Lower Taxes, Less Waste,
More Accountability

Championing Value For Money From Every Tax Dollar

SkyCity handout: Letter to the editor nails it

A letter to editor published in today's NZ Herald nails the problem with SkyCity trying to strong-arm the Government for a handout for the National Convention Centre.

Corporate parasites cashing in

Commenting on its convention centre proposal, SkyCity says it is “working on a solution with the Government to bridge the funding gap. In resolving this issue, we will ensure that the value of this significant and complex project is not diminished for our shareholders’’.

Is it for real? Does it really believe taxpayers and ratepayers should subsidise its shareholders? We really do live in a country drowning in corporate welfare when people can make statements like this without being castigated by the Government or the Auckland Council.

The only utterances we have heard from them is that a bail-out with public money would be the last resort and not desirable. No flat-out refusal, as there should have been.

Once again, private enterprise is targeting the public trough. New Zealand is a country where profits are always privatised and losses always socialised.

I am sick of overpaid corporate parasites feeding off my endeavours. Chorus is another example. The Commerce Commission has allowed it to once again overcharge for its services, causing internet providers to raise their prices.

Chorus — not the taxpayer or consumer — stuffed up its quotation. So once again, shareholders should not be inconvenienced or short-changed.

Graham Hansen, Howick.

We don't know Graham, but he might be interested to read our report Monopoly Money which tracks the cost of taxpayer funded corporate welfare since 2008. The report is available to view and download here.

Len Brown's rates

Today we released information showing that while Aucklanders have been facing hefty rates increases, rates for Len Brown’s seven bedroom mansion have been falling.

Information obtained by the Taxpayers’ Union show that Mr Brown’s annual rates bill has fallen by several hundred dollars since becoming Mayor – from $3,994.05 in 2011/2012 to $3,693.76 in 2014/2015.

Since becoming Mayor of Auckland, Len Brown’s rates have fallen by several hundred dollars.

When Aucklanders are feeling the pinch of soaring rates Len Brown must have the best deal in Auckland with a decrease of almost ten per cent in three years.

While everyone’s rates are going up, Len Brown’s are going down. It’s salt in the wounds of those whose rates have increase ten, twenty or thirty percent.

Since our launch in 2013 we have been keeping an eye on huge rates increases within Auckland. Our competition to find the largest rates increases revealed one ratepayer, Mrs Glenys Smith, faced an increase of 34.2 per cent from the 2011/2012 year.

No wonder Len Brown broke his promise to hold rates at 2.5 per cent, it appears that Auckland Council’s inefficiency affects everyone but him.

It’s easy to break your promise when it’s everyone else picking up the tab.

Guest Post: Larry Mitchell on Auckland Council’s “Elephant in the Room”Guest Post: Larry Mitchell on Auckland Council’s “Elephant in the Room”

In the last year there has been a lot of discussion regarding efforts by Auckland Council to fund its yawning funding gap, a gap that mostly relates to its transportation (roading) budgets. New tolls for existing motorways are a possibility, as well as distorying the Auckland Energy Consumer Trust so that Auckland Council (instead of the intendand benificiares) get the annual payout.

Feedback included one commentator who “shouted” (in bold caps) … “Hang On! lets not try to fill any funding gap before we first address Auckland Council’s wasteful and unaffordable expenditures which are so clearly out of control!” … the Elephant!

Fair point … so here, to start this particular ball rolling, are some simple financial facts concerned with Auckland’s expenditures.

The 2012- 2022 long term plan forecast Council group expenditures to increase by 24% over the next five years, although this year’s 2014 actual result is slightly less (by 3%) than that forecast.

Recent publicity surrounds the funding deficit issues referred to already, that is, the search for increased income and other sources to meet budgeted funding totals. But there is something important missing from this picture. Nowhere in the debate surrounding the financial management of Auckland Council is there to be found any call for or actions to address the funding shortfall by making budget savings derived from expenditure reductions.

How different this is from individual budget holders of our family’s expenditures or of firms in the private sector. Any private sector firm faced with a similar funding dilemma to that of the Council would not hesitate in wielding the axe to its expenditures. They would act promptly to lower their overheads, then most likely to reduce payroll, while all the while seeking more efficient and economical ways to produce their goods and services. So why is our Council somehow exempt from employing these sensible strategies?

It appears that the Council’s coercive powers give them an assured (taxation) basis for their revenues and that effectively removes any incentive or compulsion for their making cost savings.   

This is the reason Councils usually just run “cost plus” budgets year after year. A small number, usually those reacting to pressures of their ratepayers, from time to time trim their costs. Currently though New Zealand Councils by and large show little interest in making cost savings as tables of recent year’s inexorable rates increases attest.

An analysis of alternative solutions, designed to modify Auckland Council budget strategies fall into two broad areas.

The first is to look at the Auckland Council culture and practices that have allowed this situation to develop.

The second addresses a range of specific tactics that can make inroads (savings) to meet balanced budget objectives..

So how did this expensive, unaffordable approach to Auckland Council financial management arise? There is no need to itemise these reasons as recent publicity has already done so. One glaring example of a lack of cost control however is the Council payroll. With over 1,100 (roughly 15% by number) of all Council employees drawing over $100,000 salary per annum this of itself is sufficient evidence of poor cost management for most ratepayers when their average incomes are in the mid-sixties.

In the interests of brevity we now merely list some of the missteps that have lead to the creation of our under-performing, expensive monster of a Super Council: 

  • The election of a Mayor and Council (majority) who have shown little interest in the creation of a high performing cost-effective unit of local government. Recent events may have forced them to address some funding alternatives but any cost savings ideas remain missing in action
  • Failure to do (as the Royal Commission recommended) and put in place a governance and management structure where performance and cost control would have the highest priority. The appointment of the suggested performance audit function was quietly shelved – some might say to be replaced it seems by an army of Mayoral feel good PR spin merchants?
  • Appointments in key financial positions of persons with no interest or track records in seeking to achieve affordable, high performance service delivery
  • Layered staffing structures with high payroll and head counts consequently building up large departmental overhead structures.
  • The absence of useful benchmarked expenditure-setting controls or performance improvement processes.
  • A failure to determine (including the use of independent public opinion surveys) the level of service ratepayers are prepared to trade off against cost savings.
  • A disinterested hands off external audit role. This is obvious from recent annual audit management clearance letters to the Council. These reflect an ineffectual extremal audit presence out of its depth, often beholden to Council management and totally disinterested in improved Council performance.

The result of these circumstances are well understood by Auckland ratepayers - just look at their rates bills and see the nearly daily headlines of the latest examples of Council waste and extravagance. Lack of control of Council expenditures has lead to unaffordable rates and their projected high percentage annual increases.

Only a total turnaround of leadership and of Council culture plus effective cost savings tactics can address these issues. Electors, as ratepayers seeking better value for their money have their opportunity next year to (albeit somewhat indirectly) set affordable cost-effective budgets by electing a Council with these as their principal agenda.   

Larry Mitchell is a local government financial analysist.  The views are his own and do not necessary reflect those of the Taxpayers’ Union. Larry can be contacted vai [email protected].  

Daniel Hannan MEP on David Cunliffe & Trickle Down Myth

Daniel Hannan, a Conservative Member of the European Parliament, has written an article for CapX on the myth of “trickle down economics”. He quotes former Labour Party leader David Cunliffe and seeks to dispel the myth surrounding free market economics.

In the run-up to the recent New Zealand election, for example, the Labour leader, David Cunliffe, asserted: “The rich are getting much richer, the middle is struggling and the poor are going backwards. It’s the human face of ‘trickle-down economics’, the idea that if we give more to those at the top, eventually things will get better for the rest of us.”

Cunliffe (who went on to lose badly, Kiwi voters evidently not sharing his analysis) was in distinguished company. When he was standing for the presidency in 2008, Barack Obama had similarly excoriated “the economic philosophy [which] says we should give more and more to those with the most and hope that prosperity trickles down to everyone else.”

It’s a wide-spread meme.

The case against trickle-down, then, is pretty clear. But who exactly is making the casefor it? Where are the economists, the politicians, the commentators, arguing that we should give more to the rich? Who avers that the best way to stimulate the economy is for plutocrats to have more to spend on their Lamborghinis and swimming pools?

Well, here’s an odd thing: I can’t find anyone. Which is, when you think about it, pretty astonishing. One of the consequences of the Internet has been to ensure that even the most eccentric points of view generally turn out to have some advocates. But my online searches, while turning up hundreds of people debunking trickle-down, have not discovered a single person defending it. Could it be that the whole thing is a socialist fantasy, a false creation proceeding from the heat-oppressed brain of Left-wing polemicists? 

If nobody can be found to promote this theory, why is it that there are so many politicians who are quick to rally against it? And what does it actually mean?

Hannan explains:

Coolidge, surely the most underrated of all American presidents, had applied the logic of the Laffer Curve avant la lettre. He could see that the punitive tax-rates levied under the Wilson administration were pushing wealthy people into removing their assets from the productive economy, and believed that, by cutting tax rates, he would boost tax revenues – as well as stimulating the economy in general. 

He was absolutely right. In 1921, when Americans earning over $100,000 were expected to pay an eye-watering 73 per cent in federal income tax, they accounted for 30 per cent of a total tax yield of $700 million. By 1929, when the top rate had been cut to 24 percent, the federal government collected more than a billion dollars in income taxes, of which 65 percent came from those earning over $100,000.

So “trickle-down economics” as characterised by Mr Cunliffe and others appears to be the rallying cry of certain politicians that want to tax people higher amounts and in doing so reduce the amount of tax raised by the government.

Mr Hannan’s full article is well worth a read. It can be found here.

