Lower Taxes, Less Waste,
More Accountability

Championing Value For Money From Every Tax Dollar

John Bishop overview on Budget 2017

Budget 2017 overview - a taxpayer perspective

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

John Bishop
New Zealand Taxpayers' Union


Media Release: Changes in tax thresholds sell us short

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

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

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

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

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

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

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

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

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

Media Release: Very little for business sector in Budget 2017

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

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

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

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

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

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

Budget 2017 - pre-budget analysis

Budget 2017: Guide to Possible Tax Changes

Steven Joyce has intimated that this Budget will provide tax relief to New Zealanders through an adjustment in tax thresholds. 

As we go into the Budget lock up, the Taxpayers Union’ have put together some benchmark figures as a guide to judging the size of these possible changes:

Bracket Creep

To counteract fiscal drag since 2010 (adjusting thresholds for inflation) new tax thresholds need to increase to approximately:

  • $0 - $16,000 for the 10.5% marginal tax rate (currently $14,000)
  • $16,001 - $54,000 for the 17.5% marginal tax rate (currently $48,000)
  • $54.001 - $79,000 for the 30% marginal tax rate (currently $70,000)
  • $79,000+ would be taxed at the 33% marginal tax rate (this currently kicks in at $70,000)

Fiscal Impact: $0.96 billion

A “Meaningful Tax Cut” - John Key

A meaningful tax relief package of $3 billion (the John Key size tax cuts) would require tax thresholds increase to:

  • $0-$25,000 (10.5%)
  • $25,000-$65,000 (17.5%)
  • $65,000-$100,000 (30%)
  • $100,000+ (33%)

Fiscal Impact: $3 billion 

For more information refer to ‘Option 4’ in our report, 5 Options for Tax Relief in 2017.

Response to PSA – “Ten Perspectives on Tax”

The Public Services Association (PSA) have released a new booklet, “Ten Perspectives on Tax” that intends to fight back against growing public demand for tax cuts. It did not take long – the first page of the first chapter to be precise - before I had to stop and address a crucial and defining error in logic. 

Trade unionist and writer, Morgan Godfrey, states “If there is a tax reduction there must be a corresponding reduction in spending or a corresponding increase in debt”. 

At first, this may seem like an obvious truth (at least it did to Godfrey!). In actual fact this is the sort of misconstrued logic that plagues the minds of the ideological left. Thankfully it only requires a simple example to correct.

Lets take country V (short for Venezuela – to make Godfrey and his big government friends feel comfortable). For simplicity lets say that country V has a national income of $100 and the government taxes income at 50%. Therefore the government of country V will yield $50 in government revenue, which can be spent on public goods such as health and education. For arguments sake, lets say country V manages to double its income (to $200). Without increasing the tax rate the government has managed to increase its tax revenue from $50 to $100. Hopefully my point should now be obvious. The government could cut taxes in half without reducing any spending! That is the magic of growth; it’s not a zero-sum game. 

In actual fact this is exactly what has happened in New Zealand. Tax receipts, in real terms, have grown as the economy has grown. Therefore the Government can cut taxes without reducing spending or increasing debt. 

Another way of thinking about this is by comparing countries. Singapore spends 4.9% of GDP on health (as of 2014). New Zealand spends 11% - more than double in relative terms. One would be forgiven for thinking that Singapore underspends on health. The PSA would certainly think so. But get this: Singapore actually spends slightly more per capita than New Zealand, according to the World Health Organisation. They get away with a lower relative amount (to GDP) because they are much wealthier than us. 

Do not be fooled by the propaganda of the PSA. Tax cuts are affordable. They are welcome. They are overdue. And they can happen without any loss in government services. This is not to say that trimming the government would not be of use. But rather the arguments of the PSA (and their big government friends’) stumble at the first hurdle: simple arithmetic.

Total Lifetime Tax


As Steven Joyce prepares to deliver his first budget on Thursday, the Taxpayers’ Union can reveal that the average household pays $1.48 million in tax over a lifetime - equivalent to 15 years of earnings.

In a paper published today, the Taxpayers’ Union reveals:

  • Over a lifetime, an average household (gross income of $98,818) will pay $1.48 million in taxes (at 2016 prices).
  • This is equivalent to the total income of a household over 15 years.
  • Of the $1.48 million, approximately $826,000 is paid in income tax (56% of the total tax bill), $375,000 in GST, $121,000 in council rates, and $40,000 in petrol taxes.
  • Households earning more or less than the average take even longer to pay their lifetime tax bills.
  • The average household in the bottom ten percent of income earners will pay $381,187 in direct and indirect taxes, taking 18½ years to pay.
  • An average household in the top ten percent of income earners will pay $2,772,842 in direct and indirect taxes, taking 20½ years to pay.
  • Figures are based on a standard working life of 44 years (age 21-64) and retired life of 15 years (a life expectancy of 80). 

This new analysis shows just how heavy the burden of taxation falls on each and every family across New Zealand, pushing up the cost of living.

Cutting down wasteful spending is key to reducing the average household’s lifetime tax bill.  Corporate welfare, whereby the Government ‘pick winners’ with grants, costs taxpayers $1.3 billion per year and is a good example where money could be saved.
Kiwi’s tax bills are too high – and growing because the Government has not adjusted income tax thresholds to match wage inflation.  Lower taxes don’t mean cuts to services, they mean a focus on cutting out wasteful spending.  We hope Thursday’s Budget indicates renewed fiscal discipline, rather than loosening of the purse strings now that there are surpluses.

Happy Tax Freedom Day

According to the OECD figures, this year tax freedom day is Monday 22 May, representing the 39.1% of the economy that is spent by the government.

Today, Monday 22 May, is "Tax Freedom Day" - the first day this year that New Zealanders stop working for the Government and begin working for themselves.

According to OECD’s Total Government Outlays statistics, total New Zealand government expenditure is equal to 39.1% of the New Zealand economy. That means, for the average Kiwi, when the clock ticks over to 1:43pm today they finally stop working for the Government and begin to work for ourselves.  For comparison, Australia’s Government is only 36.1% of their economy - meaning its Tax Freedom Day was on 11 May.


As modeled in our report, 5 Options for Tax Relief in 2017, because income tax thresholds have not been adjusted to match growth in average earnings, the average earner now pays $1,350 each year, or $26 each week, more in income tax since 2010. 

We think Tax Freedom Day is a day for New Zealanders to reflect upon how every dollar of the money they've earned so far this year is taken by politicians and whether all of the spending is really necessary. Are politicians as prudent with your money as they should be?

Here at the Taxpayers' Union our mission is to fight government waste and for lower taxes. If you agree that Tax Freedom Day should be earlier in the year - click here to support our campaign.

Note: Accounting firm, Staples Rodway, published earlier in the month that Tax Freedom Day was on 8 May.  Their calculations do not factor in public spending funded by borrowing and other revenue means. See our comments at: http://business.scoop.co.nz/2017/05/08/reports-of-tax-freedom-day-premature-2/ 


Op-ed: There is nothing scarier than a government in surplus

There is nothing scarier than a government in surplus

Pre-budget opinion piece published in the Waikato Times, 18 May 2017

The series of new spending initiatives over the last few weeks are looking more and more like pork barrel election year bribes and suggest that the healthy government books are going to be squandered.

The National Party’s election into Government in 2008 was partly driven by John Key positioning the National Party as the substitute for Helen Clark and Michael Cullen’s ideological opposition to tax relief.  But despite the talk, it has never walked the walk.  Here the Government is, finally, able to afford meaningful tax relief but it appears to be saying ‘we know how to spend your money better than you do’.

There are hundreds of groups that will seize the opportunity.  The squeals for more public spending on pet projects: albino snails, art subsidies, industry grants, there’s a group for every cause.  Nothing drives calls for more spending, and is as scary for taxpayers, than the Government in surplus.

Unfortunately, Bill English is responding to that political weather.  Pre-budget announcements suggest that his fiscal restraint has gone out the window.   More corporate welfare via R&D grants for hand-picked businesses – check.  Another $303 million for multinational film company subsidies – check. $27 million to do up marae – check.  No doubt the Government will throw more money onto the housing demand bonfire (driving up prices and making the problem worse) in the coming days.  Sometimes it is easier to throw money around, rather than fix a problem – especially in an election year 

Earlier in the month, Finance Minister Steven Joyce announced a new Government debt target of between 10 and 15 percent of total domestic product by 2025.  At first, that sounds reasonable, especially given that a loan drawn by the government today, is simply a higher tax burden tomorrow.

But the lower target assumes that the New Zealand Government has a debt problem.  It does not.  At 24 percent of GDP, New Zealand’s government net debt position is very healthy compared to other members of the OECD.

Last week, the International Monetary Fund warned that New Zealand’s economy is vulnerable to external shocks because of our indebtedness to the rest of the world.  But, unlike comparable economies, our debt is mostly borrowed by private households and business, not the Government.  It warned that household debt (an astronomical 168 percent of disposable income) risks destabilising the economy should a global shock lead to conditions that make it difficult for Kiwis to repay their mortgages.

That is a big reason why tax relief is so important.  Because Bill English has not adjusted income tax thresholds to match wage inflation, Kiwi workers are paying a much higher proportion of their income in tax. The effects since 2011 cost about $26 per week for the average worker.  Tax relief less than that, is no more than catch up.

Tax relief would allow all households and business to pay down their debt.  A package, appropriately targeted, would also have the effect of incentivising wealth creation, hard work, and fuelling economic aspiration and growth.

Instead of using the surplus to reduce the tax burden and allow New Zealanders to get ahead under their own steam, the Government is throwing money at favoured causes and industries the media deem as sexy. 

By 2020, Government surpluses are expected to be $8.5 billion per year.  That is so large, even ACT’s tax cut package could be implemented with billions still left over for new spending and debt repayment.

With Bill English having pumped $10.36 billion into new spending – and only $415 million allocated for tax relief in that time – if now isn’t time for meaningful tax relief it never will be.

Jordan Williams the Executive Director of the New Zealand Taxpayers’ Union.  Its report, “5 Options for Tax Relief in 2017”, is available at www.taxpayers.org.nz/5_options


Stats NZ pay for astronomical lease


WestpacHouse2.jpgStatistics New Zealand’s new lease with Wellington’s Chow Brothers for offices at 318 Lambton Quay signs up taxpayers for $794 per square metre per year — an astronomical amount for office space.
As reported by this morning's Dominion Post, documents (see link below) show that the Ministry is paying $1.857 million for 2,338sqm of space – including paying $1,279.56 per square metre per year for level 3 of the building.  Westpac Bank, a tenant renting floors in the same building, pays only $331.22 per square metre per year.

Despite the market rate for ‘A’ grade buildings being no more than $500 per square metre, this eye-watering deal went through and is the talk of the town in Wellington’s property sector.

The building owners must be over the moon – they wouldn’t believe their luck. An office lease priced at nearly $800 per square metre is astronomical.

Until today, we thought Auckland's Independentt Maori Statutory Board swanky offices in Auckland's viaduct harbour were the most expensive publicly paid offices in the country.  Looks like we were wrong - taxpayers are forking out big bucks for what is nothing special in the middle of Wellington.
The Statistics New Zealand official who signed this bizarre lease should be held to account. It makes a mockery of the Government’s previous efforts to get value for money in relation to office accommodation procurement.

The fact this deal has attracted the attention of Wellington's commercial property owners, who are laughing behind the Government’s back, shows the deal is worthy of a ‘certificate of achievement’ for wasting taxpayer money.

A schedule of tenants and amounts is available here.

Costs of Fire Service about to skyrocket

Fire Service Amalgamation Means 40% Increase In Fire Insurance Levy

Screen_Shot_2017-05-01_at_10.27.44_AM.pngNew Zealanders will have to pay an extra 40% in their insurance fire levy from July despite the key selling point of the Government’s amalgamation of fire services being ‘efficiency’ - according to a new report we've published today.

The Government's reform package will result in an immediate cost increase of $80 million for little or no increase in services, despite claims by Peter Dunne, who has driven the reform, that the amalgamations will save money.

Total fire services costs will shoot up by $80 million per year despite efficiency being the key promise by Mr Dunne of these reforms. What is worse, the Government has increased the economic burden on New Zealanders without any comparable increase in the level of service.

According to the Government's own figures, efficiency gains years down the track will not even recoup 12% of the forecast increase in costs due to the amalgamations.

Despite rhetoric by politicians that these reforms are about saving money, according to official estimates, the emperor has no clothes. The costs are forecast to skyrocket.

The Fire and Emergency New Zealand Bill is in the final stages of passing in Parliament and will centralise both urban and rural fire services under the funding of the insurance levy on 1 July 2017.

download_(3).jpegCurrently, only New Zealand First are blowing the whistle on this issue. The question is, why haven’t the other parties done their homework and held Peter Dunne to account for what appears to be an enormous own goal?  His reform, which he’s sold on the basis of ‘efficiency’ will, in fact, cost New Zealanders’ hundreds of millions over the next few years alone.

New Zealanders currently pay less than a third of the cost of Tasmania - which has a similar fire climate to New Zealand - where rural and urban fire services are centralised. Tasmanians pay $293 per person compared to only $86 in New Zealand. Despite that, the Government is adopting the Tasmanian business model.

Not only are the costs going up, but the reforms will mean insurance holders are unfairly targeted to fund the fire service. For example, foresters, who seldom insure, will now pay 38% less in protection whilst Mum and Dad households are paying 40% higher levies on their insurance.  How is that fair?

The changes do nothing to incentivise self-insurance and actually rewards those who opt out of insurance altogether.

Read (or download) the report below.

OECD Report on income tax

taxing-wages-2017-brochure-COVER.pngA report released last week by the OECD (a group of mostly rich countries), ‘Taxing Wages’, compares the effective tax rates within the OECD club. According to the report, the average earner with no children in New Zealand has the second-lowest effective tax rate in the OECD at 17.9% (behind Chile at 7%) and the lowest rate for one-earner families with 2 children (6.2%)

But after a closer look at the methodology of the report, these rankings may not be all that they seem.

The effective tax rate represents the level of tax paid for every dollar earned (minus welfare benefits). Because the benchmark rate is for an average earner in each country, this does not actually lend itself very well to cross-country comparison. For example, if you took the average New Zealand earner and put them in the Australian tax system on the same income, they would be well below the average earner and pay less tax than the report suggests. The average earner in New Zealand will still be worse-off in real terms than the average earner in Australia, despite a lower effective tax rate.

images_(2).jpegFor some reason the report does not include the ACC levy – which effectively adds another one percentage point to the effective rate. It also ignores Kiwisaver deductions because it is not ‘compulsory’. It is worth noting that Kiwisaver is an opt-out scheme. Opt-out schemes are very close to compulsory in reality as not many people actually bother to opt-out (a well-established fact in behavioural economics). This will make the New Zealand rate look misleadingly low compared to a country such as Australia where the super contribution is compulsory.

The measure does not include local government rates, as they are independent of income. Whereas countries with income-based local / provincial taxes will be included despite both cases resulting in less income in the pocket. It does not include company tax (NZ is fairly average in the OECD) or GST (where NZ is reasonably high due to having no-exemptions). Remember that the tax cuts in 2010 were paid for in large part by a hike in GST.

Lastly, it is worthwhile to point out that all members of the OECD are hardly a benchmark for economic success in recent times. Comparing ourselves with the likes of Greece and Italy is hardly aspirational…

People are still paying the tax - just in a different form  

In terms of the size (and burden) of the state, the OECD's own figures show that total government outlays (local and central) are 39.1% of the economy as a whole.  That is much larger than Australia (36.1%) - despite their multiple tiers of government - Switzerland (33.7%) and even the USA (38.0%).

To read the recent report published by the Taxpayers' Union on options for tax relief click here.

Havelock North water inquiry getting costly

The Taxpayers’ Union can reveal that the the Hastings District Council has almost spent $1 million of ratepayer money on legal and investigation fees in relation to the Havelock North drinking water inquiry.  

The official figures were obtained by the Taxpayers’ Union under the Local Government Official Information and Meetings Act. They reveal that the Hastings District Council had invoiced $739,666 in investigation costs and a further $223,745 in legal fees.

The Government today announced that the drinking water inquiry will be extended for another 9 months. 

The Council are putting ratepayers in hot water, with the $1 million spending beginning to look like the tip of the iceberg.

While it is absolutely essential for the causes of the water contamination to be identified, we are concerned that the Hastings District Council is spending so much on lawyers and communication strategies, when this should really be about science and getting to the bottom the matter.

The real winner here is the Mayor, who is standing for Parliament, and therefore benefits the most in having the Government inquiry pushed back until after the election. Unfortunately, that probably means ratepayers will be up for millions more in fees for little, or no gain.

New report: 5 Options for Tax Relief in 2017

5_Options_cover.pngThe Government’s failure to index tax brackets to inflation since 2010 now costs the average Kiwi income earner almost $500 each year according to a new report released today by the Taxpayers’ Union. The report, "5 Options for Tax Relief in 2017", models five options to deliver meaningful tax relief packages which could be part of Budget 2017 with fiscal implications of $3 billion or less.

The National Government likes to talk the talk on lower taxes, but this report shows very clearly that they are simply not walking the walk.  Because tax thresholds have not been adjusted with inflation, the average Kiwi worker is now paying $483 more per year in tax than in 2010. 

By 2020, Government surpluses expected to be $8.5 billion per year.  With Bill English having pumped $10.36 billion into new spending, and only $415 million allocated for tax relief in that time, if now isn’t time for meaningful tax relief it never will be.

Budget_allocations_infographic.pngIn addition to modeling various options for tax relief to compensate New Zealand families who are paying more, the report calls for tax thresholds indexed to inflation going forward.  That would prevent Wellington increasing the average tax rate paid by New Zealanders every year, raising extra revenue for the Government, in real terms, without the transparency of actually raising taxes.

If we instead indexed thresholds to the growth in average earnings, dating back to 2010, the average earner would save $1,350 each year, or $26 each week.

With the Government set to make a decision on Budget 2017 and its tax relief package in the coming weeks, we hope this report gives taxpayers assistance in understanding what is realistic for Budget 2017.

Living Wage policies: The best of intentions but the worst of results

Seventeen parking wardens contracted by Wellington City Council were not rehired in-house, with further job losses inevitable under the Council’s living wage policy, according to a new report we've released today authored by our Research Fellow Jim Rose.

The report's key findings are:

  • Seventeen Wellington City Council employees lost their jobs after being under the skill level required for the living wage.
  • Councils hire on merit, so candidates under the skill level commensurate with the living wage will be crowded out by higher-skilled candidates.
  • There is no consensus or scientific basis for the calculation of a living wage. Any calculations arepolitically subjective.
  • Any living wage in New Zealand will be abated by up to 40% by decreases in government transfers and increased income tax obligations.
  • Living wages shift the burden from means-tested taxpayers to ratepayers and business owners.
  • Below-living-wage employment allows for in-work training, where employees tradeoff lower wages for the opportunity to learn skills that increase their future earning potential.

Unknown-1.pngLiving Wage Aotearoa New Zealand nobly want to alleviate poverty and reduce unemployment with their activism for a living wage, but the evidence to date shows they are achieving the exact opposite. This report shows that a living wage will only make it harder for low wage earners to find work.

Contrary to intentions, living wage policies actually hurt the very people they seek to help. For the first time, we reveal that seventeen parking wardens lost their jobs at the Wellington City Council as a result of its living wage policy.

Living wage policies mean higher-skilled candidates apply for jobs previously occupied by lower-skilled candidates. Of course councils will hire on merit and shortlist the candidates who previously would never have applied for the lower, pre-living wage role. That's exactly what happened when Wellington City Council brought its parking services in-house.

Minimum wage applicants do not get a shot against better-qualified candidates attracted by the higher wages. So much for the poverty alleviation and reduced unemployment.

The economic theory is clear that living wages do more harm than good, but the job losses in Wellington is the proof in the pudding. Councils should stop implementing these living wage policies which achieve so little but cost ratepayers who can ill afford it.

Living wage policies mean ratepayers pay more for less and achieve none of the intended poverty relief.

Jim's full paper (which the above summary is based on) can be viewed here.

Yule set to cost ratepayers $100k if elected to Parliament

Taxpayers are on the hook for between $90,000 and $100,000 in by-election costs in the case of Lawrence Yule being selected as the National Party's Tuki Tuki candidate and subsequently elected in this year's general election. This figure was revealed after we asked the council for its calculation of the anticipated costs of such an election.

While no price can be put on democracy, the figure puts into perspective the promises to not make a tilt at Parliament that Mr Yule made when seeking to be re-elected last year as mayor of Hastings.  It's obvious that Mr Yule should have been upfront at the time, given the huge costs that are now likely to fall on ratepayers.

With sitting councillors likely to contest the Mayoralty, ratepayers could be hit a second time round too, in the event a second by-election is required to fill a Council seat.  It could be a double whammy.

The correspondence can be viewed here.



Lack of oversight by Greater Wellington Regional Council 'scary'

A Greater Wellington Regional Council guarantee to cover $150 million of debt in the event of default by CentrePort has raised serious concerns as the New Zealand Taxpayers’ Union reveals correspondence that shows the Council has received no documentation whatsoever about CentrePort's insurance cover, or any information about the impairment of the Port's assets.

