zealanders to go to axethistax.nz and use the email tool to tell Jacinda Ardern and Winston Peters how the tax will hit their family.

Taxpayers’ Union Executive Director Jordan Williams says “The capital gains tax proposed by Dr Cullen and the Tax Working Group would be the least fair and most punitive in the world, and would apply to small businesses, farms, shares, and property. We are calling on the Government to Axe this Tax by rejecting the Working Group’s recommendations outright.”

“Our role in this campaign is to make it easier for taxpayers to navigate the Wellington bureaucracy to ensure politicians hear from those who will be personally affected by the tax. That’s why as a first step of the campaign we’re providing taxpayers with a tool to tell Jacinda Ardern and Winston Peters to reject the capital gains tax.”

“This is also a public education campaign to increase awareness of the scope of the proposed tax. With the support of our thousands of donors, we have full page newspaper adverts (see below) running across the country and a major digital campaign launching today.”

“While Dr Cullen is trying to convince the public that this is a tax on the wealthy, most New Zealanders will be hit by the tax at some point in their life. If you own your own home but have flatmates, live on a lifestyle block, have a small business, have a rental property for retirement, or have a KiwiSaver account, you will be targeted under Dr Cullen’s proposals.”

More information on the Taxpayers’ Union’s campaign to Axe this Tax can be found at the campaign website www.axethistax.nz.

The Taxpayers’ Union has listed the top 19 details Kiwis will be looking out for on Thursday in the Tax Working Group’s capital gains tax proposal.
 
In our recent report, Five Rules for a Fair Capital Gains Tax, we outlined criteria to assess whether a capital gains tax is ‘fair’. Capital gains taxes can range from moderate to extreme, or simple to convoluted, depending on the detail of the proposal.

On Thursday we will look to see how the proposals stacks up against these criteria, and check off many other details that we encourage commentators and concerned New Zealanders to look out for.

Details to look out for include:

• Rollover relief:
  • will the capital gains tax apply on death or just on sale of an asset;
  • will the tax apply if capital is simply being recycled within the same asset class (selling a smaller farm to purchase a larger farm, for example)?
• The rate:
  • will there will be a discounted or lower rate, like in Canada, Australia, the United Kingdom, or the United States?
• Revenue neutrality:
  • will the revenue be offset with tax cuts;
  • if so, who will receive them;
  • will revenue neutrality be maintained in the medium-to-long term as CGT revenue grows?
• Family home exemption:
  • will there be exemption exclusions for large properties (will lifestyle blocks be subject to the tax?);
  • will there be a ‘maximum value’ for the family home;
  • how much tax will be payable if there is an exemption exclusion?
• ‘Valuation Day’:
  • will asset owners be required to value their property and businesses;
  • if so, will it be at their expense, or will the general taxpayer be required to pay;
  • if the general taxpayer is required to pay, what will be the estimated cost of ‘V-Day’;
  • how much time will taxpayers have to obtain asset valuations;
  • if valuations are not obtained, will other ‘default valuations’ be used?
• Exemptions:
  • are there any sectoral exemptions (e.g. racing, fisheries);
  • will Maori authorities pay capital gains tax, if so, at what rate;
  • how are vehicles, boats, antiques etc. treated?
• Trusts:
  • at what rate are trusts taxed;
  • will they be taxed on accrued or realised gains?

Information released to the New Zealand Taxpayers’ Union reveals that just 12 per cent of a $40,000 fashion collection owned by the Central Otago District Council has ever been on display, with the exhibited items only being displayed 14 per cent of the time (269 days) since the collection was initially purchased in 2013.

The collection of the late Eden Hore features 276 garments including lavender sequinned hotpants and a gold bikini bottom decorated with shells.

Only 35 items of the collection have been on display, some of which were only exhibited for a day or two.  

Central Otago District Council should be focused on providing cost-effective core services to boost public confidence – quality roading, water, and waste services. Instead, the Council spent $40,000 on a fashion collection it has only ever partially displayed for a short period of time.

Provided the Council’s $92,750 valuation of the collection is correct, the best course of action is to sell the collection or lease it out to private art galleries. Even if you do believe the Council should be getting into the high fashion business, there can’t possibly be value for ratepayers when the collection is locked away for most of the year.

Documents:

Original LGOIMA response

Report to Council recommending the purchase of the collection

Council's resolution to the purchase

PowerPoint presentation on the Eden Hore collection

Insurance valuation of the collection

Report to Council explaining the background to and results from the feasibility study

Feasibility study on the long term care, management and display of the Eden Hore fashion collection

Eden Hore collection catalogue 

This month’s Waitangi festivities were marked with a string of Government funding announcements, totaling hundreds of millions for development projects intended to make life better for Māori.

Some of these projects will achieve their goals. Others will just line the pockets of the politically-connected. But in every instance, these grand Waitangi gifts and the accompanying media coverage serve a hidden purpose: they distract from existing government policies that actively harm Māori and make such handouts necessary in the first place.

The most appalling case is that of tobacco tax. Adjusted for income, New Zealand has the highest tobacco tax rate in the developed world, causing significant financial damage to smokers – who are predominantly poor, and disproportionately Māori. (At last count, the Māori smoking rate was 33.5% compared to 14.9% for the general adult population.)

Assuming Māori smokers consume tobacco at the same rate as the average smoker, we can calculate that tobacco tax last year took about $519 million from the budgets of Māori smokers and their families.

If that’s too much to comprehend, consider it this way: the Government has been taking more from Māori in tobacco tax than it gives in treaty settlements and targeted social spending.

The average amount spent on Treaty Settlements is $89.6 million per year, and Budget 2018 allowed for $316 million in Māori Development spending. In total, that’s still about $120 million less than Māori pay in tobacco excise.

Even this month’s boost to Māori development spending will be undermined, as tobacco tax revenue is forecast to grow even larger in the coming years. In short, politicians give to Māori with one hand, but take even more with other.

Whatever the intended effects of the tax, the practical result for Māori smokers too addicted to quit is horrid: smaller household budgets, less food on the table, and more miserable lives.

The policy does, of course, convenience the government: by quietly turning Māori smokers into cash cows, both National and Labour have been able to puff up their budgets and loudly announce vote-winning initiatives like those unveiled at Waitangi.

Public health advocates correctly argue that the best way to curb the financial hit from tobacco tax is to help people quit smoking. If the Ministers at Waitangi wanted to mitigate the harms of tobacco tax, they would de-regulate the supply of alternative nicotine products like vapes, heat-not-burn tobacco, and snus.

A new Taxpayers’ Union report examines the increasing body of evidence that some of these products have reduced risks compared to tobacco. Giving nicotine addicts safer ways to meet their habit could be far more effective than trying to get people to quit nicotine altogether.

Unfortunately, the Smoke-free Environments Act makes advertising the reduced risks of these alternative products effectively illegal.

Further, reduced-risk tobacco products face the same rate of excise as cigarettes. A better approach would be to weight excise on tobacco products according to their risk: if (for example) heated tobacco could be extensively proven to cause less harm than cigarettes, it should face less tax.

This would encourage people to switch from smokes to better options, reducing negative health effects and the improving the financial status of struggling families – especially Māori.

Sadly, in Wellington the ‘easy option’ is to simply continue heavy-handed tobacco excise hikes. The Government gets to pat itself on the back for punishing filthy smokers, while plotting the next big Waitangi spend-up.

Jordan Williams is Executive Director of the New Zealand Taxpayers’ Union. The Union’s latest report, Ka Tukuna Atu, Ka Tukuna Mai, is available at www.taxpayers.org.nz/ka_tukuna_atu.

With tobacco excise slamming the country’s most vulnerable communities, the Government needs to urgently deregulate reduced-harm products, says the New Zealand Taxpayers’ Union upon the release of its new report, Ka Tukuna Atu, Ka Tukuna Mai.

Key findings:

1) The Government annually takes $120 million more from Māori via tobacco excise than it gives in Treaty Settlements and Māori Development funding.

2) When calculated as a proportion of income, New Zealand charges smokers the most punitive tobacco tax rate in the developed world.

3) There is increasing evidence to suggest that smokeless tobacco products like snus and heat-not-burn are far less harmful than cigarettes, and encourage people to quit smoking. Excise tax rates on these products should be weighted to reflect risks.

Taxpayers’ Union Executive Director Jordan Williams says, “Revenue from tobacco excise tax alone outstrips the combined value of Treaty Settlements and Māori Development funding by $120 million a year. This is the inevitable result of charging the highest rate of tobacco excise in the world, when adjusted for income. In short, the Government gives with one hand and takes far more with the other, undermining decades of effort to improve outcomes for Māori.”

“Reaching the Smokefree 2025 target doesn’t require never-ending taxes on the poorest. If the Government made it easier for smokeless products like vapes to be marketed, current smokers may be more likely to shift over, improving health outcomes and reducing the burden of tobacco excise on themselves and their families.”

“Additionally, our paper focuses on an alternative approach to tobacco excise: excise on tobacco products should be weighted according to health risks, if reduced health risks can be proven in peer-review. As alternative tobacco products become more popular, there is a growing body of evidence showing reduced health risks for heated-tobacco, snus, and e-cigarettes. Using price signals to encourage smokers to adopt a product with reduced health risks could make an enormous improvement to long-run health outcomes – in addition to limiting the burden of excise.”

The report can be read here.