SkyCity convention centre bailout? NBR readers say no

Just before the Christmas break we were aghast to learn that SkyCity was looking to a government bailout after cost overruns with the National Convention Centre project.

It looks as though NBR readers agree with us.

An overwhelming number of NBR poll participants say the government should not pitch in $130 million for Sky City’s new convention centre.

The Auckland-based company increased building estimates for the centre, putting the cost between $470 million and $530 million.

The casino operator had previously estimated the centre would cost $402 million, which it had agreed to cover in return for extensions to its Auckland gaming licence.

The entire purpose of the SkyCity deal was that Auckland and New Zealand would gain a world class convention centre, paid for by SkyCity, in return for various regulatory concessions for the casino.

It was never suggested at the time that taxpayers or ratepayers would have to shoulder any of the burden. If SkyCity underestimated the cost of the centre when they signed the deal, that’s their financial problem and should not be borne by taxpayers.

Economic Development Minister Steven Joyce says he expects the cost difference to be bridged through cost-cutting and in the procurement process, though would consider other funding options if needed.

"Any such options would not involve granting SkyCity more or different gambling concessions, or making further changes to any legislation that affects casinos or gambling," Joyce said.

It looks to us as though Minister Joyce is trying to warm up the public to the idea of gambling taxpayers’ money on the venture.

If that’s the case, we think he will be facing an up-hill battle!

NBR poll participants are strongly against the government forking out money to help SkyCity, with 86% of participants voicing their opposition to the idea. 

Sky City corporate welfare

Fairfax has picked up our comments on SkyCity's recent comments to prompt taxpayer funding of the controversial convention centre.

Auckland Councillors blast Sky City 'corporate welfare' Stuff 22/12/2014

Auckland ratepayers should not have to pay for a blow-out in the cost of the Sky City National Convention Centre, councillors say.

Economic Development Minister Steven Joyce raised the prospect of the Auckland Council chipping in to help fund the project, after new estimates revealed the cost could blow out by as much as $128 million.

The increase in cost could leave taxpayers on the hook for any shortfall, but Joyce said the council could provide some assistance.

[...]

The Taxpayers' Union has derided the deal as "corporate welfare" and called on the Government not to bail Sky City out.

"The whole idea of the SkyCity deal was that Auckland and New Zealand would get an international class convention centre, paid for by SkyCity, in return for various concessions to the casino," Taxpayers' Union executive director Jordan Williams said.

"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."

Read more.

Cruisin' on the taxpayer

New Zealand taxpayers have forked out $9 million to pay for a  four-day UN conference in Samoa that included hiring the luxury P&O Pacific Jewel cruise liner. New Zealand covered the accommodation and operating costs, of September’s Small Island Developing States.

We not aware of New Zealand taxpayers having ever chartered such a luxury cruise-liner. The ship is marketed as 'the world's largestPacific-Jewel.jpg adventure park at sea’ and includes a zip-line across the top deck, an outdoor circus performance arena and numerous movie theatres. Conference attendees had nine bars, pubs and nightclubs to choose from and seven restaurants and cafes to dine in.

It seems inconceivable that the Ministry of Foreign Affairs and Trade would think it a good use of taxpayers’ money to fund the chartering of a luxury cruise-liner for a conference in another country.  It appears that MFAT brought in the liner so conference attendees could avoid the mainland.

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$9 million is nearly half New Zealand’s annual aid budget to Samoa and amounts to $4,500 per attendee. The amount does not include the cost of attendees’ flights or travel (and presumably cocktails) which makes the $9 million amount all the more remarkable.

If the $9 million had been used for genuine economic development or investment, no one would complain. Instead taxpayers forked out for a conference which ‘achieved’ a document that ‘reaffirmed’, ‘acknowledged’, ‘recognised' and ‘recommitted’ to various bureaucratic platitudes.

Little of the money is likely to have gone into the local Samoan economy. The British-American owned company, P&O Cruises, appears to have been the main beneficiary.

We should be funding measures that actually develop economies, not chartering liners to talk about it

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Earlier in the year press releases were issued by Foreign Affairs Minister, Murray McCully and the Ministry which pumped the value of the talk-fest. They failed to mention the fact that taxpayers were footing the bill at a cost of more than $2 million per day. It it a shameful misuse of public money and officials are no doubt praying that the Christmas rush allows them to avoid public vilification.

 

State Services Commission staff the highest paid

The average salary for staff at the State Services Commission is higher than at any other government department, according to figures released by the Taxpayers’ Union. This morning’s Dominion Post reported the Commission staff earn an average of more than $113,000 a year - $45,000 more than the public sector average.

Frontline orientated groups such as the NZ Customs Service ($60,209) and the Department of Corrections ($60,630) have significantly lower salaries when compared to the management-heavy Ministry of Women’s Affairs ($104,586) and Ministry of Pacific Island Affairs ($90, 887).

Instead of rewarding those on the front line, the Government appears to be making those in Wellington most comfortable. How can, for example, the Ministry of Women's Affairs and the SSC justify higher average salaries than both Foreign Affairs and the Serious Fraud Office?

In light of the recent blunders by the State Services Commission, Paula Bennett should be asking some serious questions as to whether taxpayers are receiving value for money from those who are supposed to be promoting an efficient public service.

Over the flip is the list of government departments and average salaries (access by clicking 'read more').

Annual Review

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

We’re proud of the document, and what we’ve achieved to date, but there is still plenty to be done.

There are hundreds of organisations that campaign for more government spending and a higher tax burden. The Taxpayers’ Union helps balance that debate by exposing government waste, arguing for more efficient government spending, and promoting the benefits of lower taxes.

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 confidential donation.

'Trickle down economics' doesn't exist

This morning's Radio NZ's Morning Report interviewed Labour's Finance Spokesperson Grant Robertson on the OECD report on inequality released today. In the interview, Mr Roberson referred a number of times to 'trickle-down economics' and reiterated the point Green Party co-leader Russel Norman made in an earlier interview that the theory is invalid. But what does the term mean and have fiscally conservative groups (such as the Taxpayers' Union) or centre-right politicians ever argued for lower taxes on the basis a 'trickle-down' theory?

Audio on demand: Labour's take on inequality's effects

What is 'trickle-down economic' theory? Does it exist?

Back in February, Jenesa Jeram at the New Zealand Initiative, a Wellington based think-tank, considered the same question.

Defeating the trickle-down straw man

Jenesa Jeram | Research Assistant | New Zealand Initiative

In debating, speakers are not rewarded for having a superior argument per se. They are rewarded for convincing the audience that they do. The easiest – but ultimately dishonest – way to do this is to caricature the opponent, portraying their argument as ridiculous beyond belief.

Trickle-down economics is an example of a “ridiculous beyond belief” idea; that giving money to the rich will eventually trickle down to the rest of the economy to benefit all. Indeed, the refutation of this theory of trickle-down economics dominates the discourse.

Recently, opposition leader David Cunliffe cited the theory’s failure in his State of the Nation speech, arguing that “The rich are getting much richer, the middle is struggling and the poor are going backwards. It’s the human face of “trickle-down economics”, the idea that if we give more to those at the top, eventually things will get better for the rest of us.”

The problem is, there is no such thing as trickle-down economics. In fact, it is an oxymoron: it has no “economics” in it whatsoever. Thomas Sowell, senior fellow at the Hoover Institution argues convincingly that the theory is a straw man argument – a flimsy invention of those arguing against it so they can easily knock it down. Sowell writes that the idea cannot be found in “even the most voluminous scholarly studies of economic theories”.

Trickle-down economics is a complete caricature of the original arguments supporting economic growth. No economist has ever argued that in order to make a poor person richer you should make a rich person richer first. Economists have, however, argued that economic growth can make us all better off, whether we are rich or poor.

So why has this trickle-down nonsense persisted for so long? Perhaps because it sets the parameters of debate around redistribution, focussing solely on inequalities in wealth, rather than inequalities in capabilities. If wealth is not trickling down naturally through voluntary processes, then it is up to the government to intervene to ensure it does.

However, there is a much better way to deal with inequalities. Instead of trying to correct inequalities through redistribution, we should ensure that everybody has a chance to participate in our growing economy. First and foremost, this means making sure people acquire the right capabilities and education.

Rather than waiting for wealth to trickle-down from the top, the focus should be on ensuring everyone has the ability to swim with the economic tide.

Ms Jeram's final two paragraphs hit the nail on the head. In fact they are a better summary of the main message of the OECD report: the importance of investing in education and ensuing equality of opportunity.

Unfortunately Messrs Robertson and Norman couldn't help but take the opportunity to use the report to mischaracterise the economic arguments for a low tax economy. Our press release responding to the comments is over the flip.

 

Time for recall elections for local government?

On Sunday we suggested that New Zealanders should be given the ability to recall their representatives after the latest of a series of scandals involving Auckland Mayor Len Brown was revealed. The NZ Herald picked up our suggestion:

'Secret room' spending shows need for recall elections

A lobby group says revelations Auckland Council spent $30,000 on "secret rooms" for Len Brown show New Zealand needs recall elections to dismiss politicians before their terms expire.

The Council spent the money building a private bathroom and dressing room hidden behind a bookcase in the Auckland mayor's new office, the Herald on Sunday reported.

The Taxpayers' Union today said the Government should give local communities the ability to petition for recall elections.

"Councillors have already censured Len Brown for misusing funds but clearly the line in the sand is being ignored," said Jordan Williams, Taxpayers' Union executive director.

"A recall option would enable ratepayers to petition for a vote to fire a shameless [politician] who lacks any respect for those who pay the bills." Read more.

Voter recall options are gaining popularity overseas and it's time New Zealand had the conversation. Though often associated with the United States, where they have a long history and are used at both the state and local leve, recall mechanisms also exist in British Columbia, several Swiss cantons, the Philippines and Venezuela.