This is a terrifying show of failure of the most basic risk management and governance. The Council has only verbal assurances from the Port about its insurance arrangements, and despite owning 76% of the Port and being the guarantor of its debt, has required no reports whatsoever about the impairment of assets due to damage resulting from the November earthquakes.

No private company director in the country would be so casual about risk. It is worse than incompetence by those who sit on the Council.

While everyone assumed, as stewards of our money and managers of our community owned assets, Regional Councillors would have more information than the public about just how badly the Port is damaged, they simply don’t.
What audit committee would allow a $150 million debt guarantee related to property developments without having in place precise disclosure and agreements about insurance?  This is a potential liability that could cripple the Regional Council, while they keep their heads in the sand.

Would you give your own money to the Clinton Foundation?

Following on from our blowing the whistle on the Government earmarking another $5.5 million of NZ Aid money to be given to the Clinton Foundation over the next few years, we’re sorry to report that the Government is refusing to veto the extra spend.

Last week it was reported that the Clinton Global Initiative would be shutting its doors. Nevertheless, Kiwi taxpayers are still on the hook to fund the separate (albeit affiliated) Clinton Health Access Initiative.  The $5.5 million is in addition to the $7.7 million already spent.

So here at the Taxpayers’ Union, we thought we’d gauge public opinion on what people in the street think about millions of their taxpayer money being used to fund the Clinton Foundation’s charities.

We asked Wellingtonians whether they’d be willing to park with their own money and donate to the Clinton Foundation.

We spent a day asking people for their views and to donate.  We couldn’t find a single person was willing to give their own money to the Clinton Foundation, or its charities.  Only about one in twenty thought it was a suitable use of taxpayer money.

It’s time to send a message to politicians like Minister McCully that our money isn’t a political play thing.

Click here to sign the petition calling on the Government to veto the extra funding for the Clinton Foundation affiliate.

Council-owned art: half a billion collecting dust

The Taxpayers’ Union can reveal that local councils across New Zealand have accrued more than half a billion dollars of artwork – at least $560 million – with 93% of the collections collecting dust or otherwise not on public display.

nobody_here_but_us_small.jpgA Taxpayers’ Union briefing paper on research looking at the public accessibility of municipal artworks is available below.
While we expected local authorities to own significant portfolios of art, such as where councils run galleries or museums, we were amazed to find that the vast majority of works publicly owned are in fact hidden from the public.

We found that many of the most expensive items are in mayoral offices or collecting dust in storage.

Much of the artwork has been donated or bequeathed to the local authorities so that the public can enjoy it.  But that's not happening.  In addition, many larger councils designate an amount to be spent each year on new artwork despite only a tiny fraction of their collections being accessible to the public.

At a time where most councils are imposing average rates increases multiple times the rate of inflation, this research suggests local officials should reconsider where their priorities lie. Is it really worth holding onto such large portfolios when most are in storage gathering dust?

Among the key findings of the research are:

  • Territorial authority councils (district, city, and unitary) own at least $568,393,020 of artwork, made up from at least 173,269 pieces;
  • The amount of artwork on public display is only 7%;
  • Auckland Council has the most valuable collection of artwork, making up almost half of the country’s collection at $276,981,903; and
  • Whakatane District Council has the least amount of works on public display, with only 0.2% of their $8.75 million collection on display for the public to enjoy

The most perplexing leaving gift ever?

As regular readers will know, the Taxpayers' Union operate a tip-line for insiders and members of the public to report government waste.  In December we received a tip off that former Wellington Mayor Celia Wade-Brown asked officials for a ratepayer-funded tattoo as her departure gift as Mayor of the City.

We found it difficult to believe that an elected official would ask for a tattoo, which we were told was to be on the former Mayor’s ankle, so (as is our practise to verify tip-offs) we made a request under freedom of information laws to the Wellington City Council.

To our astonishment last week we received confirmation from Wellington City Council that the tip was correct!  Fortunately, the Council refused to grant an unusual request by former Wellington. 

Ratepayer-funded body-art is perhaps the most unusual spending request we have ever come across.  Well done to the person in the Council who had the nous to say no!

Below is a copy of the Council’s response to the Taxpayers’ Union request for information.


*** Update ***

15370110_10154102077479562_6118097164540683699_o.jpgStuff.co.nz; the NZ Herald; and even international media have now picked up the story:




They've also found pictures of the tattoo: a Gecko.

Australian Government pulls plug on Clinton Foundation funding

lthm.gifWith news that the Clinton Foundation is laying off 22 staffers due to the discontinuation of the Clinton Global Initiative, we have revealed that the Australian Government is cutting all financial ties with the Clinton Global Health Initiative.

In 2014 Australian Foreign Minister Julie Bishop announced that the Australian Government had committed to five years of financial support for the Clinton Health Access Initiative, the sister organisation of the Clinton Foundation.  By last year however, that funding had stopped, with the Australian Government jumping ship very soon after Donald Trump’s victory in the US election. 

News.com.au reported late last year that:

AUSTRALIA has finally ceased pouring millions of dollars into accounts linked to Hillary Clinton’s charities.

Which might make you wonder: Why were we donating to them in the first place?

The federal government confirmed to news.com.au it has not renewed any of its partnerships with the scandal-plagued Clinton Foundation, effectively ending 10 years of taxpayer-funded contributions worth more than $88 million.

The Clinton Foundation has a rocky past. It was described as “a slush fund”, is still at the centre of an FBI investigation and was revealed to have spent more than $50 million on travel.

Despite that, the official website for the charity shows contributions from both AUSAID and the Commonwealth of Australia, each worth between $10 million and $25 million.

News.com.au approached the Department of Foreign Affairs and Trade for comment about how much was donated and why the Clinton Foundation was chosen as a recipient.

A DFAT spokeswoman said all funding is used “solely for agreed development projects” and Clinton charities have “a proven track record” in helping developing countries.

Australia jumping ship is part of a post-US election trend away from the former Secretary of State and presidential candidate’s fundraising ventures.

The news follows our petition launched last week calling on Foreign Affairs Minister Murray McCully to veto MFAT’s plans to give another $5.5 million of NZ Aid Money to the Clinton Health Access Initiative, an affiliate of the Clinton Foundation. The petition has attracted nearly two and half thousand signatures and can be signed at: http://www.taxpayers.org.nz/clinton_petition

NZ Aid should be going to programmes that are the most effective and efficient in achieving our aid objectives. Channelling money through entities established by international politicians is not a proven effective and efficient method of giving aid to those who most need it.

It is simply bad practice for MFAT to give Aid money to an entity so closely associated with politics and politicians. The money would be much better going straight to an organisation like the Red Cross.
The Australians have stopped - so why haven't we?

Government set to give Clinton Foundation another $5.5 million


The Taxpayers’ Union can reveal that the Government has budgeted to give another $5.5 million dollars of taxpayers’ money to the controversial Clinton Foundation, despite Mrs Clinton’s failed US Presidential bid and controversy over improper ties between the Clinton Foundation, the State Department and donations from foreign governments to the foundation while Ms Clinton was US Secretary of State.

Figures obtained by the Taxpayers’ Union under the Official Information Act show that to date Kiwi taxpayers have forked out $7.7 million to the Clinton Foundation’s “Health Access Initiative” with $2.5 million and $3 million earmarked for 2017 and 2018 respectively.

Given the lessons of the Saudi Sheep saga, we are staggered that MFAT appear to still think handing out money for diplomatic purposes is sensible.  Even worse, this money comes from the NZ Aid budget which should be going to programes which are the most effective at helping the world’s poor - not sidetracked into political objectives.


It is possible that officials have reason to believe that the Clinton Foundation’s work does provide good value for money, although given the controversy in the US that seems unlikely. The refusal to front up and explain leaves a stench of buying political access.

Given New Zealand’s faux pas in co-sponsoring the UN Security Council resolution condemning Israel on Christmas Eve, and the heavy criticism of New Zealand which has resulted, the continued support of the Clinton Foundation risks even more damage to New Zealand’s ability to wield any influence in the US.

The MFAT response to the Taxpayers’ Union information referred to above is available here.

* Update - claims of 'separate legal entity' *

After a brouhaha on twitter and blogs running MFAT's spin about the  “Health Access Initiative” being a "separate legal entity" from the Clinton Foundation, we've issued a press release clarifying the situtaiton:




The excuse justifying the millions of taxpayer dollars the Ministry of Foreign Affairs and Trade (MFAT) will pay the Clinton Health Access Initiative that it is a “separate legal entity” to the Clinton Foundation is pathetic says the Taxpayers’ Union.

Earlier today the Taxpayers’ Union released a response to an Official Information Act request to MFAT which showed that in addition to the $7.7 million already paid, the Government has budgeted another $5.5 million of NZ Aid money for the Clinton Health Access Initiative.

Executive Director of the Taxpayers’ Union, Jordan Williams, says, “This excuse from MFAT is nonsense on stilts and they know it.  The Clinton Health Access Initiative is a subsidiary of the Clinton Foundation and is responsible for appointing the board members."

“Government spin doctors can try to dance on the head of a pin to justify MFAT's actions, but the fact is the two entities are even described on their own websites as 'affiliated entities'. The Clinton Foundation controls the organisation Kiwi taxpayers are funding."

In September, the New York Times reported that the Initiative would be separated if Clinton won the US Presidential election. The relevant article is available at: https://www.nytimes.com/2016/09/15/us/politics/clinton-foundation-staff.html.

Also available is the most recent publicly available income tax return for the Clinton Health Access Initiative which discloses that the Clinton Foundation is a “Related tax-exempt organization” and appoints members of the board of the Clinton Health Access Initiative (refer to pages 73 to 75 of the document available at http://bit.ly/2jgeLOc).

* Update 2 - petition calling for McCully to veto funding *

Following feedback from a number of members and supporters who emailed or phoned our office, we have launched a petition calling on the Minister of Foreign Affairs, Murray McCully to veto MFAT giving anymore NZ Aid money to the Clinton Initiative.

You can sign the petition here.

How we are fighting the war on government waste and making the case for tax cuts in 2017

Three years fighting for taxpayers

The Taxpayers’ Union has today released its annual review, covering the last 12 months of operations.

Click here to view in full-screen mode (opens a new window)

The document concludes what has been a busy, and effective, year for the Union.  Our combined effort exposed, fought, and defeated the awful 'Taniwha Tax’ in Auckland; blew the whistle on the government’s programmes of corporate welfare; and, most importantly, held the politicians and bureaucrats who waste taxpayers money to account.

Our plan ahead 

But there is much more to do.  The Kaikoura Earthquake make our arguments for ensuring taxpayers get value for money in all areas of government spending even more important.  For example, infrastructure spending should be put to the best use possible. We cannot afford to continue to plough money into rail if the economics doesn’t make sense, and that money would be better spent on a more secure national highway network or more coastal shipping. 

It’s the role of taxpayer groups like ours to ask some of those difficult questions and, if necessary, challenge the sacred cows of New Zealand politics.

Tax cuts

Assuming the quakes cost around $3 billion, there is still plenty of room for tax cuts in next year's budget.  At minimum New Zealanders should be compensated for the hidden tax hikes that have occurred under the current Government because of fiscal drag – where inflation pushes income earners into high tax brackets (resulting in the average tax rate increases over time).  We’ll be fighting for you to make sure these measures are legislated next year - rather than just election promises liable to be traded away as part of costly post-election coalition negotiations.

We hope you are as proud of our achievements as we are, because they could not have happened without your support.

Thanks to all our members, donors and supporters who make our work possible.

If you're not already a member click here to click here to join the Taxpayers' Union, or click here to make a donation.

Trans-Tasman report calls for life-saving reforms to help smokers quit

The New Zealand Taxpayers' Union,  Australian Taxpayers’ Alliance and MyChoice Australia have jointly launched a  report calling for the governments on both sides of the Tasman to legalise, and lightly regulate new technologies to help smokers quit. 

The report, E-cigarettes: Reducing the Harm of Smoking, builds on the report we released in January examining the extent to which New Zealand politicians are using smokers as cash cows.  At the time we questioned why politicians claim higher tobacco taxes are necessary to promote better health, but to date have prevented the sale of new generation smoking alternatives such as e-cigarettes which are far less harmful and the most popular smoking cessation tool used in England.

While politicians cry crocodile tears about the harms of smoking, their refusal to allow the sale of healthier alternatives appears to be motivated by the revenue stream from the taxes on traditional cigarettes.

E-cigarettes provide a healthier alternative to traditional cigarettes and mean smokers are not forced to be the Government’s cash cows. While the New Zealand Government is well ahead of Australia in terms of moves to legalise the technology, suggestions that it should be taxed like traditional cigarettes would undermine the very benefits the new technologies offer.
E-cigarettes offer the only real pathway to the Government’s aspiration of a Smokefree New Zealand by 2025. If governments tax next-generation smoking technologies like they do traditional cigarettes, they will be effectively choosing the tax revenue over saving lives.
Millions of smokers worldwide have quit smoking because of this technology, and it is now the most popular way for smokers to quit in countries such as the United Kingdom. Public health experts worldwide have praised it as being 'at least 95 percent' safer than smoking. It is time for our regulations to catch up to the times and encourage this life-saving technology.

The report is also available to download as PDF here.

Absolutely, positively wasteful: Wellington City Council shindig costs $51K (with video)

The Taxpayers’ Union can reveal that a Wellington City Council party, just weeks prior to the local body elections, to celebrate the signing of its new “sister city” agreement with Canberra, cost Wellington City ratepayers more than $51,000. The total cost included $14,850 spent on fashion models, ballet dancers and “contemporary performers” with $30,079.38 on “production costs” at the Public Trust Building to turn it into a party venue.

Whilst Wellington City Council blows tens of thousands on showy parties with dancers, drag-queens and DJs, ratepayers have been struck with annual rates increases of over 5% per year. Who on earth approved a two-hour shin-dig for 131 people, where the venue alone cost $30,000?

The Council says that sister city agreements bring economic opportunities to Wellington, but the vast majority of the guest list were those from the public sector.  It seems it was more about a lavish farewell party for the Mayor, rather than anything to do with promoting Wellington to Canberra.

If the Council genuinely wanted to promote economic growth in Wellington, it would learn to tighten its belt and cut out glitzy junkets like these. It defies belief that Councilors were not aware of the staggering costs of this party before it was held. They refused to answer our questions about who precisely was responsible for this Hollywood-style party on the ratepayer.

If you weren’t invited to the Sister City party, but paid for it, check out the highlight video of the evening below. You can also real the Council's response to the Taxpayers' Union request for official information here

Time for an official child poverty measure

This morning the Taxpayers’ Union is called on political parties to come together and agree on an official measure and national target to cut childhood poverty. 

Irrespective of whether you think the Government is already spending enough on measures to relieve child poverty, we should have an agreed yardstick to hold politicians to account.

How can anyone judge whether the Government’s social, housing, and health programmes are effective when no one is measuring the results?  It’s tens of billions of taxpayers dollars every year, and we should be measuring how effective that spending is. 

It’s not about the amount of spending, it’s about the effectiveness of the spending – does it make a difference and how do we know that? 

material_02.pngIf we are to have an official measure of child poverty then it needs to meet two criteria. One is that there is multiparty agreement on it (as for example there is on the Household Labour Force Survey to measure unemployment), and secondly, it actually has to measure poverty and deprivation, and be able to track progress in reducing it. 

If the consensus of advice from officials and from other stakeholders is that the material deprivation index, as suggested by the Children’s Commissioner Judge Andrew Beecroft, is the most appropriate and effective measure then we and most others will support it.

There are of course those who try to highjack the poverty debate and want to make arguments based on measures of income inequality not poverty. That of course means that should say Peter Jackson up sticks and move to Sydney (perhaps with other rich listers), 'poverty' defined using ineqality goes down - a complete nonsens.

Becroft's preferred measure (as described in this Stuff article):

He wants to use the material deprivation index that has 17 indicators and when a child meets at least six they’re considered to be suffering severe hardship.

This is a measure of children not actually having some of the basics such as:

  • two pairs of shoes in good repair and suitable for everyday use
  • meal with meat, fish or chicken (or vegetarian equivalent) at least each 2nd day
  • home contents insurance
  • put up with feeling cold to save on heating costs
  • postponed visits to the doctor
  • in arrears on rates, electricity, water
  • borrowed money from family or friends more than once in the last 12 months to cover everyday living costs

In our view it is more important to get agreement on how to measure child poverty and progress in reducing it than it is to argue over any specific measure. Debate over the various measures risks a lack of agreement on any, and the issue is too important for that. 

We would like to suggest a multiparty group with officials and non-government representatives be appointed by Parliament to do the job. That would be a sign that MPs are serious about the issue, willing to work together and wanting a sound measurement of the problem. 

As with all public expenditure the taxpayers’ interest  is in having that money used as effectively as possible, which means it is absolutely essential to have national statistics of the size of the problem and of whether the Government’s various programmes are making a difference.

Comprehensive victory in Unitary Plan "Taniwha Tax" campaign

The Taniwha Tax is dead!

Taniwha Tax policy victory

Today with our sister group the Auckland Ratepayers' Alliance, we are celebrating a comprehensive victory in our “Taniwha Tax” campaign, with the Independent Hearings Panel recommending that Cultural Impact Assessment requirements, and the scheduled “sites of value” be deleted from the Unitary Plan.

In April last year, both groups joined Democracy Action and the Auckland Property Investors Association in launching a briefing paper on the draft plan’s Mana Whenua Cultural Impact Assessment provisions.

The Independent Hearings Panel report found (our emphasis):

"Accordingly [sites and places of value to Mana Whenua] have been withdrawn from the notified Plan. The remaining sites are those on publicly-owned land.

The Panel has recommended the deletion of those sites of value identified on publicly-owned land. This means that all of the sites of value are to be removed from the Unitary Plan. The reasons for removing those sites of value on publicly-owned land are the same as those set out above. That is, those sites have not been appropriately identified and evaluated to determine if they are indeed a site of value."

Our campaign exposed that many of the 3,600 sites deemed of cultural value didn’t even exist and the Council didn’t bother to check. Despite that the up to 18,000 affected landowners would be expected to obtain expensive reports from Mana Whenua groups before improving their properties.

The report continues:

References to cultural impact assessments as a specific method in the regional policy statement have been deleted as being unnecessary. It is the Panel's view that 'environment' is defined in the Resource Management Act 1991 to include people and communities and the cultural conditions which affect people and communities. It follows that in preparing an assessment of effects on the environment for form part of an application for resource consent, an applicant must address any potential effects of a proposed activity on Mana Whenua, including their relationship with their ancestral lands, water, sites wāhi tapu, and other taonga as well as kaitiakitanga and the principles of the Treaty of Waitangi, wherever those matters may be relevant.

The Panel confirmed everything that we suspected:

  • That no robust process of identification and verification of the sites of value existed
  • The sites were never evaluated against any criteria
  • The rules relating to sites of value were unreasonable
  • The rules had immediate effect
  • That the rules covered much larger areas than was approved

The Panel also confirmed that some iwi groups were concerned aout the robustness of and justification for including all of the sites of value.

This is a win for democracy, for protecting Auckland’s genuine cultural heritage, and for science-based planning.

We welcome the Panel’s recommendations and look forward to the Council's adoption of them.

Demagoguery Has Hijacked Labour's Once-Stellar Housing Plan

Originally published in the NBR, 15 July 2016.

house.jpgNew Zealand's soaring house prices are a symptom of a deeper problem, and one man has had the wisdom and courage to hit the nail on the head. That man is Labour MP Phil Twyford of Te Atatu, but his sound strategy has taken a backseat to knee-jerk grandstanding within his party.

In May of this year, Twyford called for the abolishment of Auckland's urban growth boundary, to free up land for construction. The boundary, he wrote, "creates an artificial scarcity of land, and drives up section costs.… [making it] up to 10 times more valuable than rural land."

The party's housing spokesman also identified "restrictive land use rules" as contributing to the misery of "Generation Rent." He correctly attacked the National Party for doing nothing in this regard, and advocated not only freeing up growth on the fringes but "allowing more density" and "intensive spatial planning" within city limits.

Beyond barriers to construction, Twyford saw faulty incentives at the local level, and promoted an innovative alternative to flip the incentives and make new developments pay their own way. That would be a form of bond financing for the necessary infrastructure, over an extended period of up to 50 years.

Such was the need for and common sense of this plan that the New Zealand Taxpayers' Union started a petition drive to show support — and it is nearing the goal of 2,500 signatures. Even former National Party leader Don Brash in effect endorsed this idea, when recently he said that Auckland's would need to fall by 40 per cent, with the lack of available land being the root problem.

Yes, the gravity of the situation is there for all to see. Out of 87 major metropolitan housing markets in the Anglosphere, Auckland is the fourth most expensive, nipping at the heels of Sydney and Vancouver, which have crises of their own. In fact, an assessment from Demographia, a US consulting firm, has found housing in six of New Zealand's eight largest cities to be "severely unaffordable." That means a median price more than five times the median household income, and Auckland's ratio of 10 makes it double even that threshold.

Perhaps the glaring pressure, though, has caused many to panic and jump to wrongheaded better-do-something responses. Case in point: Labour Party Leader Andrew Little's diabolical policy announcement last weekend.