Earlier this week, Oxfam released its latest findings on global wealth inequality, with widespread media coverage (such as the pictured front-page story in the Dominion Post).

The group’s analysis of inequality in New Zealand was glib and unhelpful.

Citing Credit Suisse’s Global Wealth Databook 2018, Oxfam claims that inequality is worsening – two wealthy New Zealanders were better off over the last year by over $1 billion, while the bottom 50 percent of New Zealanders were worse off by $1.3 billion.

On the surface that sounds deeply concerning, but it misses the substance of Credit Suisse’s report, which shows the Gini coefficient – a more comprehensive and internationally-recognised measure of wealth inequality – reduced in the last year from 72.3 to 70.8, indicating wealth inequality actually fell, despite Oxfam’s alarmist claims to the contrary.

Unfortunately, there are more fundamental problems with the analysis, beyond Oxfam’s use of ‘alternative facts’.

If you have just completed university and have a large student loan, Oxfam treats your wealth position as worse than an impoverished worker in the developing world, who despite having very few or no assets, may also have no debt or liabilities. Hence the impoverished worker has zero net wealth, while university graduates in New Zealand and the rest of developed world have ‘negative’ net wealth.

This leads to absurd conclusions in Oxfam’s analysis.

Introducing a student loan scheme in a developing country – opening up access to tertiary education – would show up as a worsening of social capital in Oxfam’s eyes. While the programme would improve the net wealth positions of many families in the long run, young people would temporarily take on debt while they receive an education and seek employment.

Wealth inequality is also only considered domestically, rather than internationally. Inequality  between developed countries and developing countries is collapsing, largely due to the expansion of free markets and free trade.

For example, while Oxfam found in 2017 that inequality was worsening in Vietnam, the percentage of the population living below the poverty line fell from 17.2 percent to 9.8 percent between 2012 and 2016. In the decade between 2007 and 2017, average monthly income grew from 2349.7 VND to 6357.4 VND – close to a tripling in take-home pay.

In other words, while there are more wealthy Vietnamese today than there were ten years ago, the gap in the standard of living between those who live in New Zealand and Australia, and those who live in Vietnam, China, and many other countries quickly ascending from deprivation, is falling.

The developing world understands why their lives are improving as well, even if Oxfam doesn’t.

Evidence from Pew Research’s 2015 Global Attitudes survey suggests 89 percent of Vietnamese believe the Trans-Pacific Partnership free trade agreement is good for their country, with only 2 percent believing the opposite. Sadly, Oxfam organised a petition against the Trans-Pacific Partnership in the same year – bowing to populism, instead of acknowledging the genuine transformative effects of free trade and economic growth on the lives of the most internationally vulnerable.

A final question: how can Oxfam continue to credibly claim tax-free charitable status, when so much of their work is strictly political?

Campaigning for wealth taxes, and other left-wing policies to ‘solve’ wealth inequality is not and should not be treated as charitable – particularly when the Oxfam’s research skews the facts to suit this agenda.

If the likes of the Sensible Sentencing Trust and Family First (or, for that matter, the Taxpayers’ Union) miss out on the tax benefits of charitable status, then Oxfam should too.

Joe Ascroft is an economist at the New Zealand Taxpayers’ Union.

While taxpayers wait for the release of the Tax Working Group’s Final Report, the New Zealand Taxpayers’ Union has released a new report which provides a framework – Five Rules – for assessing a possible capital gains tax, expected to be proposed by Working Group.

The exact detail of the capital gains tax will be crucial for determining whether the tax is fair or not, and whether the Taxpayers’ Union will accept the reform – or fight it with everything we’ve got.

To be fair, a new capital gains tax must abide by the following:

1. No Valuation Day: Any capital gains tax regime should exclude a valuation day approach in favour of grandfathering assets into the system upon sale, as was the case in Australia when it introduced a capital gains tax.
2. Indexation for Inflation: Any capital gains tax regime must discount for inflation, so taxpayers are taxed only on their real capital gains, rather than nominal gains.
3. Revenue Neutrality: Given the Government's surpluses, any revenue from a capital gains tax must be used to fund tax cuts in other areas so that the total tax burden does not increase overall.
4. Roll-Over Relief: Tax should be paid only on sale – not death. Further, there should be roll-over relief when capital raised from a sale is then immediately invested in the same asset class.
5. Discounted Rate: Any capital gains tax should apply at a discounted rate, instead of at the full personal income tax rate, to avoid New Zealand having one of the highest capital gains tax rates in the world.

If the Government puts forward a reasonable proposal, focused on fairness and steady reform, the Taxpayers’ Union is ready accept a tax shift. In contrast, if the Working Group process was just an excuse for aggressive tax hikes, we’ll fight it to the end.

Even if the Working Group's proposals fail the five common sense tests, taxpayers will still have opportunities to make their voice heard, either to the Government now, or during Parliament's Select Committee process. We will be working to make sure the new tax legislation follows our Five Rules for a Fair Capital Gains Tax.

The New Zealand Taxpayers’ Union has launched a petition calling on Toyota New Zealand to pay back the $391,000 grant secretly given by Palmerston North City Council, for which the Council and Toyota refuse to explain.
 
This kind of corporate welfare is wasteful and unnecessary. With profits of 22 billion USD, Toyota should not be getting free handouts from Palmerston North ratepayers.
 
The Council and Toyota refuse to explain why or how this decision was made. That says it all. If the grant was above board, why was it kept secret?
 
We encourage Palmerston North ratepayers, Toyota customers, and concerned New Zealanders to sign the petition.

--> Click here to sign the petition. <--
 
Toyota needs to apologise and explain that its opportunistic grab of public funds was just a blip in an otherwise solid record of serving New Zealanders. The first step is to pay the money back.

The New Zealand Taxpayers’ Union can reveal that Minister for Local Government Nanaia Mahuta has not met with a ratepayer association since her appointment in 2017. Not even one.
 
Given the challenge every ratepayer in the country is feeling about costs being out of control at most town halls, many will be shocked to learn the Minister hasn’t bothered to speak to a single resident or ratepayer groups. Not even one.
 
Just who is she serving?  The fat cat Mayors and well paid bureaucrats, or those who fund the whole thing? The Minister’s diary suggest the former.
 
We were first tipped off on this as the Minister’s office would not even respond to correspondence sent from our sister group, the Auckland Ratepayers’ Alliance.  The Alliance is New Zealand’s largest ratepayer group – some 20,000 subscribed members.  It speaks volumes that this Minister can’t be bothered to meet.  She can’t possibly speak for ratepayers, in fact it seems she couldn’t care less.

The relevant Official Information Act response can be viewed here:

While taxpayers are being told to stump up for fuel taxes, off-set their carbon emissions, and watch on as oil and gas jobs face the axe in Taranaki, Ministry for the Environment officials are enjoying luxurious trips abroad, exposes the New Zealand Taxpayers’ Union.

The Union can reveal that since July 2017, the Ministry for the Environment spent $769,955 on international flights, at an average cost per person per trip of $6,637.

The Ministry for the Environment has a section on its website where it explains to New Zealanders what they can do to help combat climate change, including flying less, working remotely, and using video-conferencing. The Ministry claims that flying less is ‘one of the most effective climate change actions you can take’.

But clearly Environment officials are not practicing what they preach. Despite the age of Skype and video conferencing, Environment Ministry officials are opting for first class flights on the taxpayer. Do as I say and not as I do.

The environmental hypocrisy isn’t the only issue. Why did it cost $14,112 to fly a single Ministry Director to Thailand? Was business class not sufficient?

Sending policy analysts on first class trips to international conferences is an insane use of money for a Ministry who tells Kiwis not to fly.

The Ministry also instructs taxpayers to pay to offset their carbon emissions when travelling, but when we asked the Ministry whether the costs of flights included carbon off-set charges, they said no.

A list of transactions for International Flights by Ministry for the Environment Officials between 1 July 2017 and 10 December 2018 can be viewed here.

The Taxpayers' Union is exposing that the Palmerston North City Council has given an economic grant to Toyota – one of the world’s largest car manufactures - for a local warehouse expansion, costing local ratepayers $391,000.

It’s great to see a business investing in Palmerston North, but they should do so out of their own pocket, not using ratepayers’ hard-earned money.

Toyota is the world’s second largest car manufacturer with posted profits of more than 22 billion US dollars.  Why on earth does the Council think it a good use of local ratepayer money to fund corporate welfare to this giant?

The corporate gift sets a dangerous precedent. Other large companies will eye up Palmerston North City Council for their own subsidies and special favours. In American and Canadian cities we see multi-million-dollar taxpayer-funded corporate welfare campaigns.  Ratepayers will be poorer if we see that here.

If the Council wants to create jobs in Palmerston North, it should look to cut rates and run a more efficient operation. Charging local ratepayers more just to send corporate welfare gifts to multinationals, is economic sabotage. Even if it does create a couple of jobs, it robs poor Peter, to pay rich Paul and is immoral.

This story came about due to a confidential 'tip-off' from one of our supporters. The subsequent official information request is below.

Early next year, the Tax Working Group will deliver its final report to Cabinet. That report will contain a series of recommendations for reform of our tax system, including any details on a proposed capital gains tax. Once Cabinet receives the report, it will have to decide which recommendations to implement and campaign on heading into the 2020 election.