Recently the UK Government introduced the Recall of MPs Bill to the House of Commons on 11 September 2014, after pledging to the public to go so upon election in 2010. Many UK MPs, led by backbencher Zac Goldsmith, think the Government’s proposed threshold of recall only after a committee of MPs has found the representative to have been engaged in “serious wrongdoing” is too high.

Based on the swamp of emails we've been getting, many Auckland's think the threshold to censure a Mayor seems to be pretty high too!

We think that it's time the Government gave ratepayers a voice between elections. A recall option would enable ratepayers to petition for a vote to fire a shameless politicians who lacks any respect for those who pay the bills. New Zealanders need a mechanism to replace elected representatives if they fail to perform or bring their office into serious disrepute.

As Zac Goldsmith recently said:

“What is at stake is a matter of principle – do we trust out voters to hold us to account or not?”

It’s time to have the recall conversation.

Is bigger better for local councils?

That's the question facing the Wellington region with the Local Government Commission releasing it's proposal for a "Super City" stretching from the Wairarapa to the Cook Strait.

TDB Advisory report, commissioned last year by the Hutt City Council, reviewed the international literature on the relationship between size and cost-effectiveness of local government. It examined the expenditure data from New Zealand territorial authorities to assess the relationship between size and cost-effectiveness. The report found that efficiencies are generally gained up until a local council area covers 50,000 inhabitants. Once councils reach around 200,000 in population it appears that diseconomies of scale kick-in and that larger councils tend to cost more on a per ratepayer basis.*

There are other problems with the model chosen by the Commission:

  • It doesn't offer value for ratepayers - that's not just our view, the Commission's own analysis ranks the chosen model fifth in terms of net benefits of the eight options presented. Projected efficiency gains of $30 million per year at 3% of operating expenditure are derisory given the risks of adverse efficiency changes described from other local government agglomerations.
  • A move to capital valuations for rates will hurt the CBD the most - as Aucklanders well know, capital valuations shift the rates burden onto inner suburbs. The Commission does not hide its intention to cross-subsidise. Wairarapa, for example is warned that it will lose $11m of subsidy if it goes it alone. We see Wairarapa’s determination to be self-reliant as creditworthy. Judging from the relative performance of Christchurch and its neighbouring small councils, Wairarapa will have every prospect of showing the Commission to be dead wrong.
  • The goal of 'regional coordination' is fudged - the proposal is obscure about the relationship between local boards and regional coordination matters such as economic development and transport.
  • It won't make the boat go faster or promote 'a single voice' - despite the recent efforts to address economic development at a regional level, the proposal gives economic development to local boards. Even if the scheme resulted in a 'single-voice' democracy we've not been able to track down evidence of advantages stemming from such a system. If anything, ‘single voice’ democracies in seem better positioned to squeeze central government for pork barrel politics courtesy of the taxpayer.

The Commission's draft proposal is available on this page. Submissions close on 2 March 2015.

First birthday

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A year ago today the Taxpayers’ Union launched with the aim to become a loud voice fighting for lower taxes, less government waste, and to put pressure on politicians to cut corporate and union welfare. Today's anniversary is a good chance to look back on some of the campaign highlights in our first 12 months.

Waste watch campaign highlights

Our first major exposé was Transpower's $1.2 million café on The Terrace in Wellington. The exclusive café meant staff could avoid walking to one of the dozen coffee shops within a few hundred metres of Transpower's office building. Even worse, the money was spent despite Transpower having only 18 months left on its lease!

The Seven Sharp item was the first of what has become regular television coverage of our campaigns.

Seven Sharp on Transpower cafe

We exposed DOC’s IT screw-ups and staff junkets to Australia (to learn skills not applicable in New Zealand). Our work saw media attention given to the taxpayer funded brochure to explain to elderly how to take a bus and the 1,000 taxi trips taken by health officials to avoid the 500 metre walk between offices.

We’ve held politicians to account, exposing how much hush money taxpayers are forking out when MPs have fallings out with staff, and questioning MPs for charging holidays to the taxpayer.

We stopped the CTU/Business New Zealand 'rort' that had seen $20 million spent on health and safety training that, according to ACC’s own analysis (which we uncovered), wasted 84 cents per dollar spent.

We’ve kept the pressure on local government too – exposing the handshake deals in Dunedin,  Len Brown’s debt problem, Auckland Council’s secretaries with secretaries, the ratepayer funded conference on the practise of multiple sexual relationships, the 100k curtain and Napier’s 'museum of omnishambles'.

Reports

Sky High briefing paper on passportsJordan McCluskey's report calling on 10-year passports saw the tough questions put to the Prime Minister John Key and Internal Affairs Minister Peter Dunne. It lead to considerable media attention and helped force the Government to review our passport regime with, according to Peter Dunne, a view of returning to a 10-year passport regime.
 

Jono Brown's Rate Saver Report outlined 101 ways councils can save money and received the support of Invercargill Mayor Tim Shadbolt, and Hutt City Mayor Ray Wallace. 


 

Ratepayers ReportWe worked with Fairfax media to publish New Zealand's first comprehensive online local government league tables - Ratepayers' Report. It highlighted how our largest city's finances are in poor shape, with Auckland Council carrying more than $15,800 in liabilities per ratepayer.

Bribe-O-Meter logoOur election 'Bribe-O-Meter' armed voters with the facts on how much the party promises would cost taxpayers. Thanks to donations from members and supports just like you, our targeted online advertising meant the figures reached more than 215,000 voters.

 

Jim Rose's report examining the cost of corporate welfare since 2008 was released earlier this month. Already it's seen Economic Development Minister Steven Joyce on the defensive about the $600-$800 average household annual cost of the government's programmes of corporate welfare. The report includes forewords by Labour MP Stuart Nash, and Auckland Chamber of Commerce CEO Michael Barnett.

But our continued work relies on you...

Only your donations and membership keep us afloat. If you agree our work is valuable please click here to donate now or if you're not already a member click here to join.

Here's to you, for our first year in our campaign for a lower tax burden.

Clarification of council debt in Hawke's Bay

The Hawke's Bay today is referencing our Ratepayers' Report - local government league tables, in correcting what appear to be mistaken information about the indebtedness of Hastings District and Napier City councils. Local debate is raging in Hawke's Bay as the twin cities prepare for the release of the latest amalgamation proposal from the Local Government Commission expected before the end of the year.

Taxpayers' Union joins debt debate

The Taxpayers' Union says its own figures show Napier Mayor Bill Dalton "is comparing apples with oranges" in numbers he released this week. Photo / Duncan Brown

A lobby group set up to keep a check on government spending has waded into the debate about Napier and Hastings' respective council debt.

The Taxpayers' Union says its own figures show Napier Mayor Bill Dalton "is comparing apples with oranges" in numbers he released this week, which were also criticised as "miles off" by Hastings Mayor Lawrence Yule.

Taxpayers' Union executive director Jordan Williams said the organisation went through a rigorous process earlier this year to collect debt figures for all New Zealand councils.

It published the figures in online "league tables" which included other measures of local body performance.

The league tables are online at RatepayersReport.co.nz

"Mr Dalton's figures appear to be very different from the ones we ran past the council's finance team earlier in the year," Mr Williams said yesterday.

"Mr Dalton is right that Hastings has higher debt per ratepayer, but his figures are arguably misleading by failing to take into account differing accounting policies used by each council."

"On a total liabilities measure, the latest figures available show that Napier Council owes external parties $714 per ratepayer. Although Hastings District is higher, $2501, that is still less than the New Zealand average, $4386."

Read more.

 

Joyce responds to corporate welfare analysis

Steven Joyce has provided a response to Jim Rose's Monopoly Money report - but appears to focus just on R&D tax credits, rather than address the bulk of corporate welfare identified in the report.

Joyce disputes corporate welfare analysis

Steven_Joyce_copy_21.jpgEconomic Development Minister Steven Joyce is disputing the Taxpayers’ Union analysis of corporate welfare under National, saying he disagrees with its characterisation of a subsidy and its estimate of would-be corporate tax rate reductions.

As revealed in National Business Review last Friday, a Taxpayers’ Union report claims that National has handed out an average of $1.18 billion a year in corporate welfare since it came to power in 2008. (See report attached)

In the Monopoly Money report, Jim Rose – a former principal adviser at the Treasury and former senior analyst at the Ministry of Business, Innovation and Employment – concludes that such business subsidies are costing New Zealand households an average of $600-800 a year.

Continue reading on the NBR site ($)

NBR on 'Monopoly Money'

Crony capitalism undermines sustainable growth National Business Review - 14/10/2014

 

On Friday we launched our hardest hitting report to date,Monopoly Money. The report includes forewords by Labour's Napier MP, Stuart Nash, and the Chief Executive of the Auckland Regional Chamber of Commerce & Industry, Michael Barnett, ONZM.

This morning the NBR published Mr Nash's foreword as an opinion piece on its website (click link to view). 

Our Monopoly Money report can be viewed online here

Taxpayers' Union lends voice to international coalition

Today the Taxpayers’ Union has joined a large international coalition of taxpayer groups with the intention of opposing supranational taxation schemes, including ‘harmonising’ tax rates across borders and levying taxes on behalf of international bodies. The 22 signatories represent groups from 15 different counties.

International efforts to subject New Zealanders to a taxes on sugar, consumer products and even financial transactions, are deeply concerning. We’ve joined forces with our overseas equivalents to highlight these developments.

International taxes are potentially very problematic – they will tend to come on top of national taxes, the control will be small, opening the schemes up for potential corruption. Without voters to hold these policymakers accountable, the taxes will be easy to increase once they are in place.