Sweeping all earlier logic aside, Mr Little promised more bureaucracy not less, including an "affordable housing authority" with a $100 million budget. His "KiwiBuild" plan for government housing includes another $2 billion of spending, a train wreck for boondoggles and taxpayer waste.

Even worse, Little wants to outright confiscate land from rightful owners and trash respect for private property, a precious legal and moral principle. Why? So he can rezone it and hand it over to large developers — in the name of the little guy, of course.

How about just skip the expropriations and let the land be rezoned? That win-win approach, in line with Twyford's earlier push, would boost asset values for the owners and spawn new developments naturally.

Even if it did not garner headlines, Labour had a near ideal plan that zeroed in on the real problem of impeded supply. Bipartisan support also made it a winning campaign issue, backed by research from the New Zealand Initiative, New Zealand’s top policy institute. Yet Labour have given in to the short term politics and opted for a booming, grandiose plan that is more dangerous and destabilizing than anything else.

A real KiwiBuild plan would put confidence in Kiwis to build their own homes. They could do that just fine, if those in office would get out of the way.

Fergus Hodgson (@FergHodgson), originally from Ngaruawahia, is an economic consultant with the Fraser Institute in Canada, and he advises the New Zealand Taxpayers' Union. He holds degrees in economics and political science from Boston University and the University of Waikato.


Aid money wasted on countries spending it on space programmes

download_(1).jpegThe Taxpayers’ Union is questioning why NZ Aid money, meant to help the world’s poorest, is being used to support countries and governments with their own space programs. The figures (see below) show that since 2010 more than $214 million of taxpayer money has been given to countries rich enough to fund their own space ambitions.

If a foreign government has enough cash to invest in ambitious space programmes, it should not expect to be receiving cash from New Zealand taxpayer which is earmarked for helping the world’s poorest.

Key findings

Total amount of NZ Aid money (since 2010) given to countries with government space programmes: $214,111,149


  • Received $88,753,539 in NZ Aid since 2010.
  • According to the World Bank’s open budget, over the same period Indonesia was able to spend $223 million (NZD equivalent) on LAPAN, Indonesia’s aeronautics and space program.
  • Last year Australia announced that it would cut its annual Aid of $627 million to Indonesia by 40% to $379 million.


  • Received $4,038,956 in NZ Aid since 2010.
  • The Indian Space Research Organisation (ISRO) has developed multiple Lunar and Mars bound missions in that time.
  • This year alone ISRO will receive $1.2 billion (U.S) from the Indian government.


  • Launched its fifth satellite into orbit last year and announced plans to send an astronaut into space by 2030.
  • Kiwi taxpayers have funded $647,053 of Aid to Nigeria since 2010.

Like any spending of taxpayer money, aid funding should be directed to where it is most needed. These figures show MFAT aren’t ensuring that Official Development Assistance is being allocated to those most in need. We should follow Australia’s lead and be redirecting Aid money away from Indonesia and India, and towards those in the Pacific with a much greater need.

Time to examine the merits of term limits?

Could term limits for local councillors may be a way to bring fresh thinking into local government?

This morning's DominionPost covers our research to identify New Zealand’s longest-serving local-body politicians.

New Zealand's longest-serving councillor is on track to notch up half a century in public office – provided voters give him the tick once again this year.

Grey District Council deputy mayor Doug Truman, 76, was first elected to a local authority in 1968, and plans to run for another three-year term in October's local body elections.

His 48 years in office to date make him by far the country's longest-serving councillor, according to information compiled by the Taxpayers' Union.

We are quite surprised by the variations in these figures.  For example, Doug Truman, who sits on the Grey District Council, has served as an elected official for 48 years whereas in the neighbouring Westland District Council, the longest serving Councillor has served for only 7 years.

Whilst we all recognise the need for organisations to have long-standing personnel with institutional knowledge, we think these figures suggest that it is timely to look at implementing term limits at local councils.
There are obviously huge advantages, in name recognition for example, in being an incumbent at local body elections. This means it can be hard for fresh blood to get on a council, even if they are better qualified than an incumbent. We think the Local Government Minister Peseta Sam Lotu-Iiga should consider whether term limits would improve local government decision making.

If you’ve been on a council for 6 terms – 18 years –  and you haven’t yet achieved what you set out to, it seems unlikely that you will do it by staying on Council for another 18 years.

While no one would criticise Mr Truman for his 48 years of service, we can't help but note that when he was first elected to a council in 1968, man hadn't yet landed on the moon.



Name of councillor(s)

Years served

Ashburton District Council Rod Beavan 21
Auckland Council Penny Hulse 24
Bay of Plenty Regional Council John Cronin 18
Buller District Council Graeme Neylon 24
Central Hawke's Bay District Council Mark Williams 16
Central Otago District Council Tony Lepper 27
Christchurch City Council Vicki Buck 26
Clutha District Council Crs Cadogan, Anderson, Cochrane, Vollweiler 15
Dunedin City Council John Bezett 30
Far North District Council Ann Court 12
Gisborne District Council Crs Foon, Burdett, Bauld, Davidson 18
Gore District Council Cliff Bolger 18
Greater Wellington Regional Council Chris Laidlaw and Sandra Greig 18
Grey District Council Doug Truman 48
Hastings District Council  Cynthia Bowers and Lawrence Yule 21
Hauraki District Council John Tregidga 33
Hawke's Bay Regional Council Christine Helen Scott 15
Horizons Regional Council Lindsay Burnell 27
Horowhenua District Council Brendan Duffy 18
Hurunui District Council Winton Dalley, Vince Daley 12
Hutt City Council Cr Cousins 33
Invercargill City Council Neil Boniface 36
Kaikoura District Council John Diver 18
Kapiti Coast District Council Diane Ammundsen 30
Kawerau District Council Malcolm Campbell 21
Mackenzie District Council Evan Williams 12
Manawatu District Council Barbara Cameron 12
Marlborough District Council Graeme Barsanti 27
Masterton District Council Chris Peterson 21
Matamata-Piako District Council Robert McGrail 19
Napier City Council Mark Herbert 18
Nelson City Council Paul Matheson 21
New Plymouth District Council Heather Dodunski 24
Northland Regional Council Craig Brown 15
Opotiki District Council John Forbes 15
Otago Regional Council Louise Croot 27
Otorohanga District Council Deborah Pilkington 11
Palmerston North City Council Jim Jefferies 18
Porirua City Council John Burke 30
Queenstown Lakes District Council Lyal Cocks 12
Rangitikei District Council  Lynne Sheridan 15
Ruapehu District Council Graeme Cosford 30
Selwyn District Council Malcolm Lyall 24
South Taranaki District Council Ross Dunlop 30
South Waikato District Council Neil Sinclair 26
South Wairarapa District Council Vivien Napier 21
Southland District Council Brian Dillon 18
Stratford District Council Robin Vickers and Roger Hignett 24
Taranaki Regional Council David Lean 27
Tararua District Council Crs W H Keltie and D A Roberts 15
Tasman District Council Tim King, Trevor Norriss 18
Taupo District Council  Barry Hickling 12
Tauranga City Council Stuart Crosby 30
Thames-Coromandel District Council Glenn Leach 12
Timaru District Council Richard Lyon 21
Upper Hutt City Council John Gwilliam 12
Waikato District Council Rob Maguire and Graeme Tait 27
Waikato Regional Council Lois Livingston 21
Waimakariri District Council David Ayers 30
Waimate District Council Peter McIlraith 12
Waipa District Council Grahame Webber and Bruce Thomas 15
Wairoa District Council Denise Eaglesome 12
Waitaki District Council Hopkins and Garvan 9
Wellington City Council  Helene Richie 30
West Coast Regional Council  Peter Ewen 12
Westland District Council James Howard Butzbach 7
Whakatane District Council Russell Orr 12
Whanganui District Council Sue Westwood 31
Whangarei District Council Phil Halse 23

Six councils: Carterton District Council; Hamilton City Council; Rotorua District Council; Southland Regional Council; Waitomo District Council; and Western Bay of Plenty District Council, refused to provide the information.

Taxpayers’ Union Victory: DOC extinguishes wasteful staff junkets to Australia

In mid-2014, the Taxpayers’ Union blew the whistle on the Department of Conservation for spending over $100,000 to send 47 staff overseas to learn about controlled burning of bush – a fire fighting technique that is not even used in New Zealand.

We had obtained under the Official Information Act, documents which showed that the trips were really just junkets for staff to visit Australia.

We highlighted feedback from staff who had said that the group “didn’t really do much fire stuff”, and that it was an excuse to go on an overseas trip. TVNZ and the NZ Herald (among others) picked up the story, and the Department were forced to account for the ‘junket’. Our expose even received a mention in the UK.

Two years on, we have now followed this issue up with DOC – so that they know the Taxpayers’ Union is keeping a watchful eye – and we are happy to confirm that despite DOC defending the trips at the time it has discontinued these deployments. Well done DOC.

This is a perfect example of why our work to expose government waste, and ask questions of those spending taxpayer money, is important. If you know of a government department  or local council wasting money, drop us a line so one of our researchers can look into it.


Questions over covert taxpayer funding of Labour's Wellington mayoral campaign

The Taxpayers’ Union has been leaked an email from a senior Labour Party insider which appears to reveal that the Labour Party have used taxpayer money to produce a promotional video of Wellington’s controversial Deputy Mayor, and mayoral candidate, Justin Lester.

The email suggests that Labour’s Whip's Office, which is funded via the Parliamentary Service, produced a promotional video for Mr Lester and his campaign.

It appears that the Labour Party is using taxpayer funded Parliamentary resources to further the political aspirations of one of their Party’s local body candidates. That money is meant for serving parliamentary constituents, not to be used as a local body political slush fund.

We are calling on the Labour Party leader, Andrew Little, to clarify what is going on. He needs to get to the bottom of this email and ensure that no taxpayer resources have been misappropriated.

Unlike most government agencies Parliamentary Services is not covered by the Official Information Act. That means it falls on Mr Little to be taking steps to ensure his staff haven’t misappropriated resources for Mr Lester’s campaign. Failing that, the Speaker is likely to intervene.

We also understand Mr Lester’s campaign manager is Hayden Munro. Back in 2013, Mr Munro was unlawfully paid from Parliamentary Services as a Labour Party staffer while he was working on the Christchurch East by-election campaign. At the time an ‘admin error’ was blamed and the money was paid back.

This isn’t the first time the Taxpayers’ Union has had reason to question Justin Lester. Mr Lester is heavily involved in the secrecy of a Wellington Council ratepayer funded corporate welfare slush fund and, despite being a vocal supporter of the Council implementing a ‘living wage’, failed to answer questions regarding the pay of staff at his Kapai sandwich bars.


New report - Welfare Bums

Welfare Bums: Adding up the cost of corporate welfare in the 2016 budget

Corporate welfare amounts to more than $800 per New Zealand household, according to a calculation by the Taxpayers’ Union contained in a report released today. The report, entitled Welfare Bums, is authored by economist Jim Rose.

The report updates the previous Taxpayers’ Union reports, Any new kids at the trough?, which scrutinised Budget 2015, and Monopoly Money, published soon after the 2014 Budget.

The key findings in the report are:

  • Corporate welfare will cost taxpayers $1.36 billion this year, up from $1.2 billion in the 2015/16 financial year
  • The Government will spend the equivalent of $803 per household on corporate welfare, compared to $723 per household spent in 2014/15
  • Handouts to the private sector in Science and Innovation have grown to $250 million, co-funding “commercialisations” and start-ups.
  • The primary sector and communications are the other main corporate welfare growth areas, with over $375 million being handed out to private providers installing ultra-fast broadband and irrigation.
  • Taxpayers continue to throw money at KiwiRail, which since 2008, has been given $3.5 billion worth of subsidies, and has cost the taxpayer a staggering $14.4 billion in asset write-downs.
  • Solid Energy makes matters worse, being handed an investment write-off of $60 million.
Corporate welfare is where politicians try to pick winners and the taxpayers lose,” says Jordan Williams, Executive Director of the Taxpayers’ Union. “It robs middle-class taxpayers to reward the well off and politically connected while also hurting the private entrepreneurs creating jobs in industries which don't qualify for government handouts.
Steven Joyce has turned the Government science spend into the modern day equivalent of ‘Think Big’. As an example, he has shifted money that used to go to Universities and Crown research institutes to an American-owned rocket company, which has sucked $25 million of government funding, whilst competing with Silicon Valley billionaires.

Taxpayers and politicians from all sides of the political spectrum should ask whether the public gets value for money from these business handouts.

For every dollar spent on corporate welfare, there is one less dollar for education, health, or investment by the taxpayer who earned it.

Corporate welfare is defined as government expenditure used to subsidise businesses or specific industries. Hard copies of the report are available on request.

Op-Ed: Transport policy: Greens' new freight policy does not add up

Originally published by the National Business Review, Friday 27 May, 2016

The Green Party wants to double to 50% the share of freight to be transported by rail and sea by 2027. That means moving about one-quarter of total domestic freight off 90,000km of roads on to 3800km of rail and the 16 coastal shipping services. 

This combined target of 50% of freight measured by tonnes per kilometre to move by coastal ship or train is a big ask because it is for all freight, not just long distance freight or bulk commodities.

Right now, 14% of all domestic freight is moved by coastal ship when measured by tonnes per kilometre. There are a mere 16 ships travelling the coasts, including the Cook Strait ferries. 

More than half (58%) of this coastal freight is petroleum products from the single oil refinery shipped to the rest of the country. Another 26% of coastal freight is cement and fertiliser. The rest is retail and manufacturing goods. Much of that is likely to be cars on the Cook Strait ferries. 

Those ferries aside, only two coastal shipping services are more frequent than once a week – the service from Wellington to Lyttelton. Coastal shipping literally misses the boat in timeliness. 

Little wonder the Productivity Commission concluded in 2011 that road, rail and coastal shipping were pretty much separate domestic freight markets. They do not compete much at all with each other. Road freight minimises double handling and is as frequent as you are willing to pay for.

One of the few things rail freight is good at is under-cutting much cheaper coastal shipping such as between Auckland and Christchurch with a much higher frequency of service. Most rail freight is to and from industrial plants, mines and ports, often for export.

The Productivity Commission also concluded a good majority of road freight is not contestable at all by rail. The rail network has limited access, it barely exists in the South Island, cannot compete for time-sensitive freight, and is simply not in the game for short-haul freight. 

Not surprisingly, the market share of road freight is 90% plus for most types of freight that is not a bulk commodity. 

Greens transport spokeswoman Julie Anne Genter claims that “National has neglected rail and shipping.”

In fact, the government has thrown $3.4 billion in good money after bad at KiwiRail with no end in sight. Not only is KiwiRail unable to break even, the government has also given up on its turnaround plan and appears to accept that this is a black hole for taxpayers’ money.

We are on the cusp of driverless truck technology that will revolutionise the logistics and transport industries. Despite that, the Greens would have billions more poured into a 19th century technology. 

I’m just a simple country boy who grew up in the back blocks of Tasmania. Like many from the country, I am dumbfounded by the fascination many city folk have with buses, trains and, in particular, light rail.

You city slickers seem to suspend all disbelief about the practicalities of these celebrity technologies. Celebrities are famous because they are famous. Rail seems to have its one-eyed supporters just because trains were exciting parts of their childhoods. 

On those long trips up to the big smoke as children, we country folk learned to want to get there quickly and cheaply. Why shouldn’t you?

Op-Ed: Tax debate should have room for honest disagreement

Originally published by the National Business Review on Friday, 10 June 2016

Too much of tax policy is debated with pistols drawn at 10 paces. Each side accuses the other of ignorance or being steeped in moral turpitude, and preferably often both.

Far too much time is spent feuding over the incentive effects of taxes.

If you inspect closely the history of the warring sides, they all agree that incentives matter.

If you tax something, you see less of it; if you cut taxes, you will see more of it.

The difficulty is the advocates for various causes are disappointingly selective about when they admit this is so.

Incentives do matter
French economist Thomas Piketty could not be more honest about the impact of a higher top tax rate. He welcomes the strong incentive effects of high marginal tax rates.

Why? Piketty wants to use high taxes to put an end to top incomes. He wants few to earn a large income and if they do, they should face ruinously high 70-80% marginal tax rates.

This honesty of Piketty is the basis of a ceasefire. Let us all admit that taxes have incentive effects and argue whether that is good or bad or that other considerations are more important than efficiency.

Too often in debates over income tax cuts, the opponents will not give an inch on the labour supply and investment effects of lower taxes.

Incentives count, especially when they bolster your case
But when the same groups argue about poverty traps when welfare benefits are wound back or when tax rates and Working for Families abatement rates interact, they admit that work must pay. Ordinary families will work less and second earners may stop working.

Those deeply troubled about poverty traps from high effective marginal tax rates deny point blank that putting the top tax rate back up to 39% or more will harm labour supply, investment, entrepreneurship and the incentive to go on to higher education.

On taxes on sugar and tobacco, consumers are said to be fairly responsive to higher taxes. Unkind words are said about the motives of those that disagree with these taxes.

The opposition is about how taxes on sugary drinks is a waste of time unless they are prohibitively high because there is plenty of substitute sources of sugar and fattening foods.

A higher tobacco tax is much more likely to cut smoking because there is no reasonable substitute. If the government really wanted people to quit smoking, rather than raise more revenue, they would legalise the sale of the safer alternative – e-cigarettes containing nicotine.

Opponents of company tax cuts are unwilling to admit that in highly integrated global capital markets a lower company tax wins more investment. They say that more tax is paid in the home country of the foreign investor if we cut our company tax.

In the next breath, they will rage against Facebook and Google for avoiding New Zealand company taxes. This is despite their previous argument implying this tax avoidance must be futile because Facebook and Google will pay more taxes offshore if they pay less company tax in New Zealand.

European Union politicians will say in domestic elections that company taxes do not deter investment but still relentlessly bully the Irish for its 12.5% company tax rate because it was winning more investment at their expense.

What is the point of the EU and G20 push for tax harmonisation unless it is to stop competition for investment through lower company taxes?

Clashing value judgments
It is perfectly reasonable to agree on the effect of a particular tax policy but have an honest disagreement about its desirability. A higher top tax rate will not raise as much revenue as some hope but that may not matter if you want less income inequality.

Sugar taxes may not reduce obesity by much but it could be a useful first signal about healthy eating.

Others disagree because sugar taxes are ineffective and because people should be able to live their lives for better or for worse by their own lights as long as they do not harm others. People meddling in the lives of others because they know better has always ended in tears.

At least we should keep the conversation civil. Incentives matter. Taxes bite. The disagreement is over who you want the taxes to bite. By how much usually depends on how you value the competing goals of efficiency, equality and liberty.

Jim Rose is a research fellow at the Taxpayers’ Union

Taxpayers forking out $683k per year for bureaucrats to watch SKY

Central and local government agencies are spending hundreds of thousands of dollars of taxpayers' money every year on subscription TV services.

The data for the last financial year shows some agencies such as KiwiRail and Auckland Council spending close to $50,000 each on TV subscriptions. The total for the agencies surveyed equals $682,525. 

The numbers we’ve uncovered show that bureaucrats either don’t have enough work to do, or are wasting money on Sky TV for luxurious staff rooms. Either way this represents a significant waste of taxpayers’ money.

When our researchers were collecting the information, the Chief Executive of Otorohanga District Council wrote to us saying that he could not imagine local authorities spending money on a TV subscriptions. If only that were true. Our research shows that councils spent over $200,000 of ratepayers’ money on Sky TV alone.

Politicians in Wellington also seem to be to enjoy having the taxpayer pick up the tab for their Sky TV bills. Parliamentary and Ministerial Services spent over $56,000 last year to ensure MPs received the service, including Sky Sport. Why every Beehive office needs taxpayer funded sport channels is far from clear. 

The New Zealand Transport Agency has set the example. It wasted $20,000 in the 2014/15 financial year on Sky TV but cancelled all its subscriptions last year. We say other departments should follow its lead.

While for some agencies SKY TV is justified — entertaining patients in hospitals for example — we have to question why back-room office workers like NZTA, KiwiRail and the Reserve Bank are spending so much of taxpayers’ money on TV shows.

Op-Ed: Median earners forgotten in scramble for bigger government

Originally published by the National Business Review on Thursday, 26 May 2016

The one thing we knew wouldn’t be in the Budget this week was tax cuts. The Government has said not today, probably not next year but maybe at some stage before 2020.

While National has done a good job at getting the Government’s books into surplus, it has done so on the back of an increasing tax burden on New Zealanders.

National campaigned in 2008 on tax cuts. They implemented the first tranche of their programme in 2008, but ditched the next two tranches. In 2010 they did a tax switch which saw GST increase and personal rates decrease. This was designed to be overall fiscally neutral. So the last true reduction in the tax burden was in 2009.

Fiscal drag has helped the Government balance the books, as rising wages push people into higher tax brackets. This has been quite considerable.

Take a worker earning the median full-time wage. In 2010 Ms Median paid $7,132 in tax at an average rate of 15.4%. Her marginal tax rate was 17.5%. She got to keep 82.5% of any extra money she earnt (putting aside the other taxes such as GST, excise tax)

Today Ms Median pays $9,148 in tax. An extra $2,016 or $40 a week to the Government. Her average tax rate has crept up to 17.0% and her marginal tax rate is now 30%. She only keeps 70% of any extra income, rather than 82.5%.