One important detail for the Working Group (and Cabinet) to consider is how to initially value assets for the purpose of taxing any capital gains. Since the capital gains tax is not intended to apply retrospectively, any asset potentially subject to the tax will require an official value as of 31 March 2021 – valuation day or ‘V-day’, the day before the tax is expected to be implemented.

Valuing those assets is an enormous – and expensive – task.

Every single rental property, commercial property, and business will need to be valued. There simply may not be enough qualified local valuers to assess the hundreds of thousands of properties pulled into the tax system overnight.

While valuation is simple for publicly listed companies (the implied value is derived from the share price) valuing private companies is more difficult.

Some businesses – think real estate agencies, restaurants, and tech start-ups – are notoriously difficult to value. Much of their value is derived from the particular mix of skills of their employees.

For example, a restaurant owned by Gordon Ramsey might be worth far less in the hands of a bad chef. But how accurately can a valuer make this distinction?

This ambiguity creates real problems: if the business is over-valued on V-day then the Government receives less tax revenue than it should, but if it’s under-valued then the owner is forced to pay more tax than they should when the restaurant is sold. 

Using objective financial data like revenue or profit can also be complicated. While Xero has never run a profit or delivered a dividend to its shareholders, according to the stock market the company is worth $5 billion. How can we accurately value a company like Rocket Lab, which neither runs profits nor is publicly listed? 

Valuation is an art, not a science – and it can’t be rushed.

Like art, valuation will be expensive.

OliverShaw – a specialist tax advisory firm – conservatively estimates the cost of V-Day to taxpayers as $1.3 billion, although they claim the cost could run to $2-3 billion. Total tax revenue in the first year is only expected to equal $270 million.

Putting the cost aside, even completing valuation will be straining. Attempting to value hundreds of thousands of properties and businesses after the detail of the capital gains tax has been finalised, but before it kicks in, would be a logistical nightmare.

A better approach would be for the Government to ‘grandfather’ the valuation process, meaning capital gains tax reference prices are determined by the first sale of the asset after the tax is introduced. This would mean that only assets that have already been sold at least once after 1 April 2021 would be subject to the tax.

No V-day would be required and asset owners could be confident that capital gains tax would only be applied based on the price they paid, not the subjective valuation of an over-worked, over-stressed valuer.

The New Zealand Taxpayers’ Union can reveal that in the last year the Government has paid $356,466.61 to the consultancy firm of Peter Nunns – the partner of Associate Transport Julie Anne-Genter – without a single open tender process.

The firm in question is MRCagney – for which Mr Nunns is principal economist.

A significant proportion of the 19 engagements – namely around light rail – falls directly within the Associate Transport Minister’s own portfolio allocations.

Under the previous Government, MR Cagney was paid an average of $50,346.66 per year, compared to $356,466.61 under the current Government.

This marked increase in spending on a particular consultancy since Ms Genter became the Minister raises obvious questions. If she had a sense of accountability to taxpayers, the Minister would have recognised the name of her spouse’s firm, identified the clear conflict of interest, and demanded that at least one of the 19 tender processes were opened to other firms. From what we have been provided to date, there is no evidence of this happening.

Even if the Minister has stepped aside from the decision-making, how can we have confidence that taxpayers are getting value for money, and that the firm is the most qualified if no-one is bothering with a competitive process?

One thing is clear: Julie-Anne Genter’s Government has been very good to MRCagney. The previous Government engaged MRCagney just six times in four years, compared to the current Government’s 19 engagements inside of 12 months.

The Union obtained this information under the Official Information Act, having been tipped off to the spending by a concerned public servant. The information can be viewed below.

When Sir Michael Cullen’s Super Fund was established, its explicit purpose was to help ensure that superannuation would remain fiscally sustainable long into the future while the population ages.

It’s an expensive scheme. The Government has devoted $15.45 billion to the Fund since inception, approximately $8,935 per household in higher taxes or government debt.

Wisely the quid-pro-quo for taxing New Zealanders much more to fund the Super Fund was that the Fund must be operated completely independently from the political whims of Government. The Fund was justified to the public on the basis that it would make superannuation affordable for future generations: allowing political interference in investment decisions would inherently reduce the Fund’s return and undermine the central purpose of investment performance.

Independence has served the Super Fund – and taxpayers – well. Since inception, the Super Fund has delivered an average return of 10.37 percent per annum, while the fund’s benchmark portfolio has only delivered 8.88 percent per annum on average: equivalent to a $7.6 billion premium in returns. While some economists (including our own Jim Rose) have argued that the Fund’s return merely reflects the high risk investments it chooses, the point is that it is independently managed and performs well.

Except now, the Government wants to kill the Golden Goose.

Last month the Minister of Economic Development David Parker said he wants to seize on hundreds of millions of dollars of the Super Fund to establish an ‘angel investment fund’.

The purpose of an angel fund is to invest in early stage ‘start-up’ companies. ‘Angels’ evaluate these start-ups and determine the likelihood of their future success, and the size of any returns if they are successful. If the start-ups appear to be a good investment opportunity, the fund will buy a stake in the company to deliver funding required for growth.

A well-known example of this investment strategy is Facebook, which received US$500,000 of investment from now New Zealand citizen Peter Thiel in 2004.

Angel investment strategies can be extremely profitable, but they are also enormously risky. For every Facebook there are thousands of scrap-heap start ups that never become profitable. The most adept analysts in the world seek to sort the wheat from the chaff. Most can’t.  

Establishing an angel fund is incredibly risky, especially for an agency like the Super Fund investing public money. It does not have the experience or knowledge in the tech start-up world to take full advantage of any available opportunities.

If the Fund is also directed to disproportionately focus on New Zealand investments, delivering good returns will be even more difficult.

Mr Thiel told us last year that the reason he has not invested in New Zealand start ups to the extent that he had hoped is that there are no promising investment opportunities. 

More importantly: is the Government best placed to direct the Super Fund’s investments?

The Super Fund is doing a good job at finding investment opportunities and delivering reasonable returns to taxpayers. If adopting an angel investment approach made good economic sense, why does the Government need to direct them to do so? The Fund has more than enough capital to start such a fund on their steam, without Ministerial directives.

If David Parker could do a better job with the Super Fund than its current managers, he should apply for a job there, rather than externally interfere.

Funding the next Facebook or Netflix might be politically appealing for an ambitious Minister of Economic Development, but taxpayers deserve better than to have the Government gamble away their retirement savings.  

The budget blowout for Kelvin Davis’ Māori-Crown Relations engagement meetings shows the danger of taxpayer-funded ‘hui’ and koha payments.
 
Calling a meeting a ‘hui’ shouldn’t be an excuse for lavish catering and bureaucratic extravagance. Besides, the fact Kelvin Davis had to hold 33 meetings to figure out what his new job involves suggests the Māori-Crown Relations portfolio probably isn’t needed in the first place.
 
Especially concerning is that a significant proportion of the blowout comes from ‘koha’ payments. The Government should never be paying anyone ‘koha’. These payments, at best, obscure real costs and skirt tax requirements. At worst, they’re taxpayer-funded bribery of special interest groups.

The Taxpayers' Union's new report The Bitter Truth: Why don't sugar taxes work?  focuses on the regressive economic effects of sugar taxes and responds to the central claim from public health lobbyists that sugar taxes will improve health outcomes. 

Whatever the good intentions the evidence shows that unfortunately sugar taxes haven’t actually worked to curb obesity where they have been tried. They fail to deliver meaningful health outcomes, but consumers still get hurt by the tax – especially low-income households who are disproportionately punished. Promoters of these taxes claim that the small health benefits are progressive, but the evidence for this is at best mixed.

There is also no evidence for the existence of a market failure that would justify intervention. Just because you might find someone else’s behaviour distasteful does not mean the market has failed. Many people simply enjoy drinking sugar-sweetened beverages and are fully aware of any health consequences.

The health lobbyists that campaign for sugar taxes have good intentions but they need to pay attention to the evidence. Good public policy requires a sound evidence-based approach and we hope this report goes some way to promote that.

Summary

The Taxpayers’ Union can reveal that Horizons Regional Council Chairman Bruce Gordon cost ratepayers $97,000 with the most expensive vehicle for a local government elected representative – a swanky BMW X4.

The Union asked every council in the country for expenses associated with their vehicles. The full spreadsheet of expenses is available here.

A week ago, we identified the most expensive mayoral vehicle in the country, that of Invercargill Mayor, Tim Shadbolt. But we have now looked at vehicles for chairs of regional councils, and discovered that Horizons Regional Council Chairman Bruce Gordon manages to make Mayor Shadbolt look frugal.

Bruce Gordon is someone most people, even in Manawatu, probably haven’t heard of. It is a disgraceful sense of entitlement that he sees fit to have the most expensive vehicle of any elected local official in New Zealand.

Maybe, when the Council purchased the $97,000 BMW X4, they thought this kind of luxury was the norm. It’s not – the cost of Mr Gordon’s vehicle sticks out like a sore thumb, making other council chairs and even the most extravagant mayors look frugal.

Mr Gordon risks giving ratepayers in Manawatu-Wanganui the impression that their money is taken for private luxuries instead of essential services.

Invercargill Mayor Tim Shadbolt drives the most expensive ratepayer-funded mayoral vehicle in the country, the New Zealand Taxpayers Union can reveal. 