The situation has become urgent in connection with the World Health Organization (WHO) meeting in Moscow starting today. The scope of the WHO meeting is to discuss raising excise taxes and to recommended uniform excise tax rates.

One of the points made in the letter is the value of competition by countries:

Tax Competition, by contrast, is a natural dynamic that allows people to move economic resources from high tax areas to low tax areas. Other regions must adjust, or risk depriving their own peoples of opportunities to prosper. This maximizes economic efficiency and allows consumers to pay the best price for the highest quality.

A copy of the letter and list of signatories can be viewed here.

New report on corporate welfare

The Taxpayers’ Union has today launched new a report, Monopoly Money, which examines the cost and case for New Zealand’s extensive corporate welfare programmes. 

The report, which examines the cost of corporate welfare since the 2007/2008 budget, shows:

  • Since National took office, corporate welfare has cost taxpayers $1-1.4 billion ($600 - $800 per household) per year

  • If corporate welfare was abolished, enough money would be saved to reduce the corporate tax rate from 28% to 22.5%

  • If applied to personal income tax rates, the saving would allow the 30% and 33% income tax rates to be lowered to 29%

  • Alternatively, the 10.5% rate (applicable to the first $14,000 of income) could be reduced to 7%.

Labour MP, Stuart Nash, and Chief Executive of the Auckland Regional Chamber of Commerce & Industry, Michael Barnett, ONZM, have provided forewords to the report.

Mr Nash says:

"Given that politics is a contest of ideas and vision, any government spending on the scale identified in this report should be transparent and open to public scrutiny. I therefore welcome the Taxpayers’ Union efforts in this area."

Mr Barnett, says:

“Corporate welfare seldom represents a good or fair use of tax and ratepayers' money. The report shows that evidence of substantial benefits is scant and limited.”

The report’s author, Jim Rose says:

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

Bill English was right when he said last month that welfare is like crack cocaine. There needs to be a real effort to beat the vested interests and put an end to these corporate welfare programmes.

This report will serve as a wake up call for taxpayers - the per household cost of the corporate welfare detailed in the report equals between $600 and $800 every year. The amounts may be justified - if the Government is a better investor than private citizens. The economic evidence, however, suggests that governments, politicians and bureaucrats do not have the market disciplines to be better investors on a consistent basis. 

To read our report full screen click on the image below. Alternatively, you can download the report as a PDF by clicking here.

Serious questions for Wananga

This morning's lead story in the NZ Herald will no doubt leave a bad taste in taxpayers' mouths, with reports that the Whakatane-based Te Whare Wananga o Awanuiarangi has received $6 million in payments it wasn't entitled to.

The Warriors are caught up in an investigation into a Maori tourism qualification involving alleged overpayments of $6 million of taxpayers' money.

Nearly 100 players and staff "completed" an 18-week course in just one day and a member of the club board - who also worked for the wananga that ran the tertiary course - has been referred to the Serious Fraud Office.

So 100 staff and players left left to do an 18 week course, came back with a certificate and no one asked questions?

Donna Grant has resigned from the Whakatane-based Te Whare Wananga o Awanuiarangi and offered to assist with any potential SFO inquiry, according to her lawyer.

"She is absolutely confident she has done nothing wrong and is happy to co-operate," said Richard McIlraith of law firm Russell McVeagh.

A prominent figure in kapa haka and Maori performing arts, Mrs Grant is the daughter of Sir Howard Morrison and Sir Owen Glenn's sole representative on the five-person Warriors board. She was also the driving force behind the Warriors Foundation, the club's now defunct charity arm, which delivered the Hei Manaaki course to 94 players and staff from the league team.

Her husband, Anaru Grant, is the chairman of Te Arawa Kapa Charitable Trust which also delivered the course twice in Rotorua.

Forensic accounting firm Deloitte referred those three courses to the SFO, while the wananga cancelled the certificates of 217 students and refunded an additional $1.3 million in taxpayers' money. The Herald revealed last month that players and staff from the Warriors received certificates last year, which are among those now recalled.

Chief executive Wayne Scurrah said it was "disappointing to be caught up in all of this" but the club did not know the course was supposed to be 18 weeks long, not one day.

He declined to comment further because a board member was involved and referred questions to chairman Bill Wavish, who did not return messages.

This seems very strange. When you're looking to book a cause, the length is usually the key piece of information. Was it the Warrior's board member who arranged the training?

Mrs Grant's resignation and the referral to the SFO come in the wake of a review released yesterday that found the Hei Manaaki programme was "overfunded", according to the Tertiary Education Commission and the NZ Qualifications Authority.

An independent report by Deloitte, which formed part of the inquiry, found the monitoring of Hei Manaaki - levels 3 and 4 of the National Certificate in Maori Tourism - was poor and highlighted some "internal inadequacies in the academic oversight processes".

Students spent an average of 183 hours with tutors but the wananga was given taxpayer funding for 388 hours. Poor monitoring of attendance "may have resulted in the award of these national qualifications to students who have engaged in only a small proportion of the course", said the report.

This has the potential to seriously undermine the viability of the Wananga. It shows a severe failing of governance.

The "substantially compressed delivery" led to students participating in a programme that fell "well short" of its approved credit value.

Graham Smith, chief executive of Te Whare Wananga o Awanuiarangi, said 217 certificates were cancelled.

One employee was dismissed for misconduct and disciplinary action for other staff has not been ruled out.

 

Time for Fed Farmers to be weaned

Image from Stuff.co.nzIn yesterday’s NBR it was revealed that the Federated Farmers lobby group had received $228,000 of taxpayers’ money in the past five years.

“It shows Federated Farmers received many payments via three Sustainable Farming Fund projects – a contestable fund investing up to $8 million a year in applied research and projects led by farmers, growers and foresters.

The $228,658 in payments include three separate Federated Farmers farm days from 2010-2012 that the ministry contributed almost $150,000 toward. Other payments were made for leadership programmes, training seminars for farm managers, two Federated Farmers’ AGMs, as well as attendance at an international sheep meat forum in Brussels.”

More via NBR (paywalled)

We have called for Fed Farmers to be weaned off taxpayer funding.

Government agencies should not be handing over taxpayers’ money to lobby groups and pet causes. Here a group that speaks for one of our largest industries is on the take form the Government’s ‘Sustainable Farming Fund’.

How can a lobby group such as Fed Farmers remain credible and independent, when it’s receiving taxpayer funded top ups?

Pie in the sky

This morning we released advice on the cost to taxpayers of three of Internet-Mana’s education policies. At a total cost of $17.6 billion they are higher than the entire policy package of the three main political parties combined.

Labour leader David Cunliffe is right when he reportedly said that Internet-Mana are ‘numerically challenged'.

With just three policies Internet-Mana have managed to pledge more spending than National, Labour and the Greens combined.

Even the $11 billion in spending cuts proposed by the ACT Party wouldn’t pay the tab for Internet-Mana.

According to Dr Michael Dunn of Economic and Fiscal Consulting Ltd, forgiving student loan debt would cost $14.2 billion, while ‘free’ tertiary education and full student allowances would cost $568 million and $570 million per annum respectively.

Altogether these three policies would cost a staggering $10,386.84 per household.

As most of Internet Mana's policies lack sufficient detail to enable them to be costed, the Party has not been included in the Bribe-O-Meter graphic at bribe-o-meter.co.nz.

Click here to visit the Bribe-O-Meter.

Final results of Bribe-O-Meter published

Yesterday we published the final update of our election costing 'Bribe-O-Meter' in the lead-up to Saturday’s election.

The Bribe-O-Meter now reflects the costs of all policies announced. It shows that of the main parties:

  • the Greens have promised to spend the most, $6.54 billion, or $3,857.77 per household during the next Parliamentary term;
  • the Labour Party have committed to a policy programme worth $5.81 billion, or $3,423.16 per household; while
  • National have committed to $1.4 billion, or $823.62 per household of new spending.

Throughout the election campaign our independent expert has made adjustments to the Bribe-O-Meter's numbers as parties have announced, refined and clarified their policies. Nevertheless, throughout the Greens have consistently proposed the highest amount of new spending, while ACT have been the only to propose an overall reduction.

While Labour and the Greens have outlined their plans for the next three years, National have remained more reserved, perhaps signalling debt repayment or future tax relief.

Click here to visit the Bribe-O-Meter.

Free Tertiary Education on the Taxpayer

Internet-Mana promises free tertiary study Stuff.co.nz - 12/09/2014

Free tertiary education and a universal student allowance could be delivered immediately if they were prioritised over tax cuts, the Internet-Mana Party says.

Taxpayers' Union spokesman Ben Craven said writing off student debt would benefit professionals such as lawyers and doctors who had large student loans, but were also likely to be on good incomes.

Forgiving the entire amount of student loan debt currently owed would cost an average of $8374 per household, and was likely to be more expensive than the election policies of all the mainstream political parties combined, Craven said.

"Most voters will see this promise by Internet-Mana as both fanciful and misleading."

Click here for the full story on Stuff.co.nz.

Cost of forgiving student debt

Yesterday the Internet-Mana Party announced that it wants to forgive existing student loan debt.

NBR: Internet Mana says it will forgive student debt, currently totaling $14.2b

Internet Mana has today today confirmed it would make tertiary education free — but added a new wrinkle: a pledge to "Develop a comprehensive loan forgiveness programme for those with existing debt."

The party says it will also introduce a universal student allowance.

It says total student is currently $14.2 billion.

...

The debt write-off scheme would be phased in from 2016 and be "funded from a variety of sources."

We believe the policy would result in a dramatic wealth transfer from middle class taxpayers to the lawyers, accountants, doctors and professionals who have large student loans, but are also likely to be on good incomes.