A centre right government should be sticking up for Ms Median, and pledging to allow her to keep more of her earnings. Someone on the median wage is not rich. They should not be facing a 30% marginal tax rate on top of 15% GST.

Looking at other significant parties is even more depressing. Labour have just announced that they will campaign to increase taxes on New Zealanders in 2017, and the only thing they don’t know is by how much, and what new taxes they will impose.

NZ First promises more in spending than all the other parties combined, so they offer no hope for tax relief, unless it involves massive deficits.

The Greens attitude to tax, is to impose one on anything they disapprove of – and that is a very very long list. I once counted up all the things they wanted to ban (there were around 120), so I imagine the list of things they want to tax is equally high.

As I have a masochistic bent, I have been keeping tabs on all the spending demands made by political parties, MP, media, NGOs and others since the 2015 Budget. In just one year an extra $15 billion of extra spending (per year) has been demanded. And that is not even including Labour’s flirtation with a Universal Basic Income which could easily add $10 billion more to that.

There is a huge amount of economic research showing that low tax developed economies do much better over time than high tax developed economies.  If we allow families and businesses to keep more of their income, the country gets wealthier and more people have jobs.

However Ms Median paying an extra $2,000 a year in tax doesn’t get front page newspaper headlines which seem reserved for stories saying it is outrageous that a family has to repay the massive cost of their taxpayer funded motel accommodation after their last three state homes tested positive for Methamphetamine and they were banned for a year.

This family of ten appear to have been receiving close to $3,000 a week in assistance, or $150,000 a year. $1,200 a week in welfare payments and $1,700 a week in motel accommodation. Despite this, the complaint is that taxpayers are not generous enough and should not be expecting any of this money to be repaid.

No matter how much money the Government spends, there will be scores of politicians and lobby groups demanding even more. That is why the Taxpayers’ Union will be fighting for a commitment from the Government to reduce the tax burden on New Zealand families, rather than competing with parties of the left on how best to spend the surplus.

David Farrar co-founded the New Zealand Taxpayers’ Union. He blogs at www.kiwiblog.co.nz

Op-ed: National has a moral duty to cut taxes

Originally published by the National Business Review, Monday 23 May, 2016

Ben CravenCentre-right political parties have a moral duty to lower taxes and allow people to take home more of their own money.

The National Party’s values – limited government; individual freedom and choice; competitive enterprise and reward for achievement – underpin this commitment to lower taxes.

It’s a basic principle that right of centre parties look to uphold the world over. Even UK Prime Minister David Cameron, who would hardly be regarded on the right as a dry, is on record as saying that the simplest way to help raise living standards is to allow people to take home more of their own money.

Despite the eternal honeymoon in the polls, the John Key-led government has been cautious at best when it comes to making the case for this most basic philosophical tenet of centre-right thought. Its actions don’t match its campaign slogans.

Chasing the Brighter Future

When Mr Key announced the government would look to deliver a $3 billion tax cut package after the 2017 election, people could have been forgiven for thinking that it felt a lot like Groundhog Day.

Just two years ago National raised the hopes of households by indicating tax cuts were on the horizon.

But, like chasing the horizon, the promised Brighter Future of tax cuts and increased discretionary spending seems to be perpetually just out of reach.

Contrary to the “no new taxes” billboard, since the last election National has introduced four: the “Netflix” tax on online goods and services; bright-line capital gains tax for houses sold within two years; the “travelers’ tax” at the border; and the new telecommunications levy.

In addition, bracket creep has meant Kiwis are taxed at higher rates as their wages have adjusted with inflation.

ACT’s David Seymour says that since 2011 the Inland Revenue has taken an additional $2.1 billion through bracket creep than it would have if income taxes were indexed to inflation.

The $3 billion tagged by the government for tax cuts after 2017 are too little, too late. Rather than a being a philosophical project to shift people and business toward self-reliance, the proposed tax cuts are just electioneering.

While National markets itself as the party of hard work, self-reliance and lower taxes, its record shows they are little better than Helen Clark in an attitude of “we will spend your money better than you will.”

Welfare dependency

If the government were serious about cutting taxes, it would stop expanding corporate welfare dependency.

While Finance Minister Bill English is rightly focusing government resources on the 10,000 most vulnerable people so that they are able to stand on their own two feet, his colleague Steven Joyce is dishing out more corporate welfare every year.

Will the government’s legacy be one of alleviating welfare dependency, or expanding it from McGehan Close into Queen St?

The most recent report published by the Taxpayers’ Union on corporate welfare, Any New Kids at the Trough? found that the government was spending $1.34 billion on corporate welfare in the last budget. That’s $752 for every New Zealand household.

And it’s not as though the corporate welfare projects are even paying off. Take for instance the French-owned Gameloft that went under owing the government $2.9 million; the grants to Team New Zealand and its opposition, Oracle; or the handouts to the German-owned business software giant SAP.

But it’s not just corporate welfare. The government has failed to tackle the problems Mr Key talked about when he was the leader of the opposition.  There are still more back office bureaucrats and paper shufflers than at any time under the Helen Clark-led government.

There is plenty of room to cut taxes. National simply needs to cut spending, stop trying to pick winners with our money and cut out the nonsense about Wellington spending our money better than the people who earned it.

Ben Craven is the campaigns coordinator at the New Zealand Taxpayers’ Union


Budget 2016 - our first impressions

No tax cuts announced, no surprise there. No tax cuts flagged for the future, very disappointing. No roll back of fiscal drag, or bracket creep, for people paying more tax simply because their pay has increased with inflation — unfair and deserving more attention than the brush off the Minister of Finance gave it despite the expected surpluses forecast in a few years time.

If there is one picture which sums up the budget it’s this:

Budget 2016 

There’s more money for IRD’s new computer system ($857 million), the SME tax package already announced is reprised. There is to be legislation on international tax compliance, but on tax adjustments for companies and wage and salary earners, not a word in the official documents. Not a single word, hint, suggestion or even a tease about what might possibly come later. What’s new is the Government’s presentation conveniently lumped up into four packages:

  • $761 million for science and innovation, regional development and tertiary education.
  • $2.1 billion on public infrastructure (including such major projects as developing the harbour in Opotiki and reconstructing Waitangi wharf - $11.5 million in total).
  • $651 more for social investment (over four years) - the new public sector buzz word and including $168 million for a new model for at risk and vulnerable children.
  • $2.2 billion for health of which $1.6 billion is for DHBs many of whom can’t cope within existing budgets.

But smokers get stung again with a further 10% increase in tax each year for from 2017 to 2020. In January the Taxpayers’ Union made public the Treasury’s advice that smokersalready pay more than three times the health costs of their habit.

Penalising people for voluntarily choosing a damaging habit is morally questionable when the very people who pay are those who can least afford it. But governments always ‘need’ more money.  The Budget forecasts the tax hike to take in an extra $280 million per year by 2021. The aim is to reduce the prevalence of smoking and one might ask if this extra tax is effective in achieving that, will it raise all the extra cash estimated ($425 million over four years). It may be possible to reduce smoking rates and raise a lot of extra money at the same time.

As we’ve pointed out numerous times, if the Government was genuine about reducing smoking rates (and it not also being influenced by the extra tax dollars) why hasn’t it legalised e-cigarettes, which are estimated by Public Health England to be at least 90% less harmful and are Britain’s number one smoking cessation tool?

The strategy to get back into surplus is applauded: balanced budgets are simply a basic requirement of sound government.

Budget 2016 scratches lots of proverbial itches: homelessness, vulnerable children, home insulation, social housing, cleaning up rivers, more medicines, bowel screening, special needs children, and a raft of others.

But for ordinary people without any special needs, there’s not much, unless you count a well managed, low inflation economy, currently growing more than most comparable countries.

Answering questions in the Budget lockup Bill English was asked about whether there was room to accommodate the Prime Minister’s suggestion of a $3 Billion tax cut package. Initially Mr English replied that this was a matter for future choices and reeled off a list of competing priorities: debt reduction, other spending pressures, investment opportunities, saving for the future (contributions to the Cullen Fund are to resume in 2020).

But later he added another claimant on the emerging surpluses and I quote “ensuring middle income earners don’t find themselves on the top tax rate”. This cuts in at $70 000, and as the average wage is forecast to rise to $63,000 by 2020, bracket creep will be a reality for many.

Which might just (on an optimistic construction) mean that the door is still open for compensation for fiscal drag. As it should be. The Parliamentary Library calculated for David Seymour MP that the lack of changes to compensate for inflation since 2010 means the government had collected $2.1 billion more in taxes.

The Taxpayers’ Union believes that all of this should be returned to taxpayers and that indexation of tax brackets should be introduced to prevent taxpayers being dependent on the political generosity of governments.

Click "read more" for our initial comments to media are listed below. 

John Bishop
New Zealand Taxpayers' Union

Tax Freedom Day 2016

This year Budget Day falls on "Tax Freedom Day" - the first day that New Zealanders stop working for the Government and begin working for themselves.

According to OECD figures general government total outlays now equal 40.0% of the New Zealand economy. That means, for the average Kiwi, when the clock ticks over to 11:12am Thursday we finally stop working for the Government and begin to work for ourselves.


Despite the election of a National-led Government in 2008, the burden of government is still higher now than it was under Helen Clark. During the period of the last Labour Government the size of government never rose above 40% of the economy.

New Zealand’s 2016 Tax Freedom Day is 15 days later than Australia, and three days later than Canada.

We think Tax Freedom Day is a day for New Zealanders to reflect upon how every dollar of the money they've earn so far this year is taken by politicians and whether all of the spending is really necessary. Are politicians as prudent with your money as they should be?

Thanks to income tax thresholds not adjusting for inflation the average Kiwi household now pays more than $1,000 more in taxes than they did in 2010. While John Key campaigns on a platform of lower taxes, the numbers don't match the rhetoric.

Here at the Taxpayers' Union our mission is to fight government waste and for lower taxes. If you agree that Tax Freedom Day should be earlier in the year - click here to support our campaign.

Tax Freedom Day

Op-Ed: Panama Papers don’t reveal what the opposition claimed – at least so far

Originally published by the National Business Review, Monday Monday May 9, 2016

Today was meant to be the day we learned what the Prime Minister was hiding in relation to the release of stolen client files from Mossack Fonseca, a law firm, which have been labelled the “Panama Papers.”  

Here at the Taxpayers’ Union we were geared for our staff to go through the files and prepare talking points to condemn the New Zealanders who the papers would apparently uncover as using shady international vehicles to dodge tax obligations.

But as we woke to the news reports this morning, it soon became clear that the drip-fed stories last week of an exposé were overcooked.  You know there’s not much of a story when Radio NZ, one of the media outlets with early access to the papers, led its 7am news bulletin with the number of documents their journalists had "sifted though" – not the apparent revelations they detail.

So far, there is no evidence that a single cent of revenue that would legitimately accrue to Inland Revenue in New Zealand has been lost.  Instead, the papers show New Zealand is one of the jurisdictions of choice for many legitimate ownership vehicles. It seems New Zealand’s political stability, its recognition of property rights and its honest officials mean that it is seen as a safe place for holding family wealth if you are not so blessed with strong institutions. New Zealand also respects the privacy of personal information.  Radio NZ, and others, appear to confuse safety and the privacy of ownership with (to use the words of Morning Report) ‘funnelling profits’ through New Zealand to avoid tax.

It’s all very well for New Zealanders such as Nicky Hager (who, incidentally, parks his own assets in a family trust) to bemoan foreigners for using our trust regime but he might want to consider some of the reasons why New Zealand is so attractive. Most are unconnected to tax. English-style trust laws, an independent non-corrupt judicial system and political stability are the most obvious.

For many business and political leaders, sheltering their assets isn’t just a matter of personal privacy, it can be for safety or security. Indeed, the main details we have from today’s media reports are of Ecuadorian bankers, two Colombian car dealers, a Mexican film director and “wealthy Mexican society figures.” For some reason, we are supposed to assume that just being Latino means you are involved in criminal activities.  In fact in these countries, if you have significant assets you are exposed to kidnapping and blackmail, and the risk of arbitrary state seizure of assets isn’t remote.  Who would blame them for choosing our legal system to provide protection? 

As the head of a taxpayer organisation, I am acutely aware of the threats made against my international equivalents in countries where physical and political intimidation are rife. Many would be wise to avoid their governments from knowing what they own and where. 

The Panama Papers leak is a reckless violation of personal privacy which will undoubtedly put in physical danger law-abiding individuals and their relatives around the world. The Zimbabwean farmer, the Venezuelan democracy activist, or the Saudi businessman wanting to give an inheritance to his daughter, so used a New Zealand vehicle to bypass the abhorrent Saudi rules that require all wealth to go to the eldest son. Those are the people who this leak exposes.

Opposition politicians are encouraging the misinformation that the papers show that rich New Zealanders are using sneaky accounting tricks to evade paying their "fair share" or that taxpayers are shouldering a heavier burden to cover those who are taking advantage of a regime not widely understand. They don’t.

Of course, the New Zealand trust structure doesn’t protect the beneficial owners from having to declare any dividend income received, neither does it prevent the owned companies from having to pay tax wherever it is earned. The only “rort” is that we do not require foreigners to pay tax in New Zealand on income earned outside New Zealand. So what? Foreign income, foreign owners. The New Zealand taxman was always right to butt out.

Often a trust will own shares in a company carrying on a business, which is paying full tax in the country in which the business operates. The beneficiaries declare and pay tax on any income that is allocated to them by the trust. There is no tax evasion.

If New Zealand were really being portrayed as a tax haven or being condemned overseas, as a member of the World Taxpayers Associations, we would know about it. But the only ones who are talking New Zealand are those with an interest of creating a perception that our government has been complicit in some sort of international conspiracy to allow the sheltering of income from tax. Again, the facts don’t match the rhetoric.

The Taxpayers’ Union will be the first to condemn anyone who has used trickery to avoid tax but so far all we have seen is political posturing.

Jordan Williams is the executive director of the New Zealand Taxpayers’ Union

Labour's policy to abolish Auckland urban boundary

phil-twyford-labour.jpgThe Labour Party's Housing spokesperson, Phil Twyford, has called on the Government to abolish Auckland's urban growth boundary to allow the city to expand. We wholeheartedly agree with any measures to reduce the regulatory taxes which are choking supply, so are backing Labour's proposal.

Like tax cuts always being delayed, the Government has had eight years to reform the RMA in a meaningful way but has utterly failed to do so. The RMA and regulatory burden in Auckland is just as bad, if not worse, than it was in 2008.

Labour’s proposal appears to be the first genuine supply-side reform which would almost certainly result in more affordable housing. 

We're launched a petition calling on the Government to sign up to Labour's policy. Click below to sign the petition.

To increase housing supply I call on the Government to immediately adopt Labour's policy to abolish Auckland Council's urban boundary.

New report: Money for all - considering a Universal Basic Income

Screen_Shot_2016-03-28_at_2.12.21_PM.pngA Universal Basic Income which avoided superannuitants and beneficiaries being made worse off would require a flat rate income tax of more than 50% or drastic cuts in Government services to pay for it, according to a new report we're releasing today.

The report, Money for all: the winners and losers from a Universal Basic Income, by economist Jim Rose, examines the Labour Party’s “Future of Work” proposal for a UBI and the more modest proposal by the Morgan Foundation.  

A more affordable version of Labour's scheme, such as that proposed by the Morgan Foundation of $11,000 per annum ($210 per week), would cost $11 billion dollars more than the existing welfare system, while making solo mothers $150 per week worse off. For superannuitants, a UBI at this level would see their  weekly income reduced by $50.

We find it startling that the Labour Party would be floating the idea of a replacement to the welfare system that would see those most vulnerable in society being far worse off. A UBI replaces helping those most in need with handouts to the middle-class and millionaires.

If you take Labour's assurances that no one will be left worse off under their UBI, the amount would need to be so high that Treasury's economic modelling suggests that a flat income tax of between 50.6% and 55.7% would be needed to pay for it.

Here is a political party which for years has rightly been telling New Zealanders that current superannuation entitlements are unaffordable. Now they want to effectively extend the same scheme to every New Zealander from the age of 18.

The Morgan Foundation proposes to pay for its more modest UBI with a tax on those holding capital. Such a tax would incentivise all those modern and innovative industries Labour want to encourage, to shift off-shore.

We don’t believe Labour have fully considered the consequence of a UBI on labour supply and economic incentives. People would almost certainly work fewer hours meaning that the burden of supporting the programme would be borne by a fewer number of taxable working hours, potentially requiring even further tax increases.

Even the Labour Party's own paper concedes that the taxes that would be required to fund a UBI higher than $11,000 per year may be 'unrealistically high'. The analysis in the report certainly backs that.

Key points and conclusions:

  • The Morgan proposal would cost $10 billion more than the current welfare system but leave those most in need worse off.
  • For a UBI to achieve any reduction in poverty levels, or to avoid it costing those in society who most need help, much higher taxes are required. These reduce the incentives to work and economic growth.
  • A UBI which allowed those currently receiving benefits and/or superannuation would need to be at least $15,000 per year (equivalent to the current average level of benefits). To pay for this, Treasury estimate that a flat income tax of between 45% and 56% would need to be introduced (assuming other taxes stayed equal).
  • Child poverty is not reduced by a UBI less than $15,000 per year because single parents receive no more income support than before.
  • A UBI would likely push the New Zealand economy into recession off the back of the reduced labour supply from the windfall increase in incomes alone.


You can also download the report as a PDF here.

One tax law for all? Apparently not

Go Bus

The other week it was announced that Tainui and Ngai Tahu-owned Go Bus had picked up four South Auckland public transport contracts. Initial media reports suggested that this was not a sign of the best man (or company) winning, but rather the result of a quirk in New Zealand tax law that sees Maori Authorities pay only 17.5% company tax rather than the usual 28%.

In fact, it was worse than that. An article today by the National Business Review reveals that the two owners of Go Bus, Ngai Tahu Go Bus and TGH Direct Investments (owned in turn by Ngai Tahu Charitable Group and Waikato Raupatu Lands Trust) are charitable trusts, therefore paying no company tax at all.

It was later revealed that Go Bus Chief Executive, Calum Haslop, sought to downplay the significance of his business not being subject to company tax:

“It’s really only the last two years or 18 months really that we’ve been an iwi subsidiary. Nothing has changed in terms of our competitiveness. The tax or otherwise question is not something we turn our minds to, and it is not an element in terms of our competitiveness or any reason we’ve been able to win these Auckland contracts.”

The CEO can do all he can to downplay the fact that Go Bus has a significant tax advantage, but for its competitors, paying the usual 28% corporate tax rate, the remarks are fanciful.

Many New Zealanders will be shocked to learn that New Zealand is unique in the Commonwealth in allowing organisations whose membership is defined by blood to qualify as "charitable". We believe that companies should be required to pay taxes, no matter what the racial or ethnic background of their ultimate shareholders.

The only silver lining out of this is that it has once again ignited the debate about tax advantages and ways we can lower the tax burden for businesses. Our research shows that abolishing corporate welfare alone would allow the corporate tax rate to be reduced from 28% to 22.5%. Such a move would significantly improve New Zealand's competitiveness, encourage investment and create more jobs for Kiwis.

When politics is life and death

On Monday I teamed up on Newstalk ZB with left wing commentator Josie Pagani to talk about the 11,000-strong petition calling on the Government to fund the new melanoma drug, Keytruda, and the support the campaign has received from opposition politicians, particularly Labour Party leader Andrew Little.

Codi MorganThe personal stories of people desperate for the treatment are heartbreaking. The latest is Codi Morgan (pictured) who at only 21 is dying from melanoma. He is just the latest to turn to a crowd-funding website to find the $11,000 per month he needs for the treatment which his doctors tell him is keeping him alive.

Of course even if the budget for medicines was doubled overnight, decisions would still be required by Pharmac in order to allocate the resources — inherently difficult when you are trying to maximise the lives saved with what will always be limited resources. The question is therefore who should make these decisions?

Politicians or doctors?

KeytrudaThe costs and benefits of these medicines need to be weighed up in a rigorous, scientific and evidence-based process. Until recently the Pharmac model, where officials independently analysed and worked to get the best health outcomes from taxpayer money spent on medicines, worked well.

Unfortunately the independence of the model is being broken down and it's not the fault of Labour alone. The precedent was set in 2008 when the National Party (then in opposition) campaigned on directing Pharmac to fund the breast cancer medication, Herceptin.

At the time, Pharmac was funding the drug for nine weeks, while National sought to have it funded for twelve months. Pharmac's advice was that there would be no added benefits from further funding the drug, and that the $19 million cost of doing so could be better spent on other medicines.

By campaigning, and then deciding to fund the medication once elected, the National Party allowed the genie out of the bottle. Politics now trumps science.

More drug funding campaigns inevitable

Andrew LittleCoincidently, just before we went on air, Stuff.co.nz broke the story that Mr Little hosted drug company executives at a special dinner in the lead up to Labour backing the Keytruda campaign. This of course is the same Labour Party which criticised Ministers for meeting alcohol industry representatives while the Government was reviewing how it regulates their industry — meetings which, on the face of it, were completely justified.