The New Zealand Taxpayers’ Union has asked every council in the country for expenses associated with their mayoral vehicles. The full spreadsheet of expenses is available here.

Invercargill District Council topped the chart for mayoral vehicles, having spent $72,323 on a Chrysler 300C for Mayor Tim Shadbolt in November 2015. This is despite the Council’s budget for mayoral vehicle spending being $55,000.

The reasons the Council provided for overspending were:  

- The Chrysler 300C "best suited the Mayor’s needs".
- The Chrysler 300C has "better road handling".
- The considerable mileage undertaken in the Southland region.
- Intention to retain the vehicle for a longer period than usual, until after the 2019 Local Council elections.

Invercargill ratepayers might be surprised to know their humble town has the country’s most extravagant mayoral vehicle.

The excuses for using ratepayer money on such a flash vehicle don't add up. Why does Mayor Shadbolt need to fork out $72,000 for 'better road handling'? Roads in New Zealand don't get much straighter than Invercargill’s.

Mayor Shadbolt’s previous vehicle was bought in 2012, a Chrysler 300C purchased for $58,087. This was sold in November 2015 for $20,000, meaning his previous car only had a three-year lifetime, and lost two-thirds its value.

This raises concerning questions on the expected lifetime of a mayoral vehicle. Invercargill City Council implies a car lifetime of four years is a longer period than normal, which would surprise many ratepayers.

The car is admittedly very stylish. It’s up to Invercargill ratepayers to decide whether gleaming chrome is worth the price tag.

Today at Parliament the New Zealand Taxpayers’ Union presented the inaugural Jonesie Waste Awards, recognising the best of the worst in government waste revealed in the last 12 months.

The full details of the 2018 Jonesies are available as a report, which was launched at the awards ceremony (see below).

The Jonesies celebrate the best of the worst of government waste, greed and graft, foolishness and flagrancy, at the local and central government levels.

The sheer scale of troughing is not the only criteria for a Jonesie nomination – some smaller extravagances have earned nominations thanks to their absolute absurdity or how they encapsulate a corrosive culture of frivolous waste.

While we’ve hosted this ceremony with our tongues firmly in cheek, there is a serious point. These examples of waste make a lie of the claim that governments deserve more and more of your taxpayer money.

This is envisaged as the first event of an annual tradition. We suggest that in future, any politician or bureaucrat pondering ways to fritter away taxpayer money ought to consider whether they might end up with a Jonesie on their desk.

The awards were inspired by the Canadian ‘Teddies’, which have been hosted at the Federal Parliament in Ottawa for 19 years.

Local Government Nominees:

• Hastings District Council spent $116,371 on catering in 2017 – more than $50,000 of which was for elected members.
• Auckland Council spent $91,742 on a Hunua Ranges goat cull in 2016/17 that killed zero goats.
• Christchurch City Council spent $1.25 million on a seven-metre touch screen for their new library, information that it refused to release even after intervention from the Ombudsman.
• Auckland Council spent $260,000 on a 2.4-metrewide mirror, hung between buildings in the centre city – only to have it crack open a week after its unveiling.
• Auckland Transport spent $4 million on a Grey Lynn cycleway, but now must spend $23-35 million fixing it, despite minimal use.

Winner: Auckland Council’s vegan-approved goat hunt.

Central Government Nominees:

• Callaghan Innovation spent $1,141,230 on ‘entertainment’ and gifts in the four years to 2017 – including boozy dinners, drag queens, and even pedometers for staff.
• The New Zealand Film Commission paid American producers of the children’s TV show “Power Rangers” $1.6 million to include references to New Zealand in its script, such as a plot involving a pavlova.
• Inland Revenue paid $40,000 to The Spinoff to publish a series of articles on “Tax Heroes”, promoting the tax system and tax compliance to the point of stating “Tax is love”.
• The Provincial Growth Fund saw Gisborne’s ‘Chardonnay Express’, a locomotive wine tour, receive a share of $60,000 given to three tourism businesses.
• The Ministry of Social Development spent $150,000 developing a video game to teach people how to run a business.

Winner: The Film Commission’s ‘Power Rangers pavlova’.

2018 Lifetime Achievement Award Winner:

• Hon Shane Jones, Minister for Regional Economic Development, Infrastructure, and Forestry, receives this award in recognition of the scale of pork-barrelling achieved via his $3 billion Provincial Growth Fund – of which so far only 10 per cent has been allocated.

A new report from the New Zealand Taxpayers’ Union shows the success of benefit sanctions, explains why efforts to make life on a benefit easier simply encourage a culture of welfare dependency and fraud, and exposes that more than one third of unemployment and single parent beneficiaries admit to failing on their obligation to seek employment.

The release of the report, Benefit Sanctions, coincides with a Green Party campaign to remove sanctions for beneficiaries who don’t comply with associated obligations. The report also works as a submission to the Government’s working group tasked with providing recommendations to overhaul the welfare system.

Beneficiary advocates have good intentions, but their prescriptions – removing requirements to seek work and removing sanctions – are a social and moral failure. The Green Party’s policy to make life on a benefit will simply encourage a culture of welfare dependency and fraud.

Rates of welfare fraud are many times higher than most New Zealanders would expect or find acceptable under the current system. The report canvasses the evidence that easing up on sanctions and obligations for beneficiaries would dramatically increase fraud and dependency. That means driving up the cost of the welfare system for taxpayers and leaving less room in the Budget for other forms of social spending.

If the Government wants to reduce child poverty, it should encourage the unemployed and single parents back into work and off welfare.

Our report advocates a help-but-hassle approach that nudges beneficiaries back into work, leaving more to spare for those in genuine need.

If the Government took this approach, it could afford to be more generous, within existing budgets. The difference is that the money would be more targeted to those who most need it.

Benefit Sanctions is available at www.taxpayers.org.nz/benefit_sanctions and was written by Taxpayers’ Union research fellow Jim Rose.

Benefit Sanctions: Key Findings

• The Green Party wants to remove sanctions on beneficiaries despite extensive evidence from data matching by MBIE of benefit fraud under the current system.
  • More than one third of unemployment and single parent beneficiaries admit to failing on their obligation to seek employment;
  • ten percent of single parent beneficiaries acknowledge living as man and wife; and
  • ten percent of unemployment beneficiaries work full-time.
• Ministers, the Welfare Expert Advisory Group, and even the Ministry of Social Development are unaware of the extent of this fraud because MBIE failed to publish the 2012 report containing this data. The report was begrudgingly released three years later under the Official Information Act after an appeal to the Ombudsman.
  
  
• The Government’s plan to remove sanctions for refusing to name the father will encourage many more single mothers on the benefit to not identify the father and make under-the-table arrangements.
  
  • Nearly 20 percent of single parent beneficiaries currently refuse to name the father and face sanctions.
  • About $186 million is currently deducted from benefits because the father is named and successfully chased for support.
    
    
• Benefits conditional on seeking work are highly effective in moving parents into jobs that bring their children out of poverty with the support of Working for Families. A credible sanction for not looking for work increases job finding rates by 25 percent or more.
  
  
• For the sake of taxpayers, any reforms must guard against abuse – especially in an ageing society where already-stretched budgets will only get tighter over time. No social safety net can successfully increase benefits and loosen eligibility if it fails to run a tight ship against abuse.
  
  
• Marriage booms in Sweden, Canada and the US after sole parent benefit and widows pension reforms suggest a major fiscal risk from adopting Green Party-style relationship definition, which requires marriage, or two years living together.
  
  
• The Greens’ fiscally-neutral costing of their policy is untenable: if the overseas experience is any guide, the number of sole parent beneficiaries will likely double under the Greens’ proposals, costing $1.1 billion.

Below is the statement we provided to the NZ Herald in the lead up to publication of this article.

The Taxpayers’ Union is a heavy user of the Official Information Act, comparable to media organisations such as the New Zealand Herald.

The vast majority of public sector organisations respond to Taxpayers’ Union information requests quickly and transparently. However on occasion government bodies stonewall us – treating information requests from our staff and volunteers differently than requests from other organisations, or members of the public.

Callaghan Innovation is one of the worst.  We had an insider approach us who disclosed that information requests from the Taxpayers’ Union were being deliberately sidelined as our previous investigations had led to embarrassing media coverage for the agency wasting public money.

Therefore, on rare occasions, our research staff have been forced to use personal email accounts, or have even encouraged our people to use pseudonyms, to ensure the public can have full and prompt access to information. This is one way to make it harder for officials and politicians to discriminate or play silly games with official information. The fact anyone would find it necessary to do this should disgrace these public entities.

The fact the media covered the information our requests revealed from Callaghan Innovation speaks for itself in terms of the public interest.

So, while we are not currently using the method, we do not rule it out, and if it takes this to get at the truth, we would expect the same from a good journalist.

Finally, we note that it appears many of the information requests made using the NZ Herald-sponsored website ‘fyi.org.nz’ appear to use pseudonyms – indeed, the anonymity of the system appears to be one of its key selling points.

Christchurch City Council spent $350,208 on entertainment, gifts, and catering in 2017 – including $51,572 on milk, reveals the New Zealand Taxpayers’ Union.

This makes Christchurch City the council with the highest level of ‘indulgence spending’ in New Zealand (aside from Auckland Council, who say they are unable to provide equivalent figures).

The bulk of these expenses ($336,130) came from catering, with the largest source of such expenses being the Antarctic Office, which spent $54,348, followed by the all-of-council spend on milk, at $51,572, followed by catering for citizenship ceremonies, at $36,840.