With student loan debt is currently $14.2 billion, forgiving it would cost, on average, $8,374 per household - that cost alone is more expensive that all the election policies of the mainstream political parties combined

Following our spokesman's public comments NZUSA President Daniel Haines' took exception claiming that the cost to taxpayers of forgiving student debt is only $8 billion.

“The student loan scheme is currently in the government’s books at $8 billion, not the $14.2 billion the Taxpayers’ Union cites, and reversing the tax cuts that benefited those high-earners – as Internet MANA proposes – would provide $1 billion per year, some of which could be used for debt relief for those struggling with their student debt burden on low incomes.”

Screen_Shot_2014-09-13_at_11.37.18_am.png

Mr Haines' claim might hold more credibility if he wasn't contradicted by this illustration on his organisation's own homepage

Treasury's PREFU document* shows that student debt has risen from the $13.5 billion to $14.2 billion. The $13.5 billion figure is quoted on the NZUSA's homepage.

$14.2 billion is the estimated nominal value (including accrued interest) of all student loan borrowings. It is the figure that the NZUSA usually use in publicly and advocacy for 'the burden of debt'. The amount represents $8,374 per household.

It’s a nice try by the NZUSA to use a discounted value, but the fact remains that forgiving student debt would cost $8,374 per household.

Mr Haines also claimed in his media release that repaying a debt is a tax. In fact, the tax is on the middle income earners who pay the interest on his degree, while he reaps the rewards of a subsidised tertiary education.

A student loan represents a choice made by an individual to accrue debt in the short term in order to better their employment prospects in the long term and, in turn, their earning potential. As ridiculous as the suggestion that all student debt would be wiped, is NZUSA's inference that Kiwis' mortgages, hire purchase payments and monthly credit card bills are taxes too.

* Refer to note 13 on page 101 of the Pre-election Economic and Fiscal Update. More comprehensive information on Student Loans, including nominal debt and carrying value are available on the Ministry of Education's student loan annual report.

NZ First still won't front up

With just over a week to go until the general election, and with much chatter of Winston Peters riding high in the polls. New Zealand First still won't front up with details of the cost of its election policies for inclusion in the 'Bribe-O-Meter'. This morning we issued a media release giving NZ First a final chance to provide our expert the material to cost NZ First’s policy.

"The Taxpayers’ Union has made numerous formal and informal approaches to Mr Peters and his party. Despite our best efforts Mr Peters continues to fob off providing transparency to the voting public."

Our independent expert, who used to lead the team at IRD that costed social policy for numerous governments (ironically including when Mr Peters was Treasurer!) has spoken to Party officials in Winston Peters’ office but still does not have enough information to give any insight as to what NZ First’s policies will cost.

Perhaps the reason NZ First has shied away from releasing their policy costings is because Mr Peters is worried it would deter voters? In 1996, the last time National was forced to go into government with Mr Peters, it cost taxpayers $5 billion, or $2,950 per household.

Right now we’re working hard behind the scenes to complete the final update of the Bribe-O-Meter. With the exception of NZ First, we want to thank the general helpfulness and enthusiasm other parties have displayed towards the project.

The voting public and taxpayers deserve better – but it looks like Mr Peters doesn’t want you to know how much his support will cost…

Dr Michael Dunn on relationship between unemployment and minimum wage

Minimum wage policy was quite a feature on last night's TV3 leaders' debate between John Key and David Cunliffe.  Stuff reports:

The first half of the televised TV3 debate was dominated by the economy, with Key on the attack over Labour’s plan to raise the minimum wage by $2.

Key argued that small business can’t afford the hike and it will cost jobs.

Cunliffe cited US research that shows there is no relationship between a minimum wage rise and unemployment, saying this was backed by Treasury. ‘‘You can have cheap government or you can have good government,’’ he said.

Earlier in the week, we released an independent report by Dr Michael Dunn (who ran the team at IRD costing social policy for various ministers of revenue) which critiques the numbers in the Green Party's wage policy. The report is relevant to the debate:

Context

There is now a lot of debate about the minimum wage and the expected impact of an escalation of the minimum wage on employment as well as on net Government revenues (the fiscal impact). 

Our previous analysis focussed on the fiscal impact, and showed that even without limiting employment growth, the extra revenue from income tax (and for that matter, on GST on the additional wages) would be insufficient to offset the additional cost to the Crown to fund its payroll and primary service contractors.

Impact of increasing minimum wage on employment

We are now hearing claims that “numerous studies have shown that increasing minimum wages has no adverse impact on employment levels, and may in fact lead to increased employment”.

We agree that there are numerous studies from well-respected researchers that demonstrate this to be the case, particularly in the US. However, the US is a poor choice for estimating the likely impact of increasing the minimum wage in New Zealand. The minimum wage in the US is less than 40% of the median wage, whereas in New Zealand the minimum wage is above 60% of the median wage. This means that further increases here are much more likely to affect wage relativities and the employment market in general.

There are studies that demonstrate an impact of increasing minimum wages on employment in countries where the minimum wage is above 50% of the median wage. We referred to some of these in our previous paper. We repeat that section of our paper below.

 

Untitled.png 

Source: US Department of Labour, September 2014

Studies that compare the employment effects of minimum wage changes in different countries

Research into the impact of increasing minimum wages on employment has identified that the effects are negligible when the minimum wage is below 35% of the average wage (as in the US), but are more significant and negative (i.e. raising the relative minimum wage reduces future employment) when the minimum wage is above 45% of the average wage (as in France and several other European countries).

So in short, Mr Cunliffe is right to say that in countries such as the United States, Japan and Korea, where the minimum wage is a small fraction of the median lifting the wage has little impact. The key question though is whether that holds true in New Zealand, France and Turkey - where minimum wages are already a much higher percentage of the median.

Dr Dunn's full paper can be downloaded here. His abridged version (just covering above) is available here.

 

 

 

Are the Greens still an environmental party?

Analysis of the spending promises by the Green Party shows that only 9% of the Party’s committed spending so far this election relates to environmental priorities. According to the ‘Bribe-O-Meter' of the $4.9 billion in new spending the party is promising, only $443 million relates to the environment.

Unlike the Green Party I joined in 2004, the existing policy platform appears to be more about transferring wealth than protecting the environment. In comparison to the $443 million pledged for environmental causes, the Green’s welfare policies have been assessed by our independent expert to cost $1.82 billion. $1.82 billion is equivalent to $1,073.24 per New Zealand household.

Based on these numbers, the current Green Party is arguably only 9% ‘green’.

How green are the Greens?

Expert costing of Green Party wage policy

The Taxpayers’ Union is today releasing independent research from former NZIER Principal Economist, Dr Michael Dunn, which raises significant questions about the Green Party’s election costings.

Dr Dunn’s analysis of the Green Party’s “Fairer Reward for Fair Effort” policy document shows that the Party’s taxation forecasts are incorrect and instead of generating tax revenue, will actually result in a net loss in revenue.

The Greens say that their policy will mean increased revenue to the Government of $800 million per year, our independent expert says the actual cost to the Government is at least $110 million. That is a massive difference of more than $900 million in the one policy and suggests the Greens' costings are fundamentally flawed.

On top of the drop in tax revenue, Dr Dunn estimates that the policy would increase government expenditure on employee wages and contracts for services by around $1.1 billion over 3 years.

The Taxpayers’ Union repeats our offer to allow our independent expert to confidentially cost any political parties' policy before they are released so that the public can have confidence in how much a policy will cost or benefit taxpayers.

The report's author, Dr Michael Dunn, has told media:

The Greens' costing completely ignores the reduced taxes from companies due to the higher wages. They appear to assume that businesses can magically generate more money to fund higher wage bills. It doesn’t happen like this in the real world.

Expected slower employment growth will also adversely affect tax revenue.

Under this policy the Governments' primary fiscal balance would be reduced, by at least the direct costs already acknowledged by the Green Party, as the incremental tax revenue yield would be minimal, if any. In addition social transfer payments linked to wage rates would be increased.

This isn’t some Taxpayers’ Union hack calling into question the Greens' costings. Dr Dunn led the team at IRD that costed revenue policy and produced budget revenue forecasts for 12 years. He has advised both National and Labour led administrations. We've engaged him to review numerous party costings and provide the information for our Bribe-O-Meter.

UPDATE: Our expert, Dr.Dunn, wishes to thank a reader who pointed out that the proposed October 2014 increase in the minimum wage would be only 75 cents per hour, and that would have a reduced cost and impact. He has recalculated his figures accordingly, but the conclusions are unchanged. The updated report is available for download here.

Dr Michael Gousmett on shifting the burden

According to an article in The Press, the Christchurch City Council is to approach the government regarding the ownership costs of the city’s proposed major facilities. That then shifts the burden from the city’s ratepayers to the country’s taxpayers.

Council trying to lighten load for city ratepayers

“The city council does not want ratepayers bearing the ownership costs of all the central city’s major new facilities and is talking to the Government about alternative options.

Mayor Lianne Dalziel told The Press the council was talking to the Government about ownership arrangements and the timing of some of the projects.”

Dr Michael Gousmett has written to us suggesting a different solution:

Shifting the burden from ratepayers to the country’s taxpayers might be fair and reasonable given the underlying reason for having to do so, that is, a natural disaster. 

Has the council considered approaching the ratepayers instead, not to ask for increased revenue from rates which according to the council’s 2013 financial report generated $277 million, or 30 percent of the council’s income of $938 million, in revenue?

The mayor said the council was “agnostic” over whether the Crown or a private sector partner ended up owning and operating the new facilities, but it did not want to carry all the costs.

I am suggesting something else – asking the ratepayers if they would invest in these assets through a share or bond issue by the council to contribute towards the cost of their construction. 