From the perspective of drug companies, lobbying politicians now makes perfect sense. Indeed, they will no doubt hope that other campaigns are launched for opposition politicians go into bat for them. Worse, by the Prime Minister discreetly putting pressure on Pharmac through the media, the Crown's' bargaining position to get the best possible price from the drug companies is undermined.

This is why we do what we do at the Taxpayers' Union 

One of the strongest arguments for Keytruda and taxpayer funding of other lifesaving melanoma drugs is that Australia and Britain publicly fund the same. It is these sorts of haves and have-nots which result in living in a country which is poorer than the countries we like to compare ourselves to. It is the human face of running public policy settings which have resulted in lower economic growth and a poorer New Zealand.

The Taxpayers' Union uncovers examples of government waste nearly everyday. The $11,000 per month Codi needs to survive is put in perspective by the huge amounts of money we see wasted. Take for example the $140,000 television screen MBIE purchased for their office. Or perhaps the $1.3 billion of corporate welfare we uncovered in the last budget — a sum much larger than Pharmac's $800 million annual budget.

Should Keytruda be funded before other drugs? I couldn’t possibly say. But what is clear is that when the Government wastes our money, they’re wasting money that could save lives.

You can donate to Codi's "Givealittle" campaign here.

MBIE's bad numbers lead to bad policy

MBIE.jpgWe're calling for an apology from the Ministry of Business, Innovation and Employment after bad numbers provided to the Government caused them to approve mandatory insulation requirements for rental properties thinking that the requirements would result in $640 million of economic gains, when in reality they will result in $430 million of net losses for New Zealand households.

A report by Ian Harrison of TailRisk Economics uncovered that a basic error in calculations by MBIE means that the cost-benefit return on the Government's new insulation requirements for rental housing was just 28 cents, not the $2.80 reported by MBIE.

Mr Harrison's calculations are not based on different interpretations or assumptions. Rather they have identified a basic mix-up in the figures that MBIE plugged into its cost-benefit modelling. This mistake lead to a completely fictitious result.

TailRisk Economics is the same consultancy that first blew the whistle on the Department of Building and Housing's analysis of earthquake prone building risk. Since then the Government has completely changed course, thanks largely to Mr Harrison's advice being accepted as correct. It looks like the Government has been caught short again on basic economic calculations.

It seems highly likely that the Government would not have plowed ahead with the new insulation requirements had Minister been in receipt of the correct figures. Their decision last year imposes costs of $430 million even after the benefits of the scheme are factored in. MBIE's bad numbers have in effect imposed an enormous regulatory tax on New Zealand landlords and renters at a time when housing is becoming increasingly expensive.

We have called on MBIE to explain how it is that this sort of blunder could have happened, and whether they are looking to hold officials accountable over this expensive error.

Our question for Minister Joyce is this: why aren't systems in place to prevent these sorts of expensive errors?

You can download the MBIE advice here, and the TailRisk report here.

UPDATE: Government stands by numbers, but our advice is that TailRisk is right

Fairfax is reporting that the Government is standing by its numbers, so we had our Research Fellow, Jim Rose, take a look.

According to Mr Rose, in a nutshell, the wrong number was put into table 22 (page 48) of the MBIE report, which gives the annual benefits per household. $439.95, the net present value of lives saved, was transferred from page 39 rather than $127.92 from page 38, which was the annual benefit of lives saved. 

So MBIE used five years of $127.92 benefits to calculate a net present value ($439.95) but then used the latter figure to calculate a new net present value based on $439.95 of benefits every year for 30 years.


Revealed: Speaker's warning to Labour over Parliamentary funds

We are blowing the whistle on the apparent misuse of taxpayer-funded Parliamentary resources by the Labour Party.

Andrew LittleSome weeks ago Labour sent an email in the name of Paul Chalmers, the Project Manager at Labour House, to Labour's Auckland supporters detailing how Andrew Little had opened a Auckland office that will be "the centre of the Labour and progressive movement in Auckland and the place to co-ordinate the local government and General Election campaigns."

The email also called on "like-minded partners" to share office space and other facility resources.

It appears that Andrew Little and his MPs are pooling together taxpayer resources to open a campaign office in central Auckland for the Party and Phil Goff’s campaign for the Auckland mayoralty. Use of taxpayer resources in this way is clearly against the rules.

The Speaker has confirmed that the Parliamentary Service will be monitoring Mr Little's spending and has written to him setting out the rules for taxpayer funded out-of-Parliament offices.

Speaker David CarterWe’ve expressed concern before that Mr Goff intends to be paid as an MP in Wellington, while he is campaigning for a new job in Auckland. This letter from the Speaker suggests that he too is concerned with MP’s taxpayer funded resources being misused for political purposed in Auckland.

While it is good news that the Speaker has written to Mr Little as a result of us bringing this to the Speaker's attention, we think this sort of behaviour is precisely why Parliament should be subject to the Official Information Act, like almost every other public body which spends our money.

Politicians have a bad habit of using taxpayers' money for political campaigns to protect their own jobs. In 2005 the Electoral Commission referred Labour to the Police after finding that the Party had spent $446,000 of taxpayer money on pledge cards, as part of their election campaign in the lead up to the general election that year.

The original email, and the correspondence between us and the Speaker, is below.

Auckland motorists already paying plenty

We are hitting out at renewed calls to introduce a new motorway or congestion tax for Auckland and calling on the National Party to stand by its election promise and rule out new taxes.

The proposal would require the National-led Government passing legislation to allow Auckland Council to tax motorists.

With Aucklanders paying less than $1.85 per litre for petrol, more than half of what we are paying at the pump is tax. Add a potential motorway toll to that and there is little doubt that motorists are being treated as cash cows.

Auckland Council piled on to rates a last minute transport levy last year and now politicians want motorists to stump up even more. The National Party would be breaking a promise if they let them do it.

Along with our sister organisation Auckland Ratepayers’ Alliance, we have called on Auckland local body candidates to find efficiencies and cut wasteful Council spending before proposing any increased charges. 

Fuel tax

LINZ charging excessive fees

Today we revealed that Land Information New Zealand has overcharged New Zealanders by $40 million for its "Landonline" service, despite the requirement that it is to function on a cost-recovery basis.

Data from LINZ shows the account as having a forecast surplus of $40.284 million at 1 July 2016.

Landonline is the LINZ service used to change and order copies of land records. When Kiwis buy or sell a home, they are being forced to pay well in excess of the costs need to run the service. Housing already costs enough in New Zealand without the Government clipping the ticket on the way through. It's not right.

Government agencies are required to operate these monopoly services on a cost-recovery basis. LINZ appears to be ignoring that.

We are calling on the Minister for Land Information to ensure her officials cut the costs of Landonline and stop price gouging for access to this core government service. 


What is Landonline?

Landline is the transaction centre for carry out land dealings online. Every time a real property is sold in New Zealand, the record is entered into Landonline. More information can be found here.

What are the current charges?

Licence fees vary between $511 and $1022, a breakdown for fees can be found here. These fees are passed onto sellers and vendors of real estate.

Why is there a surplus?

The surplus is due to Land Information New Zealand charging more for the service than it costs.

Why is making a profit on Landonline inappropriate?

Landonline provides a service, which costs money to run, but over which the government holds a monopoly. When fees are set higher than what is required for the service, the government is making money from a monopoly service.

How did the Taxpayers' Union find out about the Landonline surplus?

The Taxpayers' Union runs a confidential tipline for New Zealanders to dob in government waste and rorts. Late last year a concerned member of the public approached us about LINZ's excessive fee charging. 

What is a memorandum account?

Memorandum accounts record the accumulated balance of surpluses and deficits incurred in the provision of certain outputs on a full cost-recovery basis. These accounts are used to separately disclose the cost of such outputs over the years, given that such information would otherwise just be aggregated as part of an entity's financial position. 

In general, full cost-recovery (including the capital charge) applies where departments supply services to third parties in the absence of competition or under a statutory monopoly. 

Except where prior approval for alternative arrangements has been obtained from Treasury, departments must use memorandum accounts to record the accumulated balance of surpluses and deficits incurred in the provision of third-party fully cost-recovered outputs.

What should happen now?

The fees charged for users of this service should be reduced to a point where the surplus is distributed and it is operating on a cost-recovery basis, in accordance with Treasury’s advice.


Upper Hutt Mayor responds to criticism

hairdresser_1_.jpgOver the weekend we revealed more Upper City Council corporate welfare 'economic development' grants amounting to $375,000 of ratepayers’ money. Joining Burger Fuel, grant recipients include Subway, Vogue (a clothing store), Bed Bath and Beyond, and even a hairdresser!

Stuff.co.nz covered our comments here:

"It is economic trickery benefiting only the favoured businesses.

"Take the example of Prodigy Hair. There are at least 29 hairdressing firms in Upper Hutt, but the council picks this one out for a handout."

Previously, the council defended its corporate welfare scheme on the basis that it was creating jobs, Williams said.

"Of course the politicians and officials ignore that every cent is drained from the very community they are claiming to help. It is intellectually dishonest. 

"Upper Hutt ratepayers are smart enough to see that this isn't economic development, it's robbing the poor to pay the rich."

To respond, Mayor Wayne Guppy spoke to Newstalk ZB's Larry Williams tonight just prior to the political Huddle with our Executive Director Jordan Williams and Vernon Tava.


Corporate welfare for hairdressers?

Back in June we slammed Upper Hutt City Council for giving a $32,000 Business Development Support grant to listed fast-food retailer BurgerFuel to set up a shop in the City. Now we can reveal that Subway, a hairdresser, a cinema and even a Bed Bath and Beyond also received ratepayer-funded grants.

So far in the 2015/16 financial year, Upper Hutt City Council has spent more than $160,000 of ratepayers’ money on subsidies to eleven businesses.

Taxing people more through rates for corporate welfare isn’t economic development, it is economic trickery benefiting only the favoured businesses. Take the example of Prodigy Hair. There are at least 29 hairdressing firms in Upper Hutt and surrounding area, but the Council picks this one out for a handout.

Previously the Council has defended this corporate welfare scheme on the basis that the Council is creating jobs. Of course the politicians and officials ignore that every cent spent on these initiatives is another cent taken out of the community they are supposedly helping. It is intellectually dishonest.

Upper Hutt ratepayers are smart enough to see that this isn’t economic development, it’s robbing the poor to pay the rich. The Mayor, Wayne Guppy, needs to explain how sucking money out of a community to spend it on a favoured business is justified. 

List of recipients of Council grants:

  • Subway Main Street
  • Maidstone Sports (The Mall HCSC Ltd)
  • Vogue on Geange
  • Vogue (The Mall HCSC Ltd)
  • Bed Bath Beyond (The Mall HCSC Ltd)
  • Udy Contracting
  • Blue Pencil
  • Prodigy Hair
  • BurgerFuel
  • Miro Cinema
  • Fets (Fire and Emergency Training Solutions)

Upper Hutt City Council refused to divulge how much funding each firm received.

Mayor Wayne Guppy was interviewed on Newstalk ZB, who then asked our Executive Director, Jordan Williams, for his thoughts on the programme. You can listen to the interviews below.


Government Ministers too posh to fly Jetstar?

The Taxpayers’ Union can reveal that Ministers are not practicing what they preach in their apparent support for more competition in New Zealand’s skies. 

In August, Economic Development Minister Steven Joyce and Transport Minister Simon Bridges welcomed Jetstar’s expansion into the regions. But despite the apparent support, it appears than not a single minister took a Jetstar flight that month. Not even one.

While the Government crows about how Jetstar means better value for consumers, we asked for a breakdown of all taxpayer funded flights taken by Ministers that month. The data reveals that of the $74,503 spend on domestic flights in August alone, not one dollar was spent on the cheaper flights. 

Some would say that politicians prefer Koru lounges and canapés than roughing it for a short flight with the rest of us. Others might just prefer Ministers practiced what they preached. 

Flights charged in August for Ministerial domestic flights. Costs are GST exclusive.


Cost of Domestic flights
August 2015 ($)

Rt Hon John Key


Hon Bill English


Hon Gerry Brownlee


Hon Steven Joyce


Hon Paula Bennett


Hon Dr Jonathan Coleman


Hon Amy Adams


Hon Chris Finlayson


Hon Simon Bridges


Hon Hekia Parata


Hon Anne Tolley


Hon Dr Nick Smith


Hon Murray Mccully


Hon Nathan Guy


Hon Nikki Kaye


Hon Tim Groser


Hon Michael Woodhouse


Hon Todd Mcclay


Hon Peseta Sam Lotu-liga


Hon Maggie Barry


Hon Craig Foss


Hon Jo Goodhew


Hon Nicky Wagner


Hon Louise Upston


Hon Paul Goldsmith


Hon Te Ururoa Flavell


Hon Peter  Dunne


Tobacco tax hike: It’s all about the money

Cover page

Over the last 12 months we’ve had a number of members who smoke ask us to examine the issue of tobacco taxes.  So to coincide with today’s 10% hike in tobacco excise we’ve released a report examining the issue.

Smokers have become the political punching bag over the decade with the current Government hiking excise taxes nearly every year under the guise of health concerns and to pressure low income New Zealanders to give up the habit.

Our members who smoke often feel as though they are treated as cash cows. Our research shows that their concerns are justified, with government tobacco excise income around three times the estimated cost of smoking to our health system.

The report details the effect of tobacco excise increases, the failure of the Government to legalise the sale of healthier alternatives which would minimise harm, and the misuse of taxpayers' money given to not-for-profits which lobby the government.

Politicians claim higher tobacco taxes are necessary to promote better health, but the Government has prevented the sale of new generation smoking alternatives such as e-cigarettes which are 95% less harmful and are the most popular smoking cessation tool used in England.

While politicians cry crocodile tears about the harms of smoking, they are refusing to allow the sale of healthier alternatives. It appears the only reason is to protect the revenue stream from the taxes on traditional cigarettes.

From today, a $20 20-pack of cigarettes includes nearly $16 dollars of tax


It makes a complete mockery of the National Party’s election promise not to increase taxes.

Increases in tobacco excise tax are often held up as interventions that are effective at reducing consumption amongst low socio-economic groups. However, significant tax increases have coincided with an increase in the socio-economic smoking gradient. Counterintuitively, the poor are the least likely to respond to tax hikes. That means they, and their families, go without.

Just because a consumer base is poor, it does not mean that the Government is any more justified in making consumer health choices for them. Worse, increasing taxes well in excess of the health costs of tobacco, knowing that they are being paid by those least able to afford it, is morally questionable.


Even anti-smoking group ASH’s own expert estimates that tobacco excise tax is around three times the actual costs to the public health system caused by smoking (and that was before today's tax hike).

The report also examines the work of ’sock puppet’ lobby groups – those which are funded by the government to lobby the Government.

Every year the Ministry of Health waste tens of millions of dollars on tobacco groups that aren’t actually helping smokers quit. Instead they’re running political campaigns to lobby the government for higher taxes and more controls.

Take ASH for example. Here is a group which is 95% taxpayer funded which openly works with the Maori Party to lobby the Government for higher taxes and more tobacco controls. If the shoe was on the other foot and the Government was funding property groups to campaign for RMA reform, the Maori Party would be justifiably outraged. This is no different.

Every dollar wasted on taxpayer funded political campaigns is one less for frontline health services.


Why a report on tobacco tax?

Tobacco excise taxes increase by 10% on 1 January 2016. Tobacco duties and excise tax revenue, which has increased by almost $450 million since 2009, now accounts for about 1.4% of total government revenue.

How much of the retail price of tobacco is tax?

As of 1 January 2016, excise tax accounts for around 66 cents per cigarette. For a 20-pack of cigarettes which may retail for $20, excise tax accounts for $13.33. After adding the 15% GST to the total, it means for every $20 20-pack of cigarettes, the government takes $15.94.

What are the report’s key findings?

The report details tobacco control measures since the 1980s and shows:

  • Smokers are paying more in tax than ever before, with almost $16 of combined excise tax and GST per $20 20-packet of cigarettes
  • Tobacco excise and duties now account for 1.4% of government revenue 
  • E-cigarettes have been found to be 95% healthier than traditional smoking and are the most popular smoking cessation tool in England but remain illegal to sell in New Zealand
  • The Ministry of Health is funding 'sock puppet' political campaign groups that use taxpayer money to lobby the Government

What are the report’s recommendations?

  1. A moratorium on tobacco tax increases until reviews can be undertaken on:
    1. the risks of an Australian style illicit tobacco problem developing in New Zealand; and
    2. the potential harm reduction in lifting New Zealand’s blanket ban on the sale of e-cigarettes and other new generation tobacco products.
  2. An independent review of Ministry of Health funding of tobacco lobby groups to ensure that taxpayers are receiving value for money.
  3. Extending the Official Information Act to cover those not for profit organisations which are majority taxpayer funded.

Mexican sales falsehood continues to be repeated by anti-sugar lobby

This weekend TV3’s The Nation looked at excise taxes and specifically whether the sorts of taxes we impose on alcohol and tobacco should be extended to sugar, fats, or junk food.

Professor Nick Wilson from Otago University is quoted in support of imposing a sugar tax (among others) and tells Torben Akel that:

“A ten percent price increase, as in Mexico has produced, roughly, a ten percent reduction in sales.”


This isn’t the first time this claim has been made by New Zealand academics campaigning for a sugar tax. Back in July we published a report by Joshua Riddiford which not only looked into the merits of a sugar tax, but showed up the falsity of the ‘it’s working in Mexico’ claims.

Our report published Nielsen sales data (showing actual volume sales) for the first time publicly. It showed actual industry sales before and after the implementation of the Mexican tax. The Nielsen data shows that Mexican sales of sugar sweetened beverages have barely moved after the sugar tax.

Sales are sales – surely the numbers don’t lie

Repetition of the same sound bite doesn’t make it true. The favoured study used by public health academics (and other campaigners) was funded by a pro-sugar tax campaign group and is based on surveying Mexican consumers on their expressed preferences. The real sales data shows that despite what people tell researchers, the Mexican sugar tax caused a drop of consumption of only 0.2% which as since bounced back.

wilson.jpgAcademics are supposed to promote informed public debate. Instead, there appears to be continuation of an activist political campaign based on misinformation and bias. Choosing to ignore the sales data which is clear suggests either failure to stay up to date with evidence, or deliberate misrepresentation. 

Expressed preferences are often skewed. For example, when you ask people how often they use local libraries, they inflate reality. Here, people have told researchers they are reducing their consumption of sugary drinks when the sales data shows that not to be the case. Sales figures don’t lie, but people do, and it’s misleading to rely on a survey study when gold standard Nielson sales data is available.

We all agree that obesity is a problem, but the evidence is that sugar taxes raise a heck of a lot for politicians while hurting the poor, but do very little to help those over-consuming. As a precaution, and to give Professor Wilson the benefit of the doubt, we'll be sending him a copy of our report on Monday.

Click here to access or read a summary of Fizzed out: Why a sugar tax won’t curb obesity.

Jim Rose: The low skilled won't be hired for living wage jobs

The Taxpayers' Union and the Wellington Chamber of Commerce are mulling legal action against the Wellington City Council's decision to restrict it choice of security contractors to those paying a 'living wage'. We've told the the National Business Review that if the Chamber don't, we will almost certainly hold the Council (and Councillors) to account for deliberately ignoring its own legal advice and plowing forward with a measure that imposes more costs on ratepayers, including those earning minimum wage, for absolutely no gain. Click here to read the media coverage.

Our Research Fellow, Jim Rose, has written the following analysis of the decision from an economic perspective. 

Chairman's Address and Report to the 2015 AGM

When we launched the NZTU back in November 2013, I remarked, echoing Churchill, that this was not the beginning of the end, or even the end of the beginning.

It was in fact the beginning of the beginning. Now two years ago, we can see how far we have come, but we can also see how much further we have to go.

The distance we have travelled is to turn an idea, more correctly an ambition that burned hot and hard in the minds of Jordan Williams and David Farrar, into something real and tangible. The organisation exists and is active and achieving. It has full time and part time staff, volunteers and interns, members and supporters.

David and Jordan wanted an organisation that would advocate for taxpayers, the ultimate and really the only source of government revenue.

They wanted an organisation that would cry, hoi …that’s not right or not fair on those who were wasting money on their own vanity and comfort, on projects that didn’t achieve what they set out to achieve, and on the never ending claims made on the taxpayers’ wallet for ever more spending. And for taxpayers include ratepayers and others who have to pay because they have no choice.

I think we have delivered that. We have exposed stuff, drawn attention to rorts and snouts in the trough, to excessive spending, and to extravagance wherever we have found it. The $6 million plus house for our consul general in Hawaii is only the latest example. Grooming lessons for Auckland Council staff, and a hair straightener for MBIE staff ($409.25) all cost money and reflect a culture that says it’s already to be profligate with someone else’s money. That someone else in this case is the long suffering taxpayer or ratepayer, and we have had enough.

It’s not all point and shout. We have tried to develop a reasoned critique around spending. We have argued from a principled and a factual basis that the billion dollars worth of corporate welfare this government dishes out each year doesn’t produce good results, is unnecessary, plays favourites and most seriously of all, the very practice of grants and subsidies to so called emerging businesses says that bureaucrats and ministers are better at picking winners than investors and entrepreneurs in the marketplace are. That’s just nonsense.