Fifty grand spent on milk alone is an astounding figure, that reflects just how bloated Christchurch’s army of council bureaucrats has become. Either that, or the Mayor is taking milk baths.

Catering expenses are largely non-essential, and should be near first in line for budget cuts when ratepayers are getting squeezed. The fact that the Antarctic Office, totally tangential to core council business, managed to spend $54,000 on wining and dining should warrant an audit from councillors.

Canterbury ratepayers are also under the pump from the Regional Council, which spend $287,087 on entertainment, gifts, and catering, including $155,253 at one catering business, Pulp Kitchen Catering.

Ecan’s indulgence spending was higher than any other regional council in the country. For comparison, Wellington Regional Council’s total equivalent spend was $37,450.

Below are spending figures for all Canterbury territories, ranked from highest total to lowest.

Christchurch City Council
Entertainment: Included with gifts and catering
Gifts: $14,078.42
Catering: $336,130.00
Total: $350,208.42

Canterbury Regional Council (Ecan)
Entertainment: Included with gifts and catering
Gifts: $8,125.70
Catering: $278,962.19
Total: $287,087.89

Ashburton District Council
Entertainment: $20,370.67
Gifts: $4,036.88
Catering: $81,330.76
Total: $105,738.31 

Waimakariri District Council
Entertainment: Included with gifts and catering
Gifts: $7,989.23
Catering: $69,915.91
Total: $77,905.14

Timaru District Council
Entertainment: $1,065.93
Gifts: $2,936.65
Catering: $40,967.73
Total: $44,970.31

Waitaki District Council
Entertainment: $0.00
Gifts: $0.00
Catering: $25,958.41
Total: $25,958.41

Hurunui District Council
Entertainment: $0.00
Gifts: $3,664.62
Catering: $9,232.64
Total: $12,897.26

Mackenzie District Council
Entertainment: $0.00
Gifts: $779.46
Catering: $8,528.32
Total: $9,307.78

Selwyn District Council
Entertainment: $0.00
Gifts: $0.00
Catering: $9,060.00
Total: $9,060.00

Kaikoura District Council
Entertainment: $5,596.87
Gifts: $1,063.50
Catering: $1,795.02
Total: $8,455.39 

Waimate District Council
Entertainment: Included with gifts and catering
Gifts: $3,615.00
Catering: $3,729.13
Total: $7,344.13

All figures were obtained under the Local Government Official Information and Meetings Act.

Breakdowns for Christchurch City Council and Ecan are available here:

Christchurch City Council catering (including milk)
Christchurch City Council gifts
Ecan catering
Ecan gifts

On Tuesday, the Taxpayers' Union team visited the Ministry of Business, Innovation and Employment offices to see if staff are willing to take the new taxpayer-funded $500 bonus for joining the Public Service Association – a union that helps the Labour Party during election campaigns.

Sign the petition against this rort here: www.taxpayers.org.nz/psa

The Taxpayers’ Union can reveal the Ministry of Business, Innovation and Employment is using taxpayer money to bribe workers into joining the Public Service Association.
 
The following email was circulated to all MBIE staff and has been passed on to the Taxpayers’ Union. It reveals that, as a result of recent pay negotiations, MBIE will be paying a one-off $500 bonus to members of the PSA.
 


The Labour-led Government is bribing MBIE staff to join the union – meaning they’ll start paying membership dues immediately. No doubt any additional income to the PSA will be used to fund campaigns for higher taxes, more public spending, and to keep the current Government in power in 2020. It is disgraceful.

Labour Party members will be thrilled that the Government is already diverting taxpayers' money for a left-wing campaign war chest for the 2020 election, but taxpayers watching debt projections creep higher by the day will be disgusted by the brazen take-over of the country's public finances.

If the shoe was on the other foot and a National-led Government was giving subsidies for businesses to join pro-National lobby groups there would be a march to Parliament, a book by Nicky Hager, and a prime-time television exposé. Rightly so: pay-deals should not be weaponised for political purposes.

Instead, it's just another example of Union bosses claiming the moral high-ground in politics while playing by another set of rules, all at the expense of the humble taxpayer.

We have now launched a petition against this 'Union-Welfare' and handouts.  Click here to add your name.

The New Zealand Taxpayers' Union, in partnership with the Auckland Ratepayers Alliance, have today published this year's Ratepayers' Report  – online local government league tables – at www.ratepayersreport.nz. 

With these league tables, New Zealanders can easily compare their local council performance and financial position against similarly sized councils and types.

By setting out more than two thousand data points, Ratepayers' Report provides transparency, so no-one can credibly claim cherry-picking or a political agenda. The league tables set out metrics such as Council debt, assets, spending and staff costs, all on a per-ratepayer basis.

Some councils do very well in the league tables, some not so much. Every council has checked its own numbers and approved it for accuracy.

Across the country council borrowing continues to skyrocket. On average, councils have increased the share of debt for each of their ratepayers by $244 – a 5.3 percent increase in borrowing in just a year!

The data shows why Auckland Ratepayers, in particular, have cause for real concern, with Council liabilities now $19,537 per ratepayer, up more than $600 since last year. This is second only to Christchurch, and almost four times the national average of $4,876.

Every dollar spent by a Council was earned by a hard working ratepayer. Ratepayers' Report allows ratepayers to see how their money is being spent.

Notable Findings:

• Christchurch City Council has more debt on a per ratepayer basis than any other council in the country ($21,137). Auckland Council is the second most indebted authority, with debt per ratepayer of $19,537.
• The average debt per ratepayer of all councils is $4,876.
• Auckland Council pays 2,250 of its staff salaries in excess of $100,000. Auckland Council also employs more staff per ratepayer than any other unitary authority (17 staff per 1,000 ratepayers). Marlborough District Council, another unitary authority, employs 10 staff per 1,000 ratepayers.
• The highest average residential rates in New Zealand are in Western Bay of Plenty ($3,234 per year).
• The lowest average residential rates in New Zealand are in the Mackenzie District ($1,637 per year)

Editors' notes:

Data for the report was compiled by the Taxpayers' Union and was supplied to all councils for them to review prior to publication.

Ratepayers' Report facilitates straightforward comparison of average residential rates via a formula first used by Napier City Council which allows for an 'apples to apples' comparison of average residential rates and charges. Only Westland District Council was unwilling to provide the Taxpayers' Union with the necessary rates information.

The New Zealand Taxpayers’ Union has written to every local councillor in the country, challenging them to follow the Prime Minister’s lead and freeze their pay rates until local government finances are brought under control.

Last week, MPs showed courage in rejecting a pay rise to reflect pressure on teachers, nurses, and other New Zealanders struggling to make ends meet.

We say that local councillors should do the same for ratepayers, who are being told to expect rate hikes averaging 50 percent or more over the next decade.

We have written to every councillor and mayor in the country, challenging them to follow the Prime Minister’s lead. We have offered each a template they can use to instruct their Chief Executive to return any additional remuneration to the Council’s consolidated fund.

Remuneration around the Council chamber should reflect the pressures currently faced by ratepayers. This wouldn’t just save money – it would give elected members a powerful incentive to more carefully manage ratepayer money.

We look forward to publicly identifying and congratulating elected officials who take this step.

The letter to councillors can be viewed here.

The payroll instruction template can be viewed here.

Earlier this morning, Radio New Zealand's Jo Moir revealed that the racing industry is set to receive funding for all-weather tracks from the Provincial Growth Fund, along with funding for a digital centre in Dunedin and a sports hub in Northland. 

Regional Economic Development Minister Shane Jones described the projects as: "a coalition dividend", and that "the origins go back to the formation of government."

These projects are just new examples of Winston's Dowry - the cost of entering into coalition 'marriage' with New Zealand First. 

It's an open secret in Wellington that New Zealand First is a long-time friend of the racing industry, which is why it was no surprise that the Government announced subsidies for hot horses on Budget Day. Now we know that the racing industry was an important part of the coalition negotiations. 

If this Government is committed to being "the most open, most transparent Government" it should release the full terms of the coalition agreement between Labour and New Zealand First. Taxpayers deserve to know which projects and subsidies were promised prior to the formation of this Government. 

Winston's Dowry as at 23 August: $5.168 billion ($2989 per household)

The total cost so far is $5.168 billion - or $2989 for the average New Zealand household, although if officials continue to increase the expected cost of policies, this figure will grow. 

"The Dowry" to date:

• Provincial Growth Fund: $3 billion or $1735 per household, which includes funding for the racing industry revealed today. 
• Additional funding for the Ministry of Foreign Affairs and Trade: $1.144 billion or $661 per household
• Additional funding for the Ministry of Defence: $426 million or $246 per household
• Additional funding for learning support: $272.8 million or $157 per household
• Additional funding for Oranga Tamariki: $269.9 million or $156 per household 
• Adjusted 'Hot horses' tax break, the new Forestry Hub, and a rename for the Ministry of Children: $55.4 million or $32.05 per household
• Haumaha Inquiry: $150,000

It was revealed at the Acting Prime Minister's post-cabinet press conference yesterday that Tracey Martin (a New Zealand First Minister) will be in charge of an inquiry into the appointment process of Deputy Commissioner of Police, Wally Haumaha. 

Haumaha was selected as New Zealand First candidate in 2005, but did not contest the election. 