As well as having a sense of ownership, ratepayers could be given preferential treatment by way of a dividend paid at a higher rate, with the council also offering shares to non-ratepayers as well. 

The dividend could then be applied against the rates by way of a non-taxable rebate, or alternatively treated as income in the hands of the ratepayer, whichever they choose to suit their personal tax position. 

We think it's an idea worthy of discussion. What do you think? Drop us a line, or pop a message on our Facebook page.

Taxpayers’ Union has attacked National more often than any other party

Since the Taxpayers’ Union launched a number of left wing critics have claimed that we are just a front for the National Party, and are biased in its favour. The critics are wrong and their politically motivated criticisms are just nonsense.

We have always maintained that our stand is against waste and inefficiency and against bad policy wherever we find it, and that has always included the current government.

As Chairman I ensure that our Board and staff know that we are our own vehicle, with our own purposes, and don’t do other people’s bidding. Of course, we work with other groups (for example we partnered with Age Concern, Consumer NZ and the Financial Services Council for the Fair Tax for Savers campaign) where our objectives align.

An analysis of our media releases shows that we have criticised the National led government more often than any other party or entity.

Of the 192 media releases made by the Taxpayers’ Union since we started operations in October 2013, 121 media statements have been about central government of which 67 have criticised some aspect of the National Government’s policy and just 12 statements have supported a policy stance.    

The figures for Labour are 9 statements against and one in favour; for the Greens it is four against and two in favour.

We backed Winston Peters on the Interislander issue, and criticised a NZF candidate for double dipping and commended another NZF candidate, Ron Mark, for promising not to do so. We have issued only three statements about the Mana Party all critical of some aspect of their policy.

63 statements have been about local government. Most of these, 60 out of the 63 were about specific councils; 31 were about the Auckland Council alone.

Three were to do with our local government report which detailed the financial position of all councils, and a second report setting out 101 ways councils could save money.

We have criticised the current government on nine separate occasions for its continued use of taxpayers’ money in grants and handouts to so called growth companies. We called these ‘corporate welfare’ and in turn we have been attacked by Minister Stephen Joyce for doing so.

And we went after government Minister Todd McLay for getting a government grant to back a tourism project in his own electorate. The “stench of pork barrel politics in Rotorua” was our headline.

We have upset Business New Zealand as well as the Council of Trade Unions for revealing government funding to a joint venture those two bodies had for health and safety training. The ACC’s audit of the training labelled it a waste of time, and the government withdrew the funding.

We have also campaigned against the government’s decision to make passports valid for only five years, and we claim some credit in forcing a rethink which has put ten year passports back on the agenda.

These figures speak louder than the cries of our critics. Their claims of our being a National Party front organisation is empty rhetoric without any factual substance.

We have been genuine in our efforts to hold the government to account and to promote better policy and more effective spending.  We will continue to do that regardless of the outcome of the election.

After the flip is our raw data.

Minor parties added to Bribe-O-Meter

We've added the Green, ACT, United Future and Conservative Parties to the ‘Bribe-O-Meter’ election costing page launched last month.  Excluding ACT and New Zealand First, the total election ‘bribes’ - that is new spending not already in the budget covering the next parliamentary term, equals $12.7 billion, or $7,486 per household.

We're delighted that the Bribe-O-Meter is enabling Kiwis to judge for themselves the various bribes this election. With the addition of the minor parties voters can assess which political parties are offering taxpayers value for money.

Currently National's election promises add up to $329 per household. The equivalent figure for Labour is $2,776, the Greens $2,893, United Future $1,253, and the Conservatives $236. ACT is in the negative, committing to cut spending by $6,876 per household.

A lack of detail in New Zealand First’s policy documents has made it impossible for the Union's independent expert, Dr Michael Dunn, to calculate credible figures for the Party’s inclusion in the Bribe-O-Meter.  Public and private requests to New Zealand First have, to date, not resulted in amelioration. New Zealand First apparently just doesn’t have the information. It appears that Mr Peters makes promises to all and sundry, but no one at his office is adding up the cost.

Click here to view the Bribe-O-Meter.

Bribe_o_meter

Inciting violence, but @peace with taxpayers’ money

Music has always been a tool of free expression. Particularly from the 1960s onwards, artists began politicising their messages through music, voicing their opinions about war, famine and other hardships. The Beatles, Bob Geldof, The Exploited and Pussy Riot music has not just been a tool of expression, but a call to action.

Yesterday saw the release of a track by New Zealand hip-hop act @peace, grimly titled “Kill the PM”.

Fairfax reports:

An Auckland hip-hop crew slammed for releasing a song with lyrics that apparently include a threat to kill Prime Minister John Key are urging young people to enrol to vote.

Kill The PM, by @peace, depicts a golfing, luxury car-driving Key, and says he should die - "ain't doin' nothin' so I'm gonna kill the prime minister".

It continues: "I been tryin' to get a job but they got none/so I instead I got a sawnoff shotgun/and 'pop'."”

It soon came to our attention that @peace had been in receipt of taxpayer-funded grants from NZ On Air for previous tracks.

According to the NZ On Air website, the group has received $32,000 since late 2011. $6,000 of which was received to make a music video for one of their songs last month.

So far NZ On Air has refused to denounce @peace for their hateful track, nor have they pledged to refuse the group taxpayer-funded grants in the future.

We have written to NZ On Air to outline our concerns and request assurance from the Chief Executive that no further taxpayer-funded grants will be made to any group espousing hate-speech.

Letter is uploaded here:



Dunedin City Council Loses 152 Cars!

The Taxpayers' Union is calling for Dunedin City Council to disclose more details after it was revealed 152 Council vehicles have been sold without the Council recouping a cent. It is estimated that the Council is out of pocket to the tune of $1.5 million.

Dunedin City Council criticised over missing 150 fleet cars Newstalk ZB - 23/08/2014

Dunedin City Council is being criticised for failing ratepayers, by refusing to explain how it managed to lose more than 150 fleet cars.

The Council has confirmed it has complained to police over the alleged fraud which has cost the city more than 1.5 million dollars.

The information was released by way of a video comment from the Mayor and the Council's CEO no one's been available to answer questions.

Taxpayers Union spokesman Jordan Williams says people are right to feel aggrieved at the lack of information.

He says the Council should be explaining more about the complaint it's made to police.

Click here for the full news report.

Taxpayers' Union launch 2014 Bribe-o-meter

This morning we launched our 2014 election costing project to calculate the total cost of promises politicians make in the lead up to the 2014 General Election. The “Bribe-o-meter” allows Kiwis to judge for themselves the political bribes as parties vie for votes.

The Bribe-o-meter will hold the politicians and political parties to account for how much their pork barrel bribes will cost New Zealand households. For too long politicians have got away with plucking numbers out of thin air when announcing policy.

The Bribe-o-meter is about transparency. We will be updating the figures weekly, allowing potential voters to assess which political parties are offering taxpayers value for money.

As of Monday, National's promises add up to $2,770 per household. For Labour it's $4,082.

We've engaged Dr Michael Dunn to undertake the economic research for the project. Dr Dunn will provide the Taxpayers' Union independent figures and analysis. Dr Dunn is a former Principal Economist at the New Zealand Institute of Economic Research and led the team of financial analysts at the Inland Revenue Department that forecast government tax revenues, and costed social policy through thirty Budget, Half Year and pre-Election Economic and Fiscal Updates. While at IRD, Mr Dunn served under numerous ministers and treasurers under National and Labour lead governments.

In the coming weeks we will be updating the Bribe-o-meter tables, asking Dr Dunn to provide an expert review of parties' cost estimates and adding the costs of further announced policies. We'll also be adding the estimated costs of policies proposed by the minor parties.”

Click here to view the Bribe-o-meter.

Porky presents troughing award to CEO of Ministry of Pacific Island Affairs

Introducing Porky, our new mascot and aspiring list MP!

Porky loves identifying troughing MPs and bureaucrats. The crème de la crème, he surprises with an awards ceremony. After all, when you’ve turned troughing on the taxpayer into an art, it would be rude to get no recognition!

This morning Porky issues his first award having read the Dominion Post's coverage of Pauline Winter, the Chief Executive of the Ministry of Pacific Island Affairs and her $30,000 expense bill , including weekend trips for her and an assistant to fly to Auckland most weekends.

Taxpayers are stumping up for Pacific Island Affairs boss Pauline Winter to travel between Wellington and Auckland most weekends.

Winter has a home in Westmere, but her $240,000-a-year job is based in the capital.

Her expense records show that over the last year she flew between the two cities almost every weekend. Between July 2013 and 2014, her expenditure totalled more than $30,000, most of which went on airfares, taxis and rental car hire in Wellington and Auckland.

Taxpayers fork out $270,000 per year for this Chief Executive and she is refusing to take calls from the media. The Taxpayers' Union called on Ms Winter to front up, or resign.

This afternoon Porky visited the Ministry of Pacific Island Affairs, hoping to present Ms Winter with a “Troughing Award” to acknowledge her endeavours with taxpayers’ money.

 Unfortunately Ms Winter's didn’t front. Porky was devastated. Executive Director Jordan Williams recounts:

"For Ms Winter's gallant efforts to rip off New Zealand taxpayers with publicly funded weekend trips to the exotic capital of the South Pacific known as Auckland, Porky and I visited the Ministry’s offices to present her with the first of our 'Troughing Awards’."

“Ms Winters was in the office but refused to front-up or speak to media."

"Despite Ms Winter's expenses being more than $30,000 she chose to hide in her office and send a spin doctor to accept the award on her behalf."

“Ms Winter's refusal to justify her expense bill is the epitome of arrogance. She should front up, justify her extravagance on the taxpayer purse, or resign.”