And there is more to come. One publication now in its development stages is an alternative economic strategy. We’ve called it Plan B. It sets out what we and a bunch of very reputable economists and business leaders think the government should now do to improve our economy. It’s a ready-made agenda for reform, which we intend to use to argue for positive changes to improve growth and prosperity.

We will also be making specific points about the sale of some government assets, actually they are government liabilities for which there is no business case for the taxpayer to own, and to continue dumping money into. And we will also be giving the government some advice about how to spend the budget surplus, now that it has turned up.  

Our view – unsurprisingly – is that hardworking New Zealanders ought to get most of the surplus given back to them in tax cuts. It can hardly be the case that governments know how to spend money better than ordinary people.

If there is a surplus it is because the government has taken too much from us. The answer is simple. Give it back. We will be saying why, and putting forward some ideas about how.

2016 looks bright for the Taxpayers Union. We have created Auckland’s largest political movement. The Auckland Ratepayers Alliance has over 14 thousand members, more than the Green Party and very close to the reported  membership of the Labour Party across the whole country.

And those people are going to be active in trying to unseat the gang of nine, those councillors who voted for a nine percent plus increase in rates for the average Auckland household.

They are going to feel the heat, and we will be backing the ARA to defeat as many of them as possible. Auckland needs sensible government that lives within its means, not continuing extravagance that raids the ratepayers’ pocket whenever the council’s coffers run low.

Always, but always, we know that we depend on the support and generosity of our supporters and members. We are always grateful, but we are also almost always desperate as well. Donating to causes and charities is the ultimate act of discretionary spending, but without continuous support we will simply not survive and be able to do the work that so much needs to be done.

I urge you all not just to dip into your pockets once, but to sign up for an ongoing commitment, monthly, quarterly or whatever suits you best. We can then see a positive cash flow into the future, which not only gives us comfort to proceed with projects, it also tells us that we are doing the right things, the things our members want us to do. Of course if you can manage a more substantial donation once or twice year, that is even more welcome.

Many of the groups that we battle against can go to government agencies and get taxpayer funding to lobby the government for their causes. That path is closed to us, which means we rely on people like you. You have not let us down, and we want to continue to make you happy in what we do and in what we achieve.

Finally may I thank very much my fellow board members, David Farrar, and Gabrielle O’Brien and our executive director Jordan Williams and various other staff members, volunteers, contributors, all of whom have given freely of their time and talent. I applaud you along with our members and supporters for keeping the NZTU alive and well through another eventful year.


John Bishop
New Zealand Taxpayers’ Union

20 October 2015

WCC legal challenge

The Taxpayers’ Union is currently considering legal action against Wellington City Council following the council voting to extend the so-called living wage to private contractors.

Like others, our initial legal advice is that the Council is highly likely in breach of the Local Government Act which requires Council to provide services in the most efficient manner. If the property and business groups decide against seeking judicial review of the Council we are almost certain to do so.

Our main hesitation is that the Council may throw good money after bad to defend the decision. But that might be a necessary evil to act as a reminder to councils throughout the country that they are required to be prudent stewards of ratepayers’ money.

Choosing to pay someone more than is necessary for him or her to do the job does not alleviate poverty. Charging people on the minimum wage more money in rates so the Council can pay higher wages is expensive virtue signally with ratepayers picking up the bill. Why should those working for the minimum wage pay more in rates for councillors to feel good about themselves?

Our Chairman, John Bishop, was recently interviewed by Mark Sainsbury on RadioLive about our likely legal challenge. John explains our opposition to the move and why the Council should stay out of the affairs of a private company. Audio available here.

David Farrar has obtained a transcript of the Wellington City Council’s CEO advising Councillors against the move, which is available on Kiwiblog. 

$80,000 taxpayers dollars for meaningless waffle

images-2.jpegThe Government is giving $80,000 (labeled a "Community Development Scheme" grant) to the Methodist Mission for the following:

The key outcome for the project is the development of a greater sense of community within the inner city. The project’s goal is to harness this energy to empower residents and the broader community to self-identify and achieve their aspirations. 

Talk about an easy gig. For $80,0000 who wouldn't harness energy and be empowered to self-identify and achieve aspirations – whatever that means? It’s the sort of Government spending waffle that usually goes unnoticed, but adds up and needs to tackled.

Many of the grants under the Community Development Scheme are services the Ministry of Education or Health should be providing anyway. Instead of funding good quality core government services, these grants blur the line between community efforts and government funded services. It may even come at a cost to community involvement, fundraising and philanthropy.

One of the reasons New Zealand’s communities are poor is because they are over taxed. Only politicians could think that that ‘development’ means taxing more more so that they can play Santa Claus and give dollops of cash to groups offering these sorts of platitudes. If a community groups wants to tender for something a community needs good on them, but the Government should be funding specifics, not aspirations.

Below is a list of this year's grants (each for $80,000).

Taxing the ill

DHBs charging millions for patients to park

web_image.jpgOur new briefing paper on public hospital parking charges reveals that District Health Boards are raking in nearly $15 million per year in parking charges at New Zealand’s public hospitals.

The information has been compiled from Official Information Act requests shows that more than $44 million has been levied since the 2012/13 financial year. The Paper shows that of the twenty DHBs, seven (Northland, Hutt Valley, Mid-Central, Capital & Coast, Auckland, Waitemata and Waikato) charge patients for parking at one or more of their hospitals.

Taxpayers have already paid for the construction of the hospital and the car park. Why must they pay twice when they are unfortunate enough to have to make use of the facilities? Talk about kicking someone when they are down.

Parking taxes at hospitals punish those who are ill and may well be on benefits. The last thing that a patient should have to worry about if they are attending for treatment is whether there is going to be a penalty notice waiting for them when they return to their vehicle. Often patients won’t know how long their treatment will last and therefore how much to put in the meter.

While modest charges may make sense in large city hospitals where good public transport is available, we think for places like Northland, where patients often travel considerable distances, hospital parking fees are are a nasty revenue gathering tool which should be abolished.

When New Zealanders are ill or suffering from a family emergency, the last thing they should have to worry about is whether or not they have enough spare change for the DHB's car park.

View the paper below, or download here.

Guest post: GST on online purchases

Greg Harford, the General Manager of Public Affairs at Retail New Zealand has drafted the following on proposals to reduce the threshold for GST for imported goods purchased online.

Many people agree that tax is a necessary evil that we need to provide core Government services. Many people also think that, if we have taxes, they should be as low as possible, and enforced both fairly and consistently.

Retail NZ was interested to see that the Taxpayers’ Union is running a poll on whether the Government should reduce the threshold at which GST is collected on imported goods. At the moment, a loophole in the law means that if you buy $399 worth of books from your local bookshop, you pay GST, but if you buy them from a foreign website, GST is not paid. This means that those shopping in local stores pay more than their fair share of GST, while those shopping online from offshore don’t pay their share. It also means that the New Zealand Government is effectively applying a reverse tariff against New Zealand businesses, and that it’s harder for Kiwi firms to compete for Kiwi business.

Retailers have long argued that the Government should close this loophole. New Zealand (and Australia) are well out of line with international best practice on this, and it is time for change.

It has been suggested that the arguments against this are that collecting GST would be administratively burdensome, that the tax collected may be less than the cost of collection, and that consumers will be forced to wait longer for the delivery of products.

The administrative question is a bit of a red-herring. Retail NZ and Booksellers NZ have been lobbying for the GST registration of foreign companies selling to New Zealand – so GST would be collected by foreign websites in exactly the same way that it is collected by New Zealand-domiciled retailers. This would largely remove administrative cost (the cost would be no different to the costs imposed on domestic businesses), ensure that the tax collected is greater than the cost of collection, and ensure that most goods would flow freely across the border, without delay or inconvenience to consumers.

The big foreign etailers are all in a position to “switch on” sales tax collection for New Zealand (they do it for some other jurisdictions). If the major etailers registered for GST, this would mean that GST would be collected on the vast majority of items imported into New Zealand.

The current process may, however, be required for goods purchased from boutique companies that do not register for GST. However the volume of items processed in this way is expected to be very small. This would, we expect, lead to a substantial reduction in costs to Government overall, which would be good news for taxpayers.

No tax system is perfect. GST is not a new tax. It has long been a tax on the consumption of goods and services in New Zealand. Some people may wish to have an argument about whether GST is a fair or appropriate tax system for our country. But if we have such a tax, it should be levied universally, irrespective of where the transaction takes place.

I was slightly concerned to read in a Taxpayers’ Union email that foreign websites could be banned from trading in New Zealand. To my knowledge, this has never been mentioned in the debate either here or in Australia, and we would certainly not support such an approach. We are not against online shopping, but we are concerned about a tax that is unfairly applied and seriously disadvantages New Zealand businesses.

Our point in relation to the 'banning' of foreign websites is that it is the inevitable conclusion if a foreign domicile website (say one offering music downloads) simply refuses to apply NZ's tax law. We of course hope that it never happens!

First sugar taxes, now meat, dairy, and even bread


Within hours of our release of our latest report paper examining why sugar and other food taxes don't work, Auckland University has published a report calling for new food taxes which looks to be the most ridiculous yet.

Auckland University academics are calling for a 20% flat rate tax on bread; breakfast cereals; processed meat; fresh beef, lamb, hogget, and poultry; all take-away foods; butter; cakes; biscuits; cheese; cream; pies; pizza; sauces and condiments; milk; ice cream; yoghurt; and eggs.

The University’s press statement says that "Maori and low-income New Zealanders are most likely to benefit from these policies”. 

We are dumfounded that ivory tower academics could think that taxing staple foods will help the poor. We had to call Auckland University to check that this wasn’t a hoax. They even want to tax fresh milk, eggs, and meat.

Ramping up taxes on basic staples under an arrogant guise of helping the poor is surely a cruel joke. Pulling numbers from secret computer model and boldly claiming that it will be the amount of ‘lives saved’ is political advocacy, not academic research.

Given the mistruths and fundamental flaws the Taxpayers’ Union is beginning to uncover, Auckland University should be reining in its public health unit before this whole issue becomes an embarrassment for the University. For example, our paper shows that the claims being made by Auckland University's activist academics of a 12 per cent drop in Mexican soda sales since that country implemented a soda tax are false. Actual sales figures, collated by Neilsen and published in our report show that Mexico’s tax has had virtually no impact on the volume of sales. 

The Taxpayers’ Union report, Fizzed Out: Why a sugar tax won’t curb obesity, is available here.


Update: Food and Grocery Council have just issued this media release largely agreeing with us


Press Release: 9 July 2015 

Auckland University wants to tax bread, cereal, meat, eggs and milk 

A call by Auckland University academics to tax New Zealand families’ staple foods such as bread, milk, eggs and meat is lunacy, says NZ Food and Grocery Council Chief Executive Katherine Rich.

“Over the past two years, the Universities of Otago and Auckland have called for new food taxes on salt, fizzy, sugar generally, fat and saturated fat.

“But what’s new in today’s announcement, and buried in the small print, is a 20% extra tax on the staple foods that New Zealand families rely on – bread, breakfast cereals, eggs, cheese, milk, beef and lamb.  These foods are an important part of a healthy and balanced diet for most New Zealanders.  

“The academics’ computer modelling might look sophisticated and compelling in theory, but it’s a computer model. The number of lives they claim will be saved by introducing such a tax is just a prediction.

“What is not a prediction is that slapping taxes on will not change people’s eating or drinking habits unless those taxes are very high.  This has been proven around the world.

“What would be very real would be higher food costs for all New Zealand families due to the relatively inelastic demand for important staple foods. 

“Based on sales of these foods over the past 12 months, at the very minimum these taxes would add $1 billion a year to families’ grocery bills. To give some specific examples, these taxes would generate $40 million from taxing eggs, $92 million from milk, $56 million from breakfast cereals, $90 million from bread, $74 million from cheese, $40 million from butter and margarine, and $70 million from sausages and other packed meats.   And that’s just supermarket sales. Kiwis buy their groceries in lots of other places, too.” 

Mrs Rich said suggesting a tax on milk, cheese, butter and yogurt was ironic given that for the past few weeks New Zealanders have been discussing the price of dairy foods.  

“There is also a stark truth behind these tax ideas. If these taxes were levied at a high enough rate and they did actually change behaviour, they would do so only by making a huge part of the weekly grocery shop unaffordable for many New Zealand families, particularly our poorest.

“The researchers, surprisingly, said in the media today that these taxes would help people on low incomes. I would like to see them try to explain to some of New Zealand’s poorest families why they should pay more for their bread, eggs, cheese, mince and milk. I suspect some of their academic theories promoting hiked grocery prices for everyday food necessities will not be well received by the public.”      

New report on why a sugar tax won't curb obesity

The Taxpayers’ Union is today launching a report which corrects the recent claims of New Zealand campaigners about the effectiveness of sugar taxes in curbing obesity.

The report contains Nielsen sales data, which is being publicly released for the first time in New Zealand. The data shows that Mexican sales of sugar sweetened beverages have not moved, despite the introduction of a sugar tax. While Auckland University’s public health activists are choosing to use interview data which supports their campaign, the real sales data does not lie.

Fizzed out: Why a sugar tax won’t curb obesity, sets the record straight, and examines honestly whether taxes on food and drink, such as that introduced in Mexico, are likely to reduce consumption and affect obesity rates. 

Key findings:

  • Fizzed-out.jpgOnly 1.6 per cent of New Zealanders' total energy intake comes from the added sugar content of sugar sweetened non-alcoholic beverages
  • New Zealanders' consumption of sugar and sugar sweetened beverages is trending downward
  • New Zealanders are still getting fatter despite consuming less calories, suggesting that we’re not burning as many calories
  • Sugar taxes hurt the poor and do not result in the decreased consumption tax-supporters claim
  • Similar taxes overseas have not worked - Mexico’s tax on soda resulted in no decrease in consumption, despite recent claims to the contrary by New Zealand campaigners
The report's author, Joshua Riddiford, sums up the politics of food and drink taxes in his executive summary:

Proposing a 20 per cent tax on sugar, as some groups have suggested, appears to be more about value judgements on sugar than actually helping New Zealanders towards better health outcomes.

Christopher Snowdon of Britain’s Institute of Economic Affairs, has written a foreword to the report which concludes:

A sugar tax is attractive to politicians because it allows them to engage in mass pick-pocketing with a sense of moral superiority.

It is not good enough to say that anything is worth a try in the campaign against obesity. A policy that is known to incur significant costs without reaping any measurable rewards is a policy that should be rejected.

The report which can be viewed below or downloaded as a pdf. Hard copies are also available on request.

MBIE revoke offer to meet

The head of the government department that spent $140,474 on a TV screen, $67,339 on a sign and $5,480 on an arts consultant for its new Wellington offices, has retracted an offer made to the Taxpayers’ Union to meet about the Ministry’s spending.

After we expressed public concerns last week about the Ministry's spending, MBIE officials told us that the CEO, David Smol, would be willing to meet and discuss the wasteful spending within the Ministry. Now the media heat has died down, they refuse to talk.

We wanted to have a serious meeting away from the media to constructively engage on how the Ministry is spending taxpayers’ money. Instead of keeping their word, the Ministry is once again running from accountability.

Below is the video of Porky presenting a Taxpayers' Union Certificate of Achievement in Government Waste to the Ministry's Head of Communications. On the video he can clearly be heard saying that the CEO would meet with the Taxpayers' Union to discuss wasteful use of taxpayers’ money...

Porky presents waste award to MBIE officials


Porky, the Taxpayers’ Union government waste mascot, this morning visited the Ministry of Business, Innovation and Employment to award a Government Waste Certificate of Achievement to David Smol, the Ministry's Chief Executive, for the Ministry’s extraordinary lavish office fit out.

After some waiting, Mr Smol failed to front, but an MBIE official accepted the award on his behalf (high quality versions of the images below video of the award ceremony are available on request).

This spending is an absolute disgrace and not the first time MBIE has given the middle finger to taxpayers. First there was the $67,339 sign, now the $140,474 television, but they also spent $5,480 on a consultant just to advise what art was best for the office.

This is a Government department behaving like a Madison Avenue advertising agency. The award is to recognise the achievement of wasting so much of other people's money.


Why is there no accountability for these repeated mistakes? Who below the Chief Executive could possibly have authority to sign off on a $140,000 TV screen?

The decision maker should be sacked, or Mr Smol should do the honourable thing and fall on his own sword.



New report: Corporate welfare in the 2015 budget

Any new kids in the trough?

Corporate welfare in Budget 2015 will cost the average New Zealand household more than $750.

Any new kids at the trough? a report by Jim Rose launched today, collates all of the corporate welfare in Budget 2015. The report updates our previous report, Monopoly Money: the cost of corporate welfare since 2008.

The new report shows:

  • Corporate welfare will cost taxpayers $1.344 billion this year, up from $1.178 billion in Budget 2014

  • The amounts are the equivalent to $752 (Budget 2015) and $663 (Budget 2014) per household

  • The largest item of corporate welfare is still KiwiRail which has cost taxpayers $13.2 billion (including write downs) since 2008 with still no sign of the ‘turn around’ National promised soon after it was elected to office.

  • ‘Economic development’ is the second largest category of corporate welfare, including a $115 million appropriation for NZTE 'international business growth services’ which saw the controversial ‘Agri-hub’ given to a Saudi farmer.

  • The fastest growing area of corporate welfare is the ramping up of taxpayer funded grants to agriculture businesses wanting to install irrigation.

Corporate welfare is where politicians try to pick winners and the taxpayers lose. It robs middle class taxpayers to reward the well off and politically connected. For every dollar spent on corporate welfare, there is one less dollar for education, health, or investment by the taxpayer who earned it.

The report includes a forward by Matthew Elliott, Chief Executive of the London-based business group, Business for Britain. Mr Elliott has been in New Zealand as a guest of the Taxpayers’ Union and told media:

Many of the business subsidies and corporate handouts this report exposes are more suited to an EU-style picking business winners regime than a modern open economy. What these reports demonstrate is that lower taxes – not additional government spending – are the best driver of economic growth and prosperity.

The report embedded below (and also available for download). The earlier report, Monopoly Money: the cost of corporate welfare since 2008, is available here. Hard copies are available on request.

Saudi Sheep deal: Complaint to Auditor General

Last week the Taxpayers’ Union called on Foreign Affairs Minister, Murray McCully, to publicly release the legal advice relating to the Saudi sheep deal. Our own legal advice is that a genuine claim is highly unlikely. Now that the dispute has been settled, there can be no prejudice to the Crown.

Taxpayers have a right to know whether Government decisions on complicated trade disputes involving their money are based on sound legal advice.

On Friday we also wrote to the Auditor General asking for her to investigate the allegations of "cheque book diplomacy" and the circumstances around the Cabinet Paper. The letter is below.

Tax Freedom Day 2015

Today marks the first working day New Zealanders stop working for the Government and take home what they earn.  According to figures from the OECD, New Zealand’s total government outlays as a percentage of GDP is 41.4% this year, with Kiwis marking ‘Tax Freedom Day’ on Queens Birthday Monday.

Tax Freedom Day has arrived four days earlier this year than in 2014, meaning the burden of Government has reduced.

Despite this earlier arrival, total Government outlays as a percentage of GDP remain higher than the OECD average, and higher still than what they were under the last Labour Government.

Since peaking in 2010 at 48.5% in the aftermath of the Global Financial Crisis, Tax Freedom Day has arrived earlier every year since. This is a positive trend, which ensures that taxpayers are increasingly supporting themselves rather than supporting central and local government.

How does New Zealand compare to the rest of the OECD? Have a look at the table below.


Why abolishing the KiwiSaver $1,000 kick starter makes sense

On One News, they found someone to complain that they won’t be getting a free $1,000  contribution from the taxpayer. She claimed that the contribution “kind of feels stolen” from her.

Her name is Alexa Rae Johnson. The same one who only moved to NZ this month to start a job here. Has been here working just one month, and already complaining that we’re not giving her a free $1,000.

Consider that the contribution was scrapped to fund the child poverty package. Now is Miss Johnson in poverty? Well, on her travel blog, she boasts of having traveled to 39 countries in the last couple of years.

Now this post is not a criticism of Alexa Rae. If a Government is silly enough to offer free $1,000 handouts to people who have just moved here, who wouldn’t want one. I’ve taken one. You’re a bit of an idiot if you don’t take one.

But the issue is whether the $1,000 hand out was a good use of taxpayer money. I’m not sure we need to help someone who has travelled to 39 countries save money.

Stuff reports some interesting data:

While 2.5 million people have signed up to KiwiSaver 38 per cent are making no contributions to it.

Many of those members are likely to be children whose parents signed them up to take advantage of the now-removed $1000 kick-start.

So middle class families with smart accountants have all rushed in to get the $1,000 handout for their kids, but it doesn’t actually lead to them saving money. They just take the $1,000 and leave it there.

In fact the overall change in savings behaviour has been very limited:

KiwiSaver has cost the taxpayer more than $6 billion and its success in helping people who really need a boost in their retirement savings has been described as “marginal, at best” in a report released by the Inland Revenue Department.

Think what else we could have done with that $6 billion?