According to Thomas Coughlan of Newsroom, the inquiry does not answer 'key questions' regarding the appointment of Wally Haumaha, including whether Cabinet would have appointed him to his role if they had been aware of comments he had made regarding a 2004 investigation of police sexual offending. 

The result for taxpayers is a $150,000 inquiry with serious flaws. 

Winston's Dowry as at 24 July: $5.168 billion ($2989 per household)

The total cost so far is $5.168 billion - or $2989 for the average New Zealand household, although if officials continue to increase the expected cost of policies, this figure will grow. 

"The Dowry" to date:

• Provincial Growth Fund: $3 billion or $1735 per household
• Additional funding for the Ministry of Foreign Affairs and Trade: $1.144 billion or $661 per household
• Additional funding for the Ministry of Defence: $426 million or $246 per household
• Additional funding for learning support: $272.8 million or $157 per household
• Additional funding for Oranga Tamariki: $269.9 million or $156 per household 
• Adjusted 'Hot horses' tax break, the new Forestry Hub, and a rename for the Ministry of Children: $55.4 million or $32.05 per household
• Haumaha Inquiry: $150,000

As reported in the Hawke's Bay Today, a New Zealand Taxpayers’ Union analysis of catering costs at Hawke's Bay councils has revealed Hastings District Councillors to be guilty of ratepayer-funded gluttony. 
 
Hastings District Council spent $50,375.88 on catering for its elected members in 2017 – or about $1,000 a week.  Across all of Council, the total catering expense was a staggering $116,371.19.
 
Hawke’s Bay Regional Council also spent a significant $44,955.63 on catering across Council. At Central Hawke’s Bay District Council this figure was $34,362.36, and even the small Wairoa District Council spent $29,623.77.
 
In contrast, Napier District Council spent just $4,285.44 on catering across all of Council.
 
Taxpayers’ Union spokesman Louis Houlbrooke says, “Why is it that Hastings District Councillors need to spend more than ten times the amount on food than Napier’s entire Council? What could possibly be the explanation for this? Do Hastings’ Councillors have eyes bigger than their stomachs, are they forgetting to eat their morning Weet-bix?”
 
“A tip-off reveals a possible explanation – Instagram posts from a local caterer advertise the lavish platters prepared for the Council. It appears Councillors are eating better than the ratepayers who fund their salaries.”
 

 

 
“Ratepayers are forced to pack their own lunch to save money, while the Council’s feasts are featured on Instagram. This gluttony is a slap in the face for ratepayers who expect their money to be used on essential services. Mayor Sandra Hazlehurst ought to make a captain’s call, and scrap ratepayer-funded feasts in favour of the old-fashioned packed lunch.”
 
Catering expenses at Hawke’s Bay Councils, 2017:

• Hastings District Council: $116,371.19 (Further enquiry revealed $50,375.88 was for elected members)
• Hawke's Bay Regional Council: $44,955.63
• Central Hawke's Bay District Council: $34,362.36
• Wairoa District Council: $29,623.77
• Napier City Council: $4,285.44

All figures were obtained under the Local Government Official Information and Meetings Act.

Catering expenses for councils across the country will be released by the Taxpayers' Union in coming days.

The New Zealand Taxpayers’ Union has today released 102 Ways to Save Money in Local Government – a report that lists big and small opportunities for local councils to save money and reduce the burden on ratepayers.

The 102 suggestions, many of which were provided to the Union by mayors across the country, range from the common-sense to the novel. Taken together, they serve as a challenge to unimaginative and undisciplined councils who allow wasteful spending to accumulate and then tell ratepayers to expect rate hikes.

The Taxpayers’ Union advocates instead for a culture where fiscal prudence is not a cause for celebration, but an expectation, just as it is within private organisations and households across the country.

Some highlighted suggestions:

• Pay down council debt (#1)
• Offer prizes to staff who suggest efficiencies – but allow anonymous entries (#2)
• Scrap political advisors (#10)
• Stop sending staff to conferences (#30)
• Rent out under-utilised office space (#68)

Some more novel ideas:

• Graze cattle and sheep on council land to save on grass cutting (#6)
• Pay cafés to open bathroom facilities to the public, instead of building new toilets (#17)
• Transition to LED lighting (#33)
• Turn down the heating at council buildings (#37)
• Ditch colourful, photography-heavy annual reports (#81)

New Plymouth Mayor Neil Holdom, in a foreword to the report, says, “I support this Taxpayers’ Union initiative to highlight opportunities for councils, large and small, to identify savings or efficiencies in their operations to minimise costs to ratepayers and deliver value. While I do not advocate some of the more radical ideas which the authors of this document have included, no doubt to grab a few headlines, I celebrate those who are committed to sharing ideas and encouraging open and honest debate.”

Auckland Ratepayers' Alliance spokesperson Jo Holmes says, “Some of the initiatives included in this report run the risk of being dismissed as mere common sense. We don’t mind a dose of common sense where it saves money at the town hall - exactly what ratepayers are calling for.”

The Taxpayers’ Union would like to thank the Mayors who responded to the Union's invitation to submit ideas and examples of how their councils have saved ratepayer money.

After being faced with legal action from the Taxpayers’ Union (and potentially the Attorney General), Christchurch City Council has buckled and confirmed the amount spent on its seven-metre ‘touch wall’ – $1.245 million.

This was an eleventh-hour backdown from the Council. We literally had the affidavit signed, papers prepared, and were ten minutes away from filing in the High Court.

The fact this spending, originally requested back in January, is now exposed is a major win for transparency. It send a message to councils across the country that ratepayers expect and will demand transparency. Councils that ignore freedom of information laws will face very real legal consequences. This was to be in court in a matter of days.

The cost of this touch wall is, as we suspected all along, enormous. It says everything about the Council’s priorities that they would spend over a million dollars on a touch screen while basic infrastructure is in poor shape and rates are skyrocketing.

Like media organisations and other watchdog groups, we are heavy users of freedom of information requests, but we have never seen such stubborn secrecy over what you would expect to be a relatively minor spending item. This secrecy has now backfired – in a kind of ‘Streisand effect’, the touch wall’s cost has turned into a much bigger story. Let this be a lesson to politicians try to hide where our money is being spent.

The Ombudsman has invited the New Zealand Taxpayers’ Union to bring enforcement proceedings to the High Court over Christchurch City Council’s failure to release the spending figure for the seven metre ‘touch wall’ in its new library. He has also asked the Attorney General to consider doing the same.

Taxpayers’ Union Executive Director Jordan Williams says, “Over a month after the Ombudsman recommended releasing the spending figure, we’ve seen nothing from the Council. This is brazen, especially under a mayor who has been promising more transparency over the use of ratepayer money.”

“The Ombudsman has made an excellent and correct decision, first in recommending the release of the information, and now in approaching the Attorney General. We’ve never seen such a damning judgement against a public body.”

“We are currently seeking legal advice – bringing action against the Council ourselves is something we are considering, regardless of whether the Attorney General does the same.”

“Christchurch ratepayers have a significant interest in this kind of spending, especially as both the library and town hall projects face budget blowouts, and rates are being hiked by an average of six percent annually.”

“But this issue is bigger than Christchurch. For too long public agencies have flouted freedom of information law. If we need to take Christchurch City Council and Lianne Dalziel to Court to set a precedent that this sort of disregard for transparency has consequences, then it’s worth the effort.”

The New Zealand Taxpayers’ Union is pleased to announce that former Wellington City Councillor Rex Nicholls has joined the organisation's board of directors.
 
Rex’s background is in engineering, project management, and property investment. His mix of civic and private achievements place him perfectly as an ambassador for taxpayers.

Rex says:

“I’ve always operated on the basis that money in my pocket will be much more efficiently spent than if I run it past a Government Department first. Spending other people’s money should carry a huge duty of care – but it seldom does.”

More information about the Taxpayers’ Union team is available here: www.taxpayers.org.nz/our_team

It was revealed last week, that the tax break for racing industry bloodstock is expected to cost significantly more than previously anticipated. The tax breaks for the racing industry have faced ridicule as the only tax cut in Budget 2018.

That's not surprising: the racing industry has historically been a strong supporter of New Zealand First. The Electoral Commission recently found that Sir Patrick Hogan was in breach of the Electoral Act when he funded a full page ad in support of the party prior to the General Election last year. 

At Budget 2018, the cost of the tax break was expected to equal $4.8 million over the next four years, however IRD officials expect the tax break will cost up to $40 million - a 733% increase in the cost of the policy. That means taxpayers will be on the line for an additional $35.2 million over the next four years, which is all added onto Winston's Dowry!

Winston's Dowry as at 2 July: $5.168 billion ($2989 per household)

The total cost so far is $5.168 billion - or $2989 for the average New Zealand household, although if officials continue to increase the expected cost of policies, this figure will grow. 

"The Dowry" to date:

• Provincial Growth Fund: $3 billion or $1735 per household
• Additional funding for the Ministry of Foreign Affairs and Trade: $1.144 billion or $661 per household
• Additional funding for the Ministry of Defence: $426 million or $246 per household
• Additional funding for learning support: $272.8 million or $157 per household
• Additional funding for Oranga Tamariki: $269.9 million or $156 per household 
• Adjusted 'Hot horses' tax break, the new Forestry Hub, and a rename for the Ministry of Children: $55.4 million or $32.05 per household

As part of our campaign to Clear the Air, we have written to Minister of Commerce and Consumer Affairs Kris Faafoi to highlight the government-led misinformation that prevents smokers from switching to less harmful alternatives, and saving up to $2 billion a year in excise tax.