Porky’s quest will continue - in fact you can expect to see him out and about where ever wasteful bureaucrats, politicians and taxpayer funded groups are wasting hard earned tax dollars.

Fair Tax for Savers

This afternoon in partnership with Age Concern, Consumer NZ and the Financial Services Council, we launched the 'Fair Tax for Savers' campaign in Wellington.

 

Campaign supporters

What is the Fair Tax for Savers Campaign asking for?

We're calling on politicians to remove the over-taxation of long term savings, specifically:

  • the effective tax rate paid on KiwiSaver funds to be the same as the marginal income tax rates KiwiSavers would pay on their other income; and 

  • term deposits to be taxed only on the real interest rate (actual interest rate less the rate of inflation) rather than the nominal interest rate (the actual interest you receive) as the compensation for inflation is not really economic income. 

The campaign involves inserting more than 120,000 post cards in print media for readers to complete and send to MPs. The first insertions were made this morning.

Support the campaign

Please take a few moments to visit www.fairtaxforsavers.org.nz and email a postcard to your local MP asking for fairer taxes on savings.

NZ Herald on patronizing brochures

Backlash over costly brochure Herald on Sunday - 27/07/2014

The Herald on Sunday included comments from Taxpayers' Union Executive Director Jordan Williams in coverage of the recent "No car? No problem!" brochure from the Office for Senior Citizens which cost approximately $37,000 excluding staff time. 

"A brochure telling senior citizens they can walk or catch the bus when they're no longer able to drive has been slammed as patronising and a waste of public money."

The brochure, which was first printed in 2005 with an updated version this year, has cost about $37,000, excluding staff time.

Taxpayers Union executive director Jordan Williams said the money could have been better used.

"Our seniors weren't born yesterday - spending taxpayers' money to produce patronising brochures explaining to them the existence of taxis and public transport is insulting.

"The Government is throwing money away at brochures that parrot what is surely common sense."

Read the full article here

Ministry of Health's Taxi Spending Raises Eyebrows

Ministry says walk's silly, we'd rather take a cab Stuff.co.nz - 27/07/2014

When it comes to walking the talk, it seems Ministry of Health staff would rather just take a cab.

Last year ministry staff took more than 1000 taxi rides for less than $10 - at the same time as officially advocating walking as a way to increase New Zealand's low levels of physical activity.

The ministry has internal advice for staff on nutrition and physical activity that includes walking short trips, and using stairs rather than lifts.

The taxis were an unacceptable use of taxpayer money by a ministry responsible for promoting physical activity, according to the Taxpayers' Union. "It is sadly ironic that while the Ministry of Health spends taxpayer money to promote active living, officials are getting taxis a few hundred metres down the road," said Jordan Williams, executive director of the Taxpayers' Union.

Click here for the full story.

Getting around without a car

The Taxpayers’ Union is questioning the merits and costs of the “No car? No problem! Getting around your community without a car” brochure, released by the Office for Senior Citizens. The brochure’s purpose is to explain to senior citizens transport options when they can no longer drive.

The primary purpose of the taxpayer funded brochure is to make suggestions such as:

  • “walking more often”
  • “getting lifts from family and friends”
  • “using taxies”
  • “using public transport"
  • “letting others use your car to drive you places”
  • "public transport and getting family to drive you"

It has cost taxpayers over $37,000 to produce the brochures since 2005 (excluding the cost of staff time).

Instead of addressing pressing issues such as fraudsters preying on our seniors and elder-abuse, the Government is throwing money away at brochures that parrot what is surely common sense. When the brochure launched, the Minister for Senior Citizens even put out a press release to welcome it!

We think that publishing a brochure explaining that people can walk places is a waste of taxpayers’ money and public servants’ time. Take a read and tell us what you think via our Facebook page.

We know that politicians like to be seen to be doing something, but surely New Zealanders don’t need to be told by the Government that taking a bus is an option, when you can no longer drive.

No Car No Problem

 

To view the responses to our information requests lodged with the Minister and Office for Senior citizens, click the links below. 

OIA response 19 June 2014

OIA response 3 July 2014

 

 

When someone else is paying, why walk?

A few months ago a Ministry of Health official contacted us regarding the use of taxi charge cards within the Ministry, and suggested we look at the number of 'micro-trips' taken by managers, often between the Ministry's Wellington offices and Parliament.

Details of the Ministry's taxi charges show its Wellington staff are making more than 1,000 taxi trips a year costing less than $10.

In the 2012/2013 financial year, Ministry staff based in Wellington charged taxpayers for 8,645 taxi trips with 1,076 of those for journeys costing less than $10.

It is sadly ironic that while the Ministry of Health spends taxpayer money to promote active living, officials are getting taxis a few hundred metres down the road. 

A taxi trip for the sake of a five minute walk is simply not justifiable when it’s someone else's money. The documents show that these short trips make up more than ten percent of all taxi charges by Wellington based staff.

Taxpayers will not be impressed that Wellington health bureaucrats are the in habit of getting them to pay for micro-trips when it is probably faster to walk.

Ministry of Health response 05/06/2014

Letter to the Speaker

News broke on Wednesday that Mana Party leader Hone Harawira had erected hoardings for the election which displayed the crest of the House of Representatives. This led to questions about how the hoardings had ben funded – had taxpayers’ money been used?

When we questioned if taxpayers’ money had ben used by the MP, Mr Harawira aggressively claimed that funding for the hoardings had not come from Parliamentary Service.

So why do they all contain the crest? It’s a symbol that generally denotes that taxpayers’ money has been used to purchase advertising or other goods and services. 

We have written to the Speaker in order to gain some clarification on this matter.

The rules applicable to fundings MPs receive are clear:

  1. Taxpayers’ money should not be used for, or in a way that could be seen to promote a candidate or party during the election; and
  2. The House of Representatives crest should not be used on materials that contain electioneering.

Which rule has been broken? And what repercussions, if any, are likely to follow?

We’re looking forward to the Speaker’s ruling and response.

24/07/2014 Letter to the Speaker

Taxpayers Union plays part reducing foreign aid waste

In May the Taxpayers' Union revealed that  $116,000 of NZ Aid money, intended for economic development, was used to buy Cook Island Prime Minister, Henry Puna a new boat and outboard motor. The Cook Islands Government initially denied the claims, which were later found to be well founded following a 3 news investigation. Two months later, in July the New Zealand Government denied the Cook Island Prime Minister eligibility to receive future NZ aid funding.

Cook Island Government Initially Refutes Taxpayers' Union Claims: 

Cook Islands government dismisses PM aid money allegations 'Dateline Pacific' Radio New Zealand - 22/05/2014

The New Zealand Taxpayers' Union says there has to be better oversight of NZ Aid money after revelations in the New Zealand media that Mr Puna got a large aid grant through a pearl farming programme. The Union's Jordan Williams says aid money needs to be targetted at people who need it and New Zealand taxpayers shouldn't be forking out funds for a new boat and outboard motor to senior politicians. He says Foreign Minister Murray McCully needs to reveal if he knew Henry Puna would be the largest recipient of the project funds.

JORDAN WILLIAMS: If everything was above board this conflict would have been acknowledged and it would have been handled properly. Instead the Cook Islands government has reacted to the story just with secrecy. There are plenty of questions to be answered both by the Cook Islands Prime Minister and indeed by our own Minister of Foreign Affairs.

The Cook Islands Financial Secretary, Richard Neves, says the allegations of large payments to the Prime Minister and comments from the Taxpayers' Union are outlandish and ignorant. He says the Cook Islands is one of the leaders in 

transparency across the Pacific. He says the Manihiki Pearl Farmers Association and the Ministry of Marine Resources work out what each farmer needs and the Finance Ministry buys the materials and then finalises who gets what.

Click here for the full Radio NZ report - 22/05/2014

New Zealand Government Denies Cook Island PM Further NZ Aid Payments: 

Cook Islands PM denied pearl farm funding 3 News - 18/07/2014

Cook Islands Prime Minister Henry Puna has been denied NZ Aid funding for his pearl farm following a 3 News investigation earlier this year.

In May, it was revealed that Mr Puna had requested $116,000 worth of equipment and loan funding for his Manihiki pearl farm despite an apparent conflict of interest.

Since then, pearl farmers who requested funding have been reassessed under the requirements signed off between the Cook Island and New Zealand governments. Mr Puna did not meet the criteria. It is unclear whether the reassessment was a direct result of 3 News' investigation.

One of the requirements was that pearl farmers had to be active to receive funding. However, Mr Puna's pearl farm was struck off by the Companies Office in November last year and his media adviser Trevor Pitt said the farm had been dormant since 2010.

Jordan Williams, executive director of the New Zealand Taxpayers' Union, is happy with the response but has further questions he wants answered.

 "While we are delighted that future aid money won't be wasted on the Cook Islands oligarchy, NZ Aid needs to front up and explain how this happened in the first place.  

"We still don't know precisely what the New Zealand Foreign Affairs Minister knew and when."

The Ministry of Foreign Affairs and Trade (MFAT) says it is working with the Cook Islands Ministry of Finance to ensure compliance with the terms and conditions of New Zealand's funding arrangement.

Prime Minister Henry Puna has not responded to interview requests.

Click here for the full 3 news article - 18/07/2014



When burritos become sandwiches

In recent days we have heard how NZ First leader Winston Peters wants to take GST off some foods, but not others. While any reduction in the tax-burden should be welcomed, this picking and choosing of which items should include a sales tax causes unnecessary confusion for suppliers, retailers and consumers. 

Take the humble burrito. 

It’s a Mexican staple; a food that’s becoming increasingly popular in New Zealand. And in New York State there is significant debate (think tax lawyers and accountants) on the question of whether it counts as a sandwich for tax reasons.