Of those who are saving 56 per cent have money taken from their salary and wages and of those 58 per cent contribute at the minimum 3 per cent rate.
But just one third of the income saved was estimated to be additional savings.

So of the 2.5 million in KiwiSaver just 62% are making contributions. That’s 1,550,000 people. And of those 1.55 million just 56% are contributing from their wages. That’s 868,000.

And of that 868,000 only a third are doing additional savings, which is 290,000.

So we’ve spent $6 billion and it has led to just 290,000 people actually saving more money. That’s a cost of almost $21,000 per net saver. Now these are ballpark numbers and not entirely accurate, but the overall picture is clear that it is a hugely expensive scheme that has had a modest impact at best on savings.

IRD concluded:

A costs and benefit analysis shows that for the period 2007/08 to 2013/13, the additional savings amongst the estimated target group for each $ of government spending ranged from $0.20 to $0.38 as the level of government contributions dropped with fewer new enrolments and policy changes. 

So 20c saved for every $1 spent.

25% of the Crown subsidies were paid to the highest income quartile.

Middle class welfare.

David Farrar is a cofounder of the Taxpayers' Union and blogs at Kiwiblog.

How to avoid ACC over-payment

ACC fees are being cut - so why is the NZTA trying to charge motorists more?

Earlier this month ACC Minister, Nikki Kaye, announced cuts to the levies that motorists have to pay. The new fee regime will come into force from 1 July 2015. Unfortunately for taxpayers, it looks as though NZTA didn't get the memo.

If your motor vehicle registration is due to expire NZTA will write to you inviting you to renew your vehicle registration. Incredibly the notices invite recipients to renew at the current rates for up to 12 months, despite ACC levies dropping by 41%, on average, from 1 July.


We think the NZTA are being discourteous by not mentioning the reduced rate on the letter asking motorists to renew their registrations.

Instead of the ACC levy cuts being pro-rated, people will need to renew their licence twice to ensure that they get the advantage of the lower rate. Instead of pro-rating the ACC component of the registration fees, NZTA require motorists to to renew their licence twice to ensure that they get the advantage of the lower rate.

Only a bureaucrat could support NZTA's policy not to pro-rate the amounts. It means more administration and hassle for motorists and more work for the NZTA. Despite that, it is the only way to ensure that vehicle owners get the full benefit of the ACC levy cut.

UPDATE: The NZTA has contacted us to clarify that with the letters, an insert is included explaining the changes. We welcome that, however wonder why the 12month fee doesn’t simply reflect the change, rather than force people to renew twice in order to take advantage of the lower fee.


Stop the Travel Tax


In Budget 2015, Bill English has delivered a new tax on hard working New Zealanders - a tax on travel.

Bill English's Travel Tax will clip the wings of Kiwi families - making it about $80 more expensive for a family of four to get the the Gold Coast.

With the economy recovering and the surplus just out of reach, why are the Government taxing the aspirations of working New Zealanders rather than cutting government waste?


National deliver high tax, high spend Budget

Your humble taxpayer advocates have just been released from today’s Budget 2015 lock-up. 

We wish we had better news

From a taxpayer perspective, Budget 2015 is Bill English’s worst. We have awarded it a two out of ten, and “National’s Labour-Green high tax, high spend Budget”.

Instead of controlling spending, cutting government waste and reprioritising spending into areas most in need, Budget 2015 introduces new taxes and reduces the incentive to work.

The good:

  • more money to health (an additional $1.7 billion over the next four years), education ($686.9 million increase for 2015/16), tertiary education ($113 million for 2015/16) and law and order ($218.5 million between Police, the SFO and Justice/Courts for 2015/16).
  • A ‘child hardship package’ targeting those most vulnerable and increased requirements on those receiving benefits to be available for work.
  • Modest changes to Working for Families to reduce welfare for those earning more than $88,000 (the average reduction being around $3 a week).
  • Provision for annual ACC levy cuts of $375 million in 2016 and a further $120 million in 2017.
  • Removal of the $1,000 KiwiSaver ‘kick-starter’ which gave a bonus even to babies of millionaires to join KiwiSaver. We’ve expressed our concern in the past with the economic analysis showing that despite it’s cost, the KiwiSaver subsidies do little to increase the overall amount of private savings.
  • Making more Crown land available for housing.

The bad:

  • The 2014/15 financial year is forecast to be a deficit of $684 million.
  • Budget 2015 estimates a tiny surplus of $176 million for 2015/16. The consensus from our economic advisers is that this surplus is optimistic at best. Any further declines in dairy prices, for example, would obliterate this amount.
  • Very little reprioritisation of existing spending to areas more in need. The taxpayer funded lobbying, advertising campaigns, and pointless government programmes will continue.
  • No commitment to cut the Wellington bureaucracy - the number of back office pen pushers will remain as high as at anytime under the Helen Clark Government.

The ugly:

  • A new Travel Tax! The Government is introducing a new tax on international travel that will add around $22 per return ticket for every traveller.
  • Reducing the incentive for beneficiaries to get into work - Budget 2015 increases the benefit rates for families with children by $25 per week – the first core benefit rate increase above inflation since 1972!
  • An extra $80 million for the corporate welfare scheme that saw Larry Ellison’s Oracle Racing awarded millions.
  • Despite the recent report by the Auditor-General damning the lack of oversight and high administration costs, Budget 2015 allocates $49.8 million more to Whānau Ora.
  • Yet another $429 million for KiwiRail. In answering questions in the lock-up, Mr English was quite candid that despite the KiwiRail ‘Turnaround Plan’ (and the billions of taxpayer money piled in) – it still hasn’t turned round!

Our initial comments to media on the Budget 2015 are available here. We have also issued press releases specifically on the new 'Travel Tax' and the changes to KiwiSaver.

Taxpayers’ Union co-founder, David Farrar, has blogged his thoughts on the Budget at KiwiBlog.

We will be spending the next week or so going through the fineprint and working hard to uncover what the politicians don’t want you to know. In the meantime, it looks like National has well and truly turned into a Labour/Green-like Government that looks likely to cost taxpayers a fortune.

The $26m flag referendum

During the 2014 election, part of National's campaign platform was to hold a referendum on the New Zealand flag.

With the design process now underway, public opinion is divided over whether the $26m cost of the referendum is value for money.

While some of the proposed designs have been taken seriously, with thought and consideration, others are a bit more... "abstract". 


We have launched a poll to see what you think of the referendum process: is the $26m price-tag a waste of money, or the fair price of democracy?



IRD exercise video

The IRD has spent more than $418,000 of taxpayer money on a campaign featuring a YouTube video of 80’s style aerobic exercises to promote filing of tax returns. 

You paid for it, so you might as well enjoy it:

It is essential that the public are well informed on how to comply with their tax obligations. We say that spending nearly half a million on a video of people dancing round in leotards is a strange way to achieve it.

While the videos cost $41,000 the IRD won’t tell us what the remaining amount was spend spent on. We presume it is online advertising, which has only resulted in 20,000 views, less than the audience of daytime television.

Interestingly the IRD released the information publicly and issued a press release at the same time as the information was sent to the Taxpayers’ Union. That is highly unusual and indicates that officials are trying to put their spin on a bad-looking story. For example, they credit the videos for 36,000 more online registrations, but acknowledge that the YouTube video has only about half that number of viewers.

The IRD's response to the Taxpayers' Union request for informant under the Official Information Act 1982 is below.

Tell Steven Joyce to pay it back

steven_joyce.jpgYesterday saw the disclosure of MPs' and Ministers' expenses - the perks they get courtesy of taxpayers to fulfil their duties.

Like most taxpayers, we were aghast to learn that Steven Joyce had racked up a mind-boggling taxi bill while on a day-trip to Sydney. The driver was instructed to keep the meter going... and going... and going.

That meter kept clicking over for a whole 9 hours and cost taxpayers an eye-watering $1,248.

We say that $1,248 taxi bill is unfair to the hard working taxpayers who earned it. Politicians should be as frugal with taxpayers' money as if they were spending their own - and we cannot think of anyone who would keep a taxi meter clicking over for nine hours.

Click here to sign our petition demanding Mr Joyce to pay back his $1,248 taxi fare.

Taniwha Tax petition launched

 New Mana Whenua rules

After the launch of The Taniwha Tax: Briefing paper on Auckland Council's new Mana Whenua rules, we were inundated with emails from our members and supporters, aghast at the silent imposition of this regulatory tax upon Auckland property owners.

Many expressed concern that Central Government appeared to be sitting on its hands regarding this issue and wanted to have their opposition to this new tax noted.

We've launched an online petition for member and the concerned public to send a message to the Government.

Click here to sign the petition to repeal the Taniwha Tax.

Check whether your property is one of the 18,000 affected by the Taniwha Tax

Although some types of resource consent activities (such as discharging into water or air) may trigger 'cultural impact assessments' regardless of where they are in Auckland, the main impact is likely to be initially felt by property owners within 200m of more than 3,600 sites of value to Mana Whenua.

Auckland Council has a mapping program that allows you to search for your property.

Here's our guide to use it:

1. Go to http://acmaps.aucklandcouncil.govt.nz (if a pop-up box appears - 'click to continue')

2. Search for your address in the search bar.


3. On the left hand side (in the 'layers' tab)

3.1 Untick "Zones"
3.2 Untick "NonStatutoryInformaiton"
3.3 Next to the tick for "Overlays" press the "+" button (a sub menu should appear)
3.4 Ensure that only "Sites and Places of Significance to Mana Whenua" and "Sites and Places of Value to Mana Whenua" are ticked.


The purple triangles are sites of significance to Mana Whenua while the purple shaded areas are sites of value.Note that even if your property does not have a purple triangle, if it is within 250m it is affected. 


Taxpayers' Union launch 'Taniwha Tax' briefing paper


The Taxpayers’ Union, with support from the Auckland Property Investors’ AssociationAuckland Ratepayers’ Alliance and Democracy Action today launched a briefing paper on Auckland Council’s new Mana Whenua Cultural Impact Assessment provisions. The paper, entitled The Taniwha Tax: Briefing paper on Auckland Council’s new Mana Whenua rules.

We believe that every Auckland homeowner or potential homeowner needs to know how the new provisions affect them.

Most affected property owners will not become aware of the provisions until they suddenly find there is a site on or near their land, or they are told they may need to get a Cultural Impact Assessment (CIA) when applying for resource consent. Worse, the Council isn’t even sure that some of the 3,600 sites deemed ‘of value’ even exist. It didn’t bother to check.

The Briefing Paper quotes extensive criticisms of the provisions made on behalf of some of New Zealand’s largest corporates, including Vodafone, Spark, Chorus, Transpower, Vector, Watercare.

If you thought that navigating RMA red tape was hard, these provisions could require you to negotiate with up to nineteen Mana Whenua groups in order to gain development consent, the rules mean that resource consents may be subject to expensive modifications, even if the reasons are entirely spiritual in nature.

The Council has previously tried to dampen public concerns, claiming that not many Cultural Impact Assessments have been required so far. They ignore the cost and delay of applicants having to go to iwi groups to ask whether a CIA is required.

Most of the messages contained in the Paper are not those of the Taxpayers’ Union. We have deliberately repeated what would otherwise go undiscovered in the files of lawyers, planners and Council insiders. Our work is to shine some democratic light onto what has happened."

The report is available to download here. 


UPDATE: To check if your property is one of the estimated 18,000 affected by these provisions, please click here for our guide.

Launch of Auckland Ratepayers' Alliance

You asked and we delivered

Over the last 18 months, we have received a lot of feedback from members and supporters that something needs to be done to hold the flame to Len Brown and Auckland Council’s culture of waste. We've been doing our best from here in Wellington, but the time has come for an Auckland-based group dedicated to holding the Super City to account.

This morning the Taxpayers’ Union’s newest initiative - the Auckland Ratepayers’ Alliance publicly launched. The Ratepayers' Alliance will stand up against Auckland Council’s wasteful spending, poor financial mismanagement, the proposed rates increases and the new taxes the Council wants to introduce. The group has very similar objectives to the Taxpayers' Union, albeit focused just at the Super City. You can read more about the group's plans at www.ratepayers.nz.

Best of all it's free to join the Auckland Ratepayers' Alliance by clicking here.

The media spokesperson for the Ratepayers' Alliance is Jo Holmes. Jo is a natural, and I just know she will do a great job sticking up for ratepayers and cutting through the Council's spin.

I am sure you will join me in wishing our new sister organisation every success.

10-year passports shouldn't come at a price

We are repeating our calls on the Government to increase the term and lower the price of New Zealand passports. Documents obtained under the Official Information Act show that despite the review having been scheduled for completion by the Department of Internal Affairs in December 2014, it only now before Cabinet which is expected to come to a decision next week on whether to return to 10-year passports.

In August last year Internal Affairs Minister Peter Dunne made it clear that the review of our current passport regime would be complete by December 2014 and presented to Cabinet for approval. We were worried that he had been sitting on his hands for four months or perhaps hoping that the issue would go away. Instead we understand that officials are advising that technical barriers exist which make ten-year passports difficult (presumably those difficulties do not apply to Australia, the UK, the USA, and those european countries listed in our report on 10-year passports).

Nevertheless, there is positive news in this morning's NZ Herald:

New Zealanders are set to enjoy 10-year passports once again - but at a price.

It is understood the Cabinet will decide in the next few weeks to extend the passport validity period, which was reduced to five years in 2005.

This will require an amendment to the Passports Act, and is likely to lead to higher fees for renewing a passport.

Prime Minister John Key said officials wanted the validity period to remain at five years. But he hinted that the Government would go against their advice and revert to 10-year passports.

"Good news is coming," he told NewstalkZB.

The change followed an independent review of passport security measures by former diplomat and Foreign Affairs chief Simon Murdoch, and a separate review of the costs related to processing passports.

The two reports were finished in December and sent to Internal Affairs Minister Peter Dunne to make a recommendation to the Cabinet.

The Government is unlikely to use urgency in Parliament to change the legislation. But it may seek a shortened public consultation process, which would require agreement from other political parties.

Mr Key has previously warned that a return to 10- year passports is likely to lead to higher fees because revenue from processing the documents will fall. At present, it costs $135 to renew a passport. Analysis by the Taxpayers' Union showed that fee was more expensive than nearly every other comparable country.

Increasing the cost of passports is unjustified. When we released the report on 10-year passports the Department of Internal Affairs was claiming on their website that the New Zealand passport fees compared ‘favourably’ with other countries. We proved them wrong.

Even if a 10-year passport cost the same as the existing 5-year one, New Zealanders would still be paying more than our trading partners for the ability to travel.

The price for a passport should reflect the cost. The Government has previously ran the passport regime at a profit and while returning to 10-year passports will help, the price should be benchmarked against our trading partners to ensure Kiwis are getting a fair deal.

We will be keeping a close eye on this issue.


Len Brown gagging ethnic advisory panel members

The message Auckland Council is effectively giving members of its Ethnic Advisory Panel is "Shut up until you're told to speak."

The Council appears to be in damage control after a member of the panel joined the Chairman and resigned labeling the Panel 'tokenism' and a 'waste of money'.

These advisory panels are supposed to be about communities having their say, but now the Council is trying to gag them from speaking to the media. It seems as though Len Brown and Auckland Council want the pretense of inclusiveness, but officials are telling panel members to zip-it when they don’t sing to the right tune.

It is becoming clear to us that the only person wanting this expensive tokenism is Len Brown.

Currently the Council has advisory panels for Youth, Ethnic Affairs, Pacific, Senior, Disability and Rural interests.

We have called on the Council to abolish the expensive advisory panels, with the exception of the disability panel, which provides important advice on the plight of assess-impaired members of Auckland’s community.

There are currently plans to introduce a ‘Rainbow Panel’ of GLBTI representatives.

Rather than ramming identity politics down ratepayers’ throats, Auckland Council should focus on keeping costs down. This expensive faux-democracy via expensive token ‘representatives’ delivers next to no value for money to ratepayers.

It’s time for these panels to go.

Bribe-O-Meter - cost of NZ First Northland bribes now more than $200 per NZ household

Following another week of policy announcements on the Northland by-election campaign trail, NZ First is now clocking up promises that, if implemented, would cost more than $200 per New Zealand household.

As of today, National has promised $63.5 million for Northland, while NZ First's promises total $378.9 million. The amounts are equivalent to a cost per New Zealand household of $35.67 for National’s promises and $212.87 for NZ First.


The largest new bribe since last week's update was Mr Peters’ pledge to use taxpayer money to bailout the Kaipara District Council’s debt arising from the Mangawhai Heads wastewater project. This alone increased Mr Peters’ Bribe-O-Meter total by $80 million.

On yesterday’s TVNZ Q&A debate, Mr Peters made reference to a policy to build a ‘fast’ train service to the North. An independent economic expert commissioned by the Taxpayers’ Union for the Bribe-O-Meter, estimates that a high-speed rail link to Northland would cost at least $6.5 billion, more than Northland’s total annual GDP.

But you can breathe a sigh of relief. Winston Peters’ Chief of Staff confirmed to us this morning that the NZ First leader was not meaning high-speed rail. Apparently Mr Peters’ comments relating to ‘fast’ rail to Northland was a reference to line upgrades, already factored into the Bribe-O-Meter, and an express passenger service.

We are proud that the Bribe-O-Meter is forcing politicians to be transparent about the cost of their promises, but with one week to go there is still a risk that politicians turn the by-election into a lolly scramble at taxpayers’ expense.

Over the flip is a breakdown of the promises and our methodology.

Winston Peters' flagship policy an unwanted handout

It appears that Mr Peters wants to spend hundreds of millions of dollars on a NorthPort rail link, but hasn't even spoken to the Port's management.

The Taxpayers' Union can reveal that Winston Peters has never visited, nor spoken to the management of the port company his key Northland by-election promise is framed around. Mr Peters announced soon after his Northland campaign launch that his party would champion an extension of the Northland railway line to the Port Whangarei and channel growth there, rather than allow expansion at the Port of Auckland.

Below is a letter we sent to Mr Peters last week seeking clarification of the cost to taxpayers of the policy and confirmation that he has never visited the port. The letter also outlines Mr Peters' apparent confusion between Northport (operating near Marsden Point) and the now defunct Port Whangarei (which for legal and technical reasons is unable to be reopened). 

Last week, Northport's CEO  told us that the Port does not want the rail link and that Mr Peters had never spoken to them about any rail proposal.

This is just the sort of expensive political promise our Northland Bribe-O-Meter is designed to expose. Mr Peters appears to consider New Zealand's hard earned tax dollar so expendable that to win a by-election he's willing to throw nearly $200 million at a Port, despite having never visited or spoken to those in charge.

Our letter is here: 

No response has been received from Mr Peters or his staff.

Northland Bribe-O-Meter update

Today we have released updated figures for our Northland by-election edition of the election costing Bribe-O-Meter. The figures show that National is catching up with NZ First in the amount of taxpayer funding pledged to the electorate.

We have updated our figures to take account of Simon Bridges' Akerama Curves Realignment Project announcement this afternoon. We have also revised the cost estimate of Mr Peters' rail policy pledge downward from $198 million to $172 million, reflecting advice received from KiwiRail.

As of today the National Party's election promises total $35.67 per New Zealand household. That compares to NZ First having pledged policy we estimate would cost $165.96 per New Zealand household if implemented.


The National Party may argue that the new bridges and motorways come from existing roading budgets and therefore are not 'new spending'. Nevertheless, where it appears projects have jumped the queue ahead of other projects, we have included them in the Bribe-O-Meter figures.

This by-election is quickly turning into a buy-election paid for by all New Zealand taxpayers. The Bribe-O-Meter's purpose is to provide transparency on pork barrelling taxpayers are being forced to pay for.

Over the flip is a breakdown of the promises and our methodology.

GST and online sales

The Government has announced that it is currently investigating ways to ensure New Zealanders are charged GST on purchases they make online from foreign vendors. Netflix was one of the first companies to state that they do not intend on charging New Zealanders GST to use their service.

Just how the Government intends to levy GST on all online purchases is anyone’s guess. The devil will be in the detail.

The key question for taxpayers is whether this ‘itunes tax’ is about fairness, or revenue gathering. If the politicians are to be believed that this is purely about creating an equal play field, then there is no reason why the extra tax collected shouldn’t be used to lower New Zealanders’ tax burden in other areas.

It should come as little surprise that retailers in New Zealand are welcoming the announcement. Online purchases, especially of physical goods, have the ability to erode their market share, and with it taxes that the Government would otherwise receive. Any regime would also have to carefully look at the impact of compliance costs.

Yet on the other hand, the Government’s proposal seems fraught with difficulty, especially in relation to digital content. New Zealanders live in an increasingly globalised world. The internet allows the free flow of information, communication and access to content. And let's face it, IRD can't possibly reach every online retailer.

Two ISPs, Orcon and Slingshot, have lead the charge to open-up access by providing their customers with a way to access otherwise geo-blocked content. Certainly there are other ways for users to access international content, whether that be anonymity software such as Tor, or by using a VPN. When these workarounds are combined with virtual credit cards, like Entropay, users are free to consume content from wherever, whenever, in whatever jurisdiction has the best price.

The potential for a 15% increase in in the price of digital content may easily lead to an increase of people finding workarounds or increase the number of people engage in illegal file-sharing.