With Jacinda Ardern now on maternity leave, Winston Peters has finally grasped the wheel of power.

However, Mr Peters has had significant control over spending since the Government was formed late last year. Since then, Winston has negotiated for an array of projects, policies, and prizes for him and his NZ First Ministers.

This includes the Provincial Growth Fund, significant increases in spending for the Ministry of Foreign Affairs and Trade, and the Ministry of Defence, a vanity project (re)re-branding of the Ministry for Children, and a tax credit for hot horses, among other initiatives. 

Winston's Dowry as at 21 June: $5.132 billion ($2960 per household)

The total cost so far is $5.132 billion - or $2960 for the average New Zealand household, although depending on how Winston behaves from the 9^th floor, that figure could grow in coming weeks. We'll be watching closely for announcements from NZ First Ministers and the acting Prime Minister so we can update Winston's Dowry. 

"The Dowry" to date:

• Provincial Growth Fund: $3 billion or $1735 per household
• Additional funding for the Ministry of Foreign Affairs and Trade: $1.144 billion or $661 per household
• Additional funding for the Ministry of Defence: $426 million or $246 per household
• Additional funding for learning support: $272.8 million or $157 per household
• Additional funding for Oranga Tamariki: $269.9 million or $156 per household 
• 'Hot horses' tax break, the new Forestry Hub, and a rename for the Ministry of Children: $20.2 million or $11.70 per household

Over the last 25 years, public sector incomes have grown much faster than the private sector, while public sector employees also enjoy a higher rate of sick leave costing taxpayers $173 million, according to Public Sector Wage Gap: The taxpayer-funded premium for working for the government, a new report we've released today.

If you work for the Government, you earn a third more on average, with taxpayers footing the bill.

This report seriously undermines the public sector unions’ claim for 9-15 percent pay hikes for their members. It blows to bits claims the last Government did not pay bureaucrats enough.

The public sector pay gap nearly doubled since the 1990s. If anything, a wage freeze, not hikes, would be fairer.

Left wing activists and unions would have the public believe that the public sector has undergone nine years of neoliberal hell. But this shows that to be a lie.

Key findings of the report:

• The gap in weekly earnings between the public and private sectors has grown since 1990, from 18.9% of private sector earnings to 34.6% in 2017. The gap peaked in 2010 at 38.4%. The premium is even higher for hourly earnings (as public sector employees, on average, work fewer hours).
• If the Government had retained a public sector earnings premium of 20%, taxpayers would save $2.5 billion per year, or $1,445 per household in lower taxes or reduced Government debt.
• The public sector took an average of 8.6 and 8.4 days of sick leave in 2016 and 2017, compared to the private sector average of 4.7 days per year.
• If the public sector reduced its rates of sick leave to private sector levels, the taxpayers would save $173 million per year, or approximately $100 per household per year in lower taxes, or reduced Government debt.

Key recommendations:

• The Government should set a goal of returning to a 20% public sector earnings premium by placing constraints on public sector wage growth and focusing on growing productivity.
• If private sectors stagnate or decline (such as in a recession) the Government should be willing to cut public sector wages to match.

You can also download the report here.

Rt Hon Winston Peters has now released the terms of reference for his review of the racing industry, due to intervention of the New Zealand Taxpayers’ Union and the Ombudsman.

New Zealand First has a long history of promoting handouts for the racing industry, with an all-weather track and new tax breaks just the latest examples. So naturally, we were very interested when Winston Peters announced a review of the sector.

Whether this type of review leads to impartial policy advice or just proposals to prop up an industry with taxpayer money depends on the questions raised in the review’s terms of reference.

We were stunned when the Minister refused to release the terms, saying there was no document literally titled ‘terms of reference’. After we involved the Ombudsman, the Minister has now released to us the letter to the review head that outlined the scope of the review.

There seems to be nothing remarkable about the released terms of reference, which begs the question of why Mr Peters’ office was so secretive in the first place.

Mr Peters could avoid the perception of cronyism if he were more transparent about his tinkering with the racing industry.

The New Zealand Taxpayers’ Union can reveal that The Spinoff have broken the terms of their agreement with IRD to publish content in their Tax Heroes project.

The Tax Heroes project, which featured a number of articles from writers associated with The Spinoff, intended to highlight the public good of paying taxes, and in doing so promote compliance with tax obligations among the public.

Due to an official information request, the Taxpayers’ Union can reveal that The Spinoff was paid $40,000 ($46,000 including GST) by the IRD to publish the series.

The IRD is required to be politically neutral – especially so for matters currently under consideration by Sir Michael Cullen’s Tax Working Group.

The Spinoff’s contract with the IRD specifically states: The Spinoff agrees not to refer to any political party or their policies in the content.

However, an IRD-branded article by Maria Slade, published on 31 March, ignores the contractual obligation.

See also the disclosure statement at the end of the article:

The article “Why the lack of a capital gains tax is letting property companies off lightly” advocates for a Green Party policy, a capital gains tax, violating the agreement.

Further, the article’s very first sentence references Labour, which again violates the agreement.

Other overtly political articles bear the ‘Tax Heroes’ tag, but without IRD branding. IRD and The Spinoff must explain whether any of these articles were paid for with taxpayer funds.

If not, and IRD funding was only used for the articles labeled ‘partner content’, then the cost per article was approximately $6,600 – which seems extraordinary.

Taxpayer’s Union Executive Director Jordan Williams says, “The Spinoff appears to have misused $40,000 of taxpayers’ money to push a political message. It is disgraceful, and they should pay the money back."

“The IRD needs to be extremely careful about its place in our constitutional environment. Taxpayers expect our revenue collection service to be strictly apolitical. Any movement away from that norm is unacceptable.”

“Putting aside the breach of agreement, the Tax Heroes series was a terrible use of $40,000 in taxpayer money. The articles were effectively taxpayer-funded pro-tax propaganda, with the first article pushing the Orwellian message that ‘Tax is love’.”

“This kind of taxpayer-funded media rort may keep quasi-news platforms like The Spinoff afloat, but do it does no good for ordinary taxpayers. The IRD should not have been funding pay-for-play websites in the first place.”

Amazon’s decision to pull out of Australia in response to a new online shopping tax shows the peril of the New Zealand Government’s plan to introduce its own ‘Amazon tax’, says the New Zealand Taxpayers’ Union, in conjunction with its sister organisation the Australian Taxpayers’ Alliance.
 
Australian Taxpayers’ Alliance Director of Policy Satya Marar (who is currently on secondment in New Zealand) says, “The Australian Government’s online shopping tax denies shoppers and families the same consumer choice available to billions of shoppers worldwide.”
 
“If this happens in New Zealand, Kiwis will be denied access to about 500 million products, most of which are unavailable locally. So instead of creating a level playing field, it only harms consumers.”
 
“Last year, an Australian senate inquiry was told that the online shopping tax would not make Australian retailers competitive, would not raise a significant amount of revenue and that the cost of implementing the tax would force major online platforms to exit the market or cease serving Australians entirely. Now we see these consequences in action.”
 
“New Zealand faces the same risk as it introduces its own Amazon tax. The Government wouldn’t need to assist domestic retailers with taxes on overseas competitors if it addressed local pressures such as zoning laws, strict labour regulations and red tape.”

In the coming weeks, we will be launching a new project: Winston's Dowry. 

Marriage can be expensive, but normally the guests aren't given a bill at the end of the ceremony. In a political marriage, the cost of attendance can be significant. The aim of Winston's Dowry is to calculate the total cost to taxpayers from the demands of two-time coalition divorcée, Winston Peters. 

We will be updating the Dowry regularly as new vanity projects, expensive trips away, and pork-laden policies are announced or appear on our radar. If you have any examples of expensive projects or eye-watering trips abroad related to Winston Peters' presence in Government, you can send them through to our tipline. 

Dear Supporter,

Our analysts have just left the Government’s Budget lock-up having pored through the largest budget media/analysts pack we can recall and listened to an early version of Finance Minister Grant Robertson’s speech which he has just read to Parliament.

You can read our summary comments to media here.

Except for the appropriations, Budget documents are essentially political. The key announcements the Government is hanging its hat on, are listed at the bottom of this email.

Government books and the economy looking rosy

Robertson’s first budget was written in extraordinarily benign circumstances. The economy is growing at a sustainable rate of around 3%, tax revenues for the June 2018 year will exceed Budget 2017 estimates, unemployment is down to 4.5%, employment levels are very high at 73.1%, and public debt at 21.7% of GDP is low and trending downwards. 

The economy is in vastly better shape than any new Government has inherited since 1972. That year Labour leader Norman Kirk won with a thumping majority and an inexperienced team. Labour lost to National’s Rob Muldoon, with a similar majority in 1975, and no more clues as to how to manage structural problems with the economy, which led to the economic crisis of 1984 and the Lange/Douglas reforms. 

Prime Ministers Bolger, Clark and Key would have been over the moon if they could have assumed office with today's economic fundamentals.