We look forward to scrutinising the proposal that the Government eventually releases, with a view to ensure that the Government offsets any increase in the tax take by reducing the tax burden elsewhere. 

Ratepayer-funded fashion advice at Auckland Council

Back-office Council staff have been receiving chic stylist advice courtesy of Auckland ratepayersweb-image.png

Despite the Council cutting services and library hours, the council seemingly has money for make-up and fashion advice for back-office accounting staff.

Material we’ve just released us show that the Council accountancy team hired image consultants Fox & Mae to run “Brand Me” sessions for the back office team to learn about grooming at work, what to wear and smart-casual Fridays.

Most employers expect their employees to be tidy and well presented, even if they are a back-office worker. Image consultants are normally employed by celebrities, the very wealthy, and front-facing staff who are acting in a front-facing role.

It is sadly ironic that the accountancy team, the very people whose job it is to keep Council spending under control, have been wasting money on what looks to be ratepayer-funded fashion and make-up advice.

Northland Bribe-O-Meter

While the by-election is a show-down in Northland, the cost of politicians’ pork-barrel politics will impact upon the pockets of all New Zealand taxpayers

Northland Bribe-O-Meter banner

Today we are proud to relaunch our election Bribe-O-Meter to keep track of the pork-barrel promises being announced on the Northland campaign trail. The Bribe-O-Meter was introduced in the 2014 General Election as a way for taxpayers to gauge what parties were promising, and how much those promises were going to cost taxpayers.

It hotly contested elections, politicians will be quick to pull out the taxpayer-chequebook. This projects endeavours to ensure that taxpayers know what their candidates want to spend, and how it’s going to affect taxpayers throughout the country. Upon the launch of the Bribe-O-Meter – Northland Edition, the leading candidates have already made some big ticket announcements.

The National Party’s promises currently total $28.37 per New Zealand household, while our estimates of announced New Zealand First policies comes to over $180 per household.


 Over the flip is a breakdown of the promises and our methodology.

Public sector pay rises a tax on private earners

When the Prime Minister announced an overhaul of the way that MPs’ pay would be calculated, after an embarrassing 5.4% pay rise form the Remuneration Authority, we at the Taxpayers’ Union were cautiously optimistic.

While it was reassuring to see politicians from across the political spectrum admit that the proposed pay rise was hard to swallow, the solution proposed by the Prime Minister creates some potentially perverse incentives.

The Council of Trade Unions, along with the Labour Party, more or less welcomed the changes proposed by the Prime Minister. The CTU’s chief economist, Bill Rosenberg, said that MPs’ salaries should not be indexed to the private sector.

That’s a sentiment we agree with. Too many of our aspiring politicians take a significant pay increase upon becoming an MP – a pay rise that is completely out of step with their earning potential in the private sector.

The Prime Ministers’ proposal for MPs’ pay would see increases indexed against the public sector. Every time our policy-makers increase the pay of taxpayer-funded public servants, they will in turn increase their own pay packets.

The real losers in this arrangement? Taxpayers.

On yesterday’s Firstline Labour leader, Andrew Little, answered a few questions about MPs’ pay and what approach his party would be taking.

We were staggered with the former trade-union man’s free and frank admission that public sector workers had been receiving more generous pay rises than those workers in the private sector.

Paying public sector workers more than those in the private sector does not get New Zealand ahead. It means those in the private sector pay more taxes and take home less. Does Mr Little not realise that or is he pandering to public sector unions?

Unless the Prime Minister ensures that public servant pay rises are reined in, he may find next year’s Remuneration Authority poses an even greater embarrassment.

Massive cost blowout at IRD

In what is the largest example of government waste the Taxpayers' Union has exposed so far, we can this morning reveal that the Government is about to blow $163 million on back peddling 2013 changes to the IRD's child support system.


In 2013 the Government passed significant reform of the Child support system that, among other things, changed the formula for the calculation of child support, and how it is collected.

Last week the Government introduced a Bill to Parliament that includes a number of changes to the tax system. The Bill didn't go unnoticed, but the Government's PR machine focused on the changes to the GST system which we welcomed.

But amoung the 211 pages, the Bill proposes to roll back a number of the child support measures passed in 2013. These significant changes to child support, as far as well know, haven't received any public attention nor were flagged by the Government. This is presumably why no one has yet exposed the significance of the turn around, the reasons and the eye-watering amount it's going to cost.

In the IRD's Regulatory Impact Statement (a report which officials must prepare explaining the policy reasons behind a proposed law) is the following:

The original 2011 cost estimate for the programme to implement the [2013 child support] reforms was $30 million. As the legislation was developed and greater details on the specific changes were determined and finalised, a business case was prepared in 2012. The business case revised the estimated cost up to $120 million over the ten year period from 2011-12 to 2021-22 (costs in the latter half of the period cover ongoing depreciation, capital charges and ongoing additional staff costs to administer the modernised scheme). The increase reflected a greater appreciation of the complexity of the changes proposed by the new formula. One of the main assumptions in the business case was that the vast majority ofthe expenditure would be operating cost. 

During 2013 Inland Revenue re-assessed the time and costs associated with the programme and the assumptions underlying the business case. It became clear that the work could not be implemented, to the level of quality and certainty required, by the original legislative deadline. More time was required. Also, the assumption that the majority of development costs would be operating and not capital expenditure was proving to be incorrect as the reform was implemented. Capital expenditure comes with associated depreciation costs and capital charges leading to a higher overall cost for the reforms. If the correct assumption had been made in the business case, the cost of the reforms would have been much higher than $120 million. In early 2014, the legislative deadlines were delayed a year to allow time to complete the first phase to the standards required. The revised estimate of the project, including costs from the delay and the higher ratio of capital expenditure, is now $210 million for the ten year period from 2011112 to 2020/21. The majority ofthe higher cost is the depreciation and capital charge associated with the capital expenditure.

That's right the $30 million cost for implementing the child support reforms has ballooned to $210 million!

'Depreciation and capital charge associated with the capital expenditure' is bureaucratic code for an IT cost blow out

So what is the Government doing?

Clearly a $180 million (or 700%) cost blowout is an unacceptable course of action. That's what the U-turn in the Bill introduced last week will remedy right?  If only it was that simple.

Elsewhere in the same document, officials say:

The cost ofimplementing phase 1 and part of phase 2 of the reforms [contained in the new Bill] is estimated at $163 million. 

There will be an additional cost ofmigrating the reforms to the new "transformed" environment. 

What a complete shambles. $163 million is what it will take to implement the revised policy! An extraordinary cost - more than $100 for every New Zealand household with not a single dollar of it going to vulnerable kids or struggling families.

The Revenue Minster has some explaining to do. We hope that opposition parties will be ensuring this happens when Parliament return on the 10th.

Click here to read the Regulatory Impact Statement on the IRD's website.

Politicians pontificating on pay-rise policy

Crocodile tears

This morning we called the bluff of MPs, some of who are crying crocodile tears in the media about their pay hike. We wrote to each asking whether they will be accepting the backdated pay increase.

We asked each MP the following: 

Dear Member,

Given various public comments that yesterday’s determination by the Remuneration Authority is unnecessary or unjustified, we seek your clarification by 5pm tonight whether you will be: 

a)    accepting the increase in pay and back-pay;

b)   refusing the amount (or refunding it to The Treasury); or

c)    giving the amount to a charity.

If you intend on giving the money to charity, please specify which charity.

The responses we received have been quite disappointing. One National MP was quick to respond with a one-letter message, “A”. We also received an odd response on behalf of all Green MPs.

Rather than answer our questions, the Greens provided a few points as to what their policy would be for the Remuneration Authority and future payments to MPs.

That’s all good and well. While their proposed solutions differ to ours, it would undoubtedly see a reduction in the rate at which pay rises occur. But what good is proposing a solution unless you practice what you preach?

When we pressed them further, the Greens refused to say what their MPs would be doing with their pay increases. We can only assume that despite their policies, they will be pocketing it.

No one fighting for taxpayers

dollar-money-cash-1200.JPGThe Remuneration Authority has approved another five and a half percent pay rise for backbench MPs, backdated to July last year.

With inflation close to zero this 5.4 percent boost is a slap in the face to taxpayers. In what other profession do you get paid an allowance for your family’s travel expenses?

For too many backbench MPs, $156,000 is the most money they will earn in their lifetime. How does that reflect the community service element of being an MP?

The current model has screwed the scrum against taxpayers. Not only should the remuneration be set once every 3-year Parliamentary term, but taxpayers need a voice in this decision. The Authority has a union representative for public sector workers, but no one representing taxpayers.


We've launched a petition calling on the Government to appoint a taxpayers'  representative (ideally an economist). We need someone in the room to push back against the continued creep of higher and higher salaries for MPs.

Click here to sign the petition

Auckland Council's ten very expensive tickets

ilxplkax.jpg  AC_horz_cmyk_32.jpg

This morning we have released documents we've obtained from the Auckland Council revealing that ATEED, Auckland Council's economic development agency, has gifted $50,000 of ratepayers' money to the prestigious Remuera Golf Club for the Holden PGANZ Championship.

Auckland Council claims to have no money, but finds $50,000 of 'spare' ratepayers' money to give a hand-out to Auckland's richest golf club. While the spin doctors might label it 'economic development' - how can this hand-out possibly be given priority over roads, rail and housing?

Ten tickets - that'll be 50k

We found out about this $50,000 gift after a Council run social media account advertised a competition, offering ratepayers ten tickets to the event. We suspect the ten tickets are all ratepayers are ever going to see of the $50,000! 

Officials have told us that there is a project sharing agreement in place where the Council receives 50% of any profits from the event over and above $150,000. We think that the answer shows that officials are trying to have it both ways by claiming that the grant is an 'investment' rather than a ratepayer-funded handout to sport. When it proves to be a flop, we suspect they will probably call it a tourism expense...

If anyone really thinks that this amounts to a genuine investment that will provide a decent return to ratepayers, well, we've got a bridge to sell ya... 

Click here to view the Council's response to our information requests.

We did it!

New Zealand Taxpayers' Union Inc.

You spoke and they listened!

Steven Joyce has announced that no taxpayer money is going to be used to support SkyCity’s convention centre. Instead, SkyCity are going back to the drawing board to come up with a cheaper design. Fantastic.

In just a few days more than fifteen hundred people signed our petition and the message got through to Mr Joyce and SkyCity. This is a win for the little guy.

While there could be devil in the detail - and don't worry we'll be making sure that SkyCity don’t now try to build something a fraction of the size that was promised - today at least taxpayers can breathe a sigh of relief.

SkyCity look set to hit the jackpot

The NZ Herald is reporting that Prime Minister John Key is not ruling out taxpayer money being used to subsidise the controversial SkyCity convention centre. Despite the deal being finalised in May 2013, it is reported that negotiations between the Crown and SkyCity are ongoing and nothing has been taken off the table.

The whole idea of the SkyCity deal was that Auckland would get an international class convention centre, paid for by SkyCity, in return for various concessions to the casino. That’s bad enough, but with Mr Key’s refusal to rule out taxpayer cash, it appears that SkyCity is about to hit the jackpot.

It was never suggested or intended that the taxpayer or ratepayer would have to shoulder any of the burden. If SkyCity underestimated the cost of the centre when they signed the deal, that's their problem. 

Any taxpayer support is nothing less than corporate welfare, no matter how the Government spins it. Our report on corporate welfare is available for download here - unfortunately it appears that we might need to bump the numbers up soon...

Poll: Should SkyCity be bailed out with taxpayer money?

Ratepayer Funded Art (with poll)

In light of Auckland Council’s decision to spend $200,000 on a sculpture many are saying in symbolic of the treatment of its ratepayers, I wanted to highlight how lucky we are in Wellington to have the Wellington Sculpture Trust. Why is it that Auckland Council seems to keep having problems with expensive art projects (as well as the new 'penis' art, the $1 million sculpture of state house is a good example) but in Wellington I can't think of a single controversy?
The Trust was formed in 1982 and is responsible for most, if not all of Wellington’s iconic art landmarks (below is a selection). I joined in early 2013 soon after the wonderful Nga Kina was revealed.

According to the Trust's website:

The Arts Advisory Panel is made up of arts professionals who assist in the selection processes. The panel currently comprises arts practitioners, the director of the City Gallery, Wellington, curators and an architect. Urban design and public safety advice is provided by the Wellington City Council’s liaison officer.

Wellington City Council plays a significant role. It provides most of our sites, helps supervise the installation of sculptures, and becomes the owner and caretaker of the sculptures on behalf of the city and the Trust after an appropriate defect liability period.

The Trust also has honorary advisers separate from its arts advisers to broaden its resources. These people have expertise in fields such as engineering, financial management and law. 

Is the Trust's model better than the a council commissioning art? From what I understand the Wellington Sculpture Trust pitches art projects in a way that matches public money with amounts contributed by private donors.

We're running a poll on whether ratepayer money should be used for art. I'm certainly interested to see whether people prefer no ratepayer funding of art, or a Wellington/trust model. Clearly Auckland's decision-making process needs improvement.

Poll: Should ratepayer money be used for art?

Coverage of LGNZ's efforts to impose new taxes

Coverage of the Taxpayers' Union response to LGNZ's efforts to impose new council taxes such as local fuel, sales and even income taxes.

Taxpayers' Union fuming over council plan (3 News, 2 February 2015)

A ratepayer-funded plan which suggests imposing more taxes to raise cash for councils has the Taxpayers' Union fuming.

Rates are the primary source of income for local authorities, but in a discussion paper released today, Local Government New Zealand suggests other funding sources.

The report lists imposing road tolls or bringing in taxes on income, certain types of expenditure, fuel, or certain transactions as options.

But Taxpayers' Union executive director Jordan Williams says the average rates bill has doubled over the last two decades, and the paper is only about how to tax more.

"Instead of focusing on the quality of councils' spending decisions, this campaign is using ratepayer money on propaganda promoting new taxes," he said.

"Nowhere in the discussion paper do we see a disciplined analysis of why local government spending is out of control." [...]


Council Digesting Report (Rotorua Review, 4 February 2015)

ROTORUA Lakes Council (RLC) won’t rule out a raft of possible new taxes that have been outlined as options in Local Government New Zealand’s (LGNZ) funding review discussion document.

LGNZ, a lobby group made up of 78 councils, including RLC, has issued the document which outlines options for addressing shortfalls in local government funding.

The options, which it says would sit alongside rates, include a local income tax, local expenditure tax, regional fuel taxes, transaction taxes and what it calls ‘‘selective taxes’’. RLC chief executive Geoff Williams said the document was intended to stimulate a discussion about possible funding opportunities and constraints in New Zealand, and declined to rule anything out.


Unsurprisingly, Yule’s claim that the discussion paper was not meant to pre- empt an overall increase in taxes was met with some scepticism by lobby group The Taxpayers’ Union.

‘‘Mr Yule is telling the public that the goal isn’t to increase the overall tax burden, but he released a report, not on ways to save money, but on ways to tax more,’’ said Taxpayers’ Union executive director Jordan Williams.

‘‘New Zealand’s average rates bill has doubled in the last 20 years, tracking at twice the rate of inflation. Instead of focusing on the quality of councils’ spending decisions, this campaign is using ratepayer money on propaganda promoting new taxes. Nowhere in the discussion paper do we see a disciplined analysis of why local government spending is out of control.’’ The LGNZ funding review document is available at lgnz.co.nz and submissions are open until March 27.

Read more.


Also: Council funding reform plea shot down (NZ Herald, 3 February 2015)


Local councils want ability to impose regional income, fuel and sales taxes

Local Government New Zealand, is spending considerable ratepayer money on a campaign promoting local income taxes, regional fuel taxes and regional GST-style regimes to increase the tax burden of local councils. LGNZ today launched a review document on various options for new taxes. You can download the paper here.

This diagram illiterates well the growth of local government (source):

New Zealand’s average rates bill has doubled in the last 20 years, tracking at twice the rate of inflation.

Instead of focusing on the quality of councils' spending decisions, LGNZ appear to be using ratepayer money on studies and propaganda promoting new taxes. We have long been concerned that LGNZ too often represents the interests of councils, rather than those paying the councils' bills! Nowhere in the discussion paper for example, do we see a disciplined analysis of why local government spending is out of control.

We've also been alerted to emails where LGNZ spin doctors are sending  draft opinion pieces to local mayors so that they can 'leverage local media' and promote these new taxes. 

"Trust us we're politicians"

In the LGNZ press release, the lobby group's President, Laurence Yule, says that:

The goal is not to increase the overall tax burden for New Zealand, but rather to determine whether a different mix of funding options for local government might deliver better outcomes for the country.

Mr Yule is telling the public that the goal isn’t to increase the overall tax burden while at the same time releasing a report that isn't on ways to save money, but on ways to tax more.

Former North Shore City Councillor, North Shore City Council David Thornton writes:

LGNZ Review is about more money for more spending

Few ratepayers object to the principal that all citizens should contribute to the cost of running their communities, and that those contributions should be within the ratepayers’ ability to pay.

The Local Government New Zealand funding review revisits many of the issues raised in the Independent Rates Review of 2007 and repeats some of the same conclusions reached then.

The difference between the two reports is that the 2007 review was looking for alternatives to rates, while this new report is aimed at raising new funds in addition to rates.

In other words LGNZ, on behalf of all councils, wants to spend more, and needs more money to feed those expansive ambitions.

We agree. The Taxpayers' Union isn't against new taxes per say. Our view is that new taxes should replace old ones (i.e. an equal decrease to compensate). In the case of local government though, LGNZ's efforts are so the local government spending binge can continue...

Poll: Should councils be given new powers to impose local GST, fuel and income taxes?

Vote by clicking here. 

HPA now giving away taxpayer funded surfboards and fishing rods

A few weeks ago we went public with our concerns about the ’No Beersie' campaign by the Health Promotion Agency. To recap:

  • * the campaign cost taxpayers $1.2 million;
  • * it doesn’t target those most likely to be affected by alcohol related harm; and
  • * even the HPA’s own focus groups found the campaign confusing (some even thought it was advertising beer!).

Despite the bad press (including this scathing Waikato Times editorial) the HPA is feeling very jolly indeed with your money.  It’s either that or the HPA so desperate to be liked they’re giving away fishing rods, surf boards and even $100 petrol vouchers! 

All this with money that should be helping those who have a problem with alcohol.

We’ve launched a petition to tell the Government to end to these sorts of silly taxpayer funded advertising campaigns promoting common sense and feel-good nonsense.


Do you agree that this is a waste of money? Will you support us? Sign the petition by clicking here.

Taxpayer support of Eleanor Catton

The Taxpayers’ Union is releasing figures obtained from Creative NZ showing that author-turned-policy-critic, Eleanor Catton, has received tens of thousands of dollars worth of grants courtesy of New Zealand taxpayers.

Some might question why Ms Catton would have a go at New Zealand when it's Kiwi taxpayers who have largely funded her education and career.

In addition to the usual government support of students, Ms Catton has received special Creative NZ funding amounting to tens of thousands for her artistic endeavours. Ms Catton's most notable work, The Luminarieswas completed while being on a six-month residency funded by Creative New Zealand. Far from not supporting the arts, it appears that taxpayers have been rather generous.

Despite The Luminaries being a commercial success, taxpayers still paid for the book to be translated into three languages. If that's not generous support, what is?

We said in our media release on Wednesday that if Ms Catton isn’t thankful for the support by the New Zealand Government while she wrote The Luminaries, maybe she should use some of the substantial royalties to pay the money back.

Click 'read more' for the raw data.

HPA spends $1.2 million on "Not Beersies" campaign

Today we released documents which detail the cost and focus group feedback on the ridiculous “Not Beersies” campaign by the Health Promotion Agency.

The documents show that:

  1. the campaign had the least positive impact on entrenched, high-risk drinkers;
  2. it instead targets those least likely to face harm from alcohol consumption;
  3. the HPA spent at least $1.2 million on the campaign (we say at least because officials refused to tell us how much advertising agency fees taxpayers covered; and
  4. the HPA conducts no cost benefit analysis on its campaigns. 

The Taxpayers’ Union had feedback that the ‘Not Beersies' ads were making people thirsty for beer. Some participants in the Agency’s own focus groups said the same - that the ads encouraged drinking or were confusing.

Is promoting a cultural change now synonymous with health promotion?

The Health Promotion Agency acknowledge that the campaign probably won’t reduce alcohol consumption and won't affect the most at-risk of alcohol harm - but they spent the money anyway.

The HPA spent over $1.2 million of taxpayers’ money in order to promote a ‘culture change’. No wonder no one bothered to do a cost benefit analysis.

It’s a creative campaign, but it’s using taxpayers’ money for social engineering rather than for the purpose of reducing harm or promoting health. The documents show that the HPA knew that they were woefully off the mark. They pushed ahead and spent the money anyway.

In December the Advertising Standards Authority received a complaint from an individual who incorrectly thought the ads were promoting beer. The campaign has also been publicly labelled "sexist and offensive" and with claims they miss the point as beer consumption continues to fall. Cleary the campaign message has become confused and contorted.

We think the campaign is an own goal. What do you think? Does the HPA and its ad agency have more money than they know what to do with? Should the Government be requiring the HPA to justifiy its budget and force it to invest in measures that actually reduce harm? Let us know on our Facebook page.

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