Two big wins for taxpayers:

1. Fiscal responsibility

It is very encouraging that the Government is remaining within the pre-election ‘Budgetary Responsibility Rules’.  We think Steven Joyce's allegations that Labour had an $11.7 billion hole (which Labour vehemently denied) had also been helpful in keeping the Government restrained in the face of criticism from some on the left who say they should borrow more. 

1. Independent election policy costing office

Budget 2018 announced that “public consultation will be launched in August on establishing an independent body to better inform public debate in our democracy.”   This is something the Taxpayers’ Union has been pushing for since 2014 – for transparency and accountability of what political party policies will cost taxpayers.

For decades political parties during election campaigns have made allegations about expenditure policies of others.  That’s why we worked so hard last year with our election “Bribe-O-Meter”. 

Tax cuts for hot horses

In terms of tax relief, unless you breed horses you are out of luck. Winston Peters has announced $4.8 million in tax reductions for ‘high quality’ horses (defined in the media release as being based on bloodlines, looks, and racing potential!).

More corporate welfare (this time green)

The Greens’ major budget announcement was a “Green Investment Fund” to “transition to a net-zero-emissions economy by 2050.”  The budget sets aside $100m for this corporate welfare capital funding.

Treasury forecasts average earner paying top tax rate by 2022

Budget 2018 projections show that the average worker will be on an annual income of $72,000 by 2022. That puts them in the highest income tax threshold (33%) which still kicks in at $70,000.

This was inevitable after eight successive Budgets that have not delivered income tax relief, or indexation of tax brackets. We will be using these new projections in the next round of submissions to the Tax Working Group to push for indexation.

Growing the pie vs dividing it

Overall, Budget 2018 is far more focused on dividing the pie than growing it.  With the exception of the already announced R&D tax credits, there is nothing to stimulate business confidence, industry, investment, and wages.

In terms of the R&D tax credit scheme, our view is that the breaks are marginally better than handing out corporate welfare grants (which are bureaucratic intensive with high transaction costs) but will almost certainly lead to gaming of the tax system.

Initial reaction

In the weeks to come our team will be working through more of the detail, but in the mean time our initial comments to media are available here:

Labour Delivers Predictable Budget In Sweet Economic Times Barrie Saunders

A Billion Dollars A Year For 900 Fewer Tertiary Students. WTF? Jordan Williams

Megan Woods Breaks Word – Gives Into Callaghan Self-Interest Jordan Williams

Government Acknowledges Merits Of Full Capital Expensing – But Why Just Bloodstock? Joe Ascroft

Budget Win For The Taxpayers’ Union With Announcement Of Independent Costing Office Joe Ascroft

New Green-Tint Corporate Welfare Scheme Mistaken Joe Ascroft

Treasury Predict Average Working Paying Top Tax Rate By 2022 Joe Ascroft 

Thank you for your support in ensuring there is a strong voice for taxpayers in the corridors of power.

Barrie Saunders
Chairman
New Zealand Taxpayers' Union

Key announcements of Budget 2018

- $4.05 billion for Health, including:

- $2.2 billion in additional funding for DHBs.

- $362.7 million in free GP visits for under-14s and subsidised GP visits for community service card holders.

- $750 million in capital funding over the forecast period for hospitals and health infrastructure.

- $100 million in capital funding for deficit support will be available to DHBs in the 18/19 financial year.

- $1.934 billion for Education, including:

- $394.9 million in capital funding for new schools and classrooms.

- $370 million for 1,500 new teacher places by 2021.

- $590.2 million in additional funding for early childhood education.

- $249.3 million in additional funding for learning support programmes.

- $1.216 billion for Justice, including:

- $298.8 million to fund an additional 1,800 police officers over the next five years.

- $1 billion for R&D tax credits over five years.

- $1 billion in funding for the Provincial Growth Fund, including:

- $245 million for the One Billion Trees planting programme over ten years.

$904.9 million in additional funding for Foreign Affairs, including:

- $190.7 million in direct funding to the Ministry of Foreign Affairs and Trade to hire an additional 50 diplomats and open an embassy in Sweden.

- $714.2 million in additional foreign aid and development spending.

- $367.7 million in additional funding for the Defense and Veterans portfolios.

- $100 million for a 'Green Investment Fund' to invest in low-emissions projects and businesses.

- $181.6 million in additional funding for the Department of Conservation

This morning our team delivered our petition to end taxpayer funding for the Clinton Health Access Initiative, a subsidiary of the Clinton Foundation. All up, the petition received an impressive 6,400 signatures. 

In addition, around 1,800 people have used our website to write to the Minister of Foreign Affairs, Winston Peters, imploring him to stop the rort.

We had hoped to deliver it straight to Winston Peters’ front desk, but his staff insisted we used Parliament’s (taxpayer-funded!) mail service.

No doubt, the heavy stack of papers will have made an impression. Now we await his official response.

Budget 2018 projections show that the average worker will be in the top income tax bracket by 2022 unless urgent changes are made to tax thresholds to adjust them to wage inflation.
 
Taxpayers’ Union Economist Joe Ascroft says “This is the eighth successive Budget that has not delivered income tax relief. While most New Zealanders expect only the most well off should pay the top rate of tax, if the current trend continues, even the average taxpayer will be paying the top rate.”
 
“In fact, much of the wage growth over the last eight years has actually just been keeping up with inflation, so while many families don’t feel much better off, they are paying more in tax than ever before. Inflation will similarly push families into the top tax bracket over the next four years.”
 
Note to editors: Treasury project the average annual income will be $72,000 by 2022. The highest income tax threshold (33%) kicks in at $70,000.

Putting aside $100 million for a “Green Investment Fund” to compete with investment bankers is a mistake, says the New Zealand Taxpayers' Union. 
 
Union Economist Joe Ascroft says “James Shaw says international investors are ‘already shifting into climate-aligned investments.’ If that’s the case, then why does the Government need to set up a fund to compete with them?”
 
“If low-carbon products and investments make good economic sense, there will be plenty of investors willing to fund them, and the fund won’t be required.”
 
“Instead of fuelling economic growth, this is just another example of picking winners, and taxing already successful businesses to fund potential failures. If the Government is interested in growing the economy, it should commit to scrapping all corporate welfare – including the Green Investment Fund – and put the savings into across the board corporate tax cuts.”

The Taxpayers’ Union is celebrating that a policy it has pushed for since 2014 has been adopted by the Government.
 
Jordan Williams, the Executive Director of the Taxpayers’ Union, says:
 
“Since we launched our election ‘Bribe-O-Meter’ we have argued that New Zealand needs an independent election policy costing office.  This increases transparency, improves democracy, and helps prevent politicians and parties from getting away with pulling numbers from thin air.”
 
“Shortly after our lobbying, the Green Party picked up the idea, and today the Government formally announced public consultation on establishing an independent body to provide parties and the public non-partisan costings on their policies.”
 
“It’s not often the Taxpayers’ Union loudly endorses new spending initiatives, but here it will be difficult to find any taxpayer who will disagree with this initiative.

The Taxpayers’ Union is fuming that Minister for Research, Science and Innovation Megan Woods has broken her word and capitulated to Callaghan Innovation’s pressure to keep its precious corporate welfare grant schemes, rather than phasing them out in favour of the new R&D tax credit.

Taxpayers' Union Executive Director Jordan Williams says, “When Minister Woods announced Labour’s R&D tax credit scheme earlier in the year, she said it would replace the growth grant scheme administered by Callaghan Innovation. But buried in the Budget appropriations we see that Callaghan Innovation’s funding for corporate welfare hasn’t been cut by a cent. Not even one.”

“Megan Woods has let down taxpayers, and we will be working day and night to redouble our efforts to defeat this corporate welfare industry that picks winners and favourites, and keeps Callaghan Innovation’s feather-nesters in their taxpayer funded make-work scheme.”

The Taxpayers’ Union is welcoming the underlying principle in the only tax change announced as part of today’s Budget 2018 to promote economic growth: full capital expensing of bloodstock.
 
“Allowing full expensing of capital investments is the best tax reform no one has heard of,” says the Union’s Economist Joe Ascroft.
 
“This is the rocket Donald Trump has put under the American economy in its recent tax reform.  The economic advice is that it would massively increase business investment in capital and accelerate productivity growth.  Productivity growth is the most relevant factor in determining income growth – the measure will lead to increased wages.”
 
“The obvious question is why the Government would choose to favour just a single industry or special interest?  That’s an outrageous way to run a tax system, and isn’t fair to the hard working employees and employers in other sectors.”
 
Editor’s note: The fiscal impact of full capital expensing is largely temporal. Full expensing pulls forward any existing tax benefits into a single year, rather than increasing the total value of any tax benefits. More information can be found at paragraphs 71 to 77 in the Taxpayers’ Union submission to the Government’s Tax Working Group, available at http://taxpayers.org.nz/twg_submission.

Treasury has ripped off the political veil and exposed the Prime Minister’s flagship ‘free’ tertiary education policy with Budget showing that the numbers in tertiary education set to decline by 900 in the 2018/19 year.
 
Taxpayers’ Union Executive Director, Jordan Williams, says:
 
“The whole reason the Prime Minister pushed ahead with the billion dollar policy was apparently to increase the numbers accessing tertiary education. That was seen as more important than various other pre-election commitments which were pushed aside.”
 
“The Government wants to spend $1.2 billion a year – $694 per household – on free tertiary fees and the projected impact is 900 fewer students. Is this possibly the most wasteful policy ever?”