When politicians pick and choose sale taxes willy-nilly there are often unforeseen circumstances. In New York this has meant that the eight percent “sandwich tax” has become applicable to burritos. It’s also led to numerous hours of government officials and tax experts debating the trivial point of just what constitutes a sandwich. 

At a cost of at least $3 billion, removing GST on items of Mr Peters’ choosing is a big-ticket policy. But as with New York sandwiches, there would be endless regulations, descriptions and exemptions.

If politicians want to truly reduce the tax burden facing New Zealanders, they should start by cutting sales or income taxes across the board. Playing politics with your pantry is an expensive exercise that leads to some truly bizarre outcomes.

Winston playing favourites with gst

Tax dodgers, GST on food top NZ First hit list  The New Zealand Herald - 21/07/2014

New Zealand First would take GST off basic food items and rates bills and would target tax dodgers to fund the expensive policies, leader Winston Peters said yesterday.

But both proposals have already been tagged as difficult to implement.

… 

Taxpayers Union executive director Jordan Williams said he welcomed Mr Peters' recognition that New Zealand families were over-taxed, "but introducing new complexity to GST won't reduce the burden".

 

Click here to read the full story on nzherlad.

Party, Party, Politics and the Taxpayers' Purse

Political parties often engage musicians to drum up support during the election season. It’s the time of year when party hacks attempt to swell their numbers by using musicians as Trojan Horses for their political ideals. We all remember The Feelers’ song used in National Party adverts last election.

But what happens when taxpayer funds are propping up these artists?

The Party, Party put on by the Internet Party features numerous bands that have recently received significant grants of taxpayers’ money courtesy of NZ On Air.

Sons of Zion, State of Mind and PNC all received subsidies from NZ On Air as recently as late last year. The sums involved are not insignificant. A quick glance at the list of subsidies suggests that in the past few years these acts have received well over $200,000 of taxpayer funds.

Laughton Kora of L.A.B was also part of a group that received $245,000 NZ On Air funding to visit prisons for a Maori TV programme. 

While we can all appreciate that bands are comprised of individuals with their own political beliefs, it seems wrong for bands to be enabled to support a political cause by being propped up by the taxpayer.

Like Russian nesting dolls Auckland Council secretaries need secretaries

That’s right – the Auckland Council’s CEO has a secretary that is advertising for a secretary.

We have all heard about stories of politicians looking to empire build courtesy of the taxpayers’ pocket, but this really takes the cake.

No wonder Auckland Council now has more bureaucrats on living off ratepayers than all of the councils it replaced combined.

So what will this new position entail?

“Your day will involve providing administrative support as and where required, this includes anything from managing correspondence, records management to diary management. This role is vital to ensuring that items are actioned, recorded and accurate.”

If that’s the role of the secretary’s secretary, what’s left for the secretary to do?

At a time when the Council needs to find savings of $860 per ratepayer, empire building in Council offices should not be tolerated.

With nearly 6,000 bureaucrats on the pay-roll, 811 of which are earning over $100,000 a year, Len Brown and his CEO ought to be out trimming the fat rather than increasing the burden on ratepayers even further. 

Taxpayers Union on Greens Economic Policy: 3 News

Greens announce $1B economic policy 3 News - 16/07/2014

Meanwhile, the Taxpayers' Union says the Greens' policy is the "lesser of two evils" and is taking a cautiously optimistic approach.

"Although the Greens' policy still leaves room for picking winners, on balance it is better than the existing corporate welfare scheme operated by Science and Innovation Minister Steven Joyce," executive director Jordan Williams says.

The union is concerned tax credits could be vulnerable to businesses manipulating what they do to qualify for new research and development funding.

Click here to read the full report.

Taxpayers' Union Response to MP Claudette Hauiti charging Australian holiday to the taxpayers.

National MP charged Australia holiday to taxpayers The New Zealand Herald - 16/07/2014

National Party MP Claudette Hauiti has given up her parliamentary charge card after she used it to pay for a personal trip to Australia.

Ms Hauiti entered Parliament in May 2013, replacing disgraced list MP Aaron Gilmore.

Taxpayers' Union Executive Director Jordan Williams said workers have been sacked for similar offences.

"If an employee charged a trip to Australia on the staff card, they would be sacked. How can someone be trusted to run the country when they can't be trusted with the plastic?"

Earlier this year Ms Hauiti was caught out breaking Parliament's rules by employing her civil union spouse in her electorate office.

"This is not the first time that Claudette Hauiti has played fast and loose with taxpayer money. Although she replaced Aaron Gilmore, she should be setting a higher standard.

"Rather than cover-up MPs' actions, Parliamentary Services should let the public be the judge of how MPs are spending taxpayer money. We are calling on Parliamentary Services to disclose the full details of all MP misspending."

Click here to read the full article in the Herald.

Would performance pay justify paying MPs more?

Stephen Franks blogs:

Incentive pay for MPs

The moot for the New Zealand Initiative's youth debate semi-final this year in Wellington is a good one -

"Should New Zealand tie MPs' and Ministers' salaries to a multiple of the average national income?"

When the Remuneration Authority was asking MPs about reform of the system 10 years ago, I urged that:

a) Parties be given a material amount they could distribute among their members according to their pre-Parliament incomes, to do three things:

  • reduce the income cut involved in going to Parliament for people for whom there is much more to lose, and
  • reduce the overpayment of the kind or people who would never be thought useful enough outside Parliament to get anywhere near their Parliamentary income, so they don't cling quite so desperately to their places; and
  • have the supplement reduce each year after entry to Parliament, to encourage turnover of people who have not progressed.

I also suggested a trailing commission, to induce longer term thinking among MPs. Exec incentive schemes that fail to add a trailing element or to defer vesting encourage manipulation of reporting and incentivise short term results. In politics that there is already more than enough incentive for false reporting and short-temism, in the 3 year electoral cycle.

Accordingly MPs should have a material part of their remuneration deferred each year. If the MP demands immediate payment is should be substantially discounted. The deferred amount (say half) might be paid out say five years later, multiplied by 2 times or 5 times the GDP or average income growth in the five years. If it shifted MPs horizons, it would be money incredibly well spent even if they tripled or quadrupled their incomes.

For an even longer perspective, simply make the deferral period longer.

From the taxpayers' perspective, paying MPs a little more, if it resulted in better performance is a no brainer. How would you structure it though? Drop us a line, or comment on our Facebook page.

Science and Innovation Minister Steven Joyce publicly responds to Taxpayers' Union criticism

Joyce slams Taxpayers’ Union attack The National Business Review - 11/07/2014

Science and Innovation Minister Steven Joyce has slammed the Taxpayers’ Union’s attack on the minister as a “fundamental misunderstanding” by its executive director Jordan Williams.

Mr Williams described the $31 million worth of grants to eight new company incubators – under Callaghan Innovation’s incubator support programme – as an example of politicians thinking they know more than IT entrepreneurs.

Mr Joyce says that Mr William’s comments show a fundamental misunderstanding of both technology-based start-up companies and the intention of the government’s policy.

NBR ONLINE asked the Minister how Callaghan Innovation justifies a 3:1 funding ratio, with the taxpayer taking 75% of the risk?

Mr Joyce replied that the incubators would be funding early stage companies that have arisen from public research organisations, where generally the taxpayer has paid up to 100% of the costs of the research.

“International experience suggests around 60% of the incubated companies repay the grant.”

Mr Joyce did not, however, comment on where the remaining 40% leaves the taxpayer.

Click here to read the full story in the National Business Review.

In a press release we responded to Mr Joyce:

Good Intentions are not Good Policy Media Release - 11/07/2014

“The Taxpayers’ Union isn't questioning the intention of the Callaghan Innovation grants, our objection relates to the outcome, where taxpayers bear the risks and private businesses get the reward."

“Justifying the 3:1 funding ratio, where taxpayers take on 75% of the risk, Mr Joyce is effectively saying that 75% is better than 100%. He appears to ignore that under his policy 0% of the profit is returned to the Crown."

“We hoped to be proven wrong on our fear that the grants are interest free. Instead the Minister confirms the worst, with 40% of the grants expected to be written off and the rest not even adjusted for inflation.”

In February the world's third largest software maker, SAP, which last year posted a profit of €1.80 billion, received a similar ‘growth grant'.

“The SAP example shows that this isn’t some business IVF program," says Williams.

"We call on Mr Joyce to please explain what our ‘fundamental misunderstanding’ is. Where is the evidence that the return taxpayers get from the successful start-ups compensate for the money lost on the half that fail? In addition, who is ensuring that the decisions made by politicians on what businesses to back are better than what would have happened had the money stayed in taxpayers' pockets?"

Click here to read our full media release.

 

 

 

Guest Post: Larry Mitchell on Auckland Council's finances

Auckland Ratepayers “Wake Up” at last

Bernard Orsman's analysis last week of Auckland Council's financial trouble got right to the heart of the matter. The section headed "Hey Big Spender you’re in a deep financial hole" accurately nails the central issue facing Auckland’s overtaxed ratepayers. With a new 2015-2025 long term plan gearing up, Auckland Council's control of its expenditure long based on borrow and spend, at long last  will now be put under the microscope.

The best place to start with the analysis is the new purposes of local government post the 2012 changes to the Local Government  Act. Section 10 (requiring "cost- effective infrastructure expenditure")  and section 11 (which lists the "core" activities) suggests that the Council is now staying well outside the typical activities we associate with councils.

Of course, Auckland  Council has been quick to run to Wellington for funding of its plans, but I think Central Government should withhold any consideration of tolls, regional sales taxes (or other alternatives) until Auckland Council can produce solid evidence of its adoption of a principled "cost effective" "core" services-based budget. At present it is anything but.

In his regular blog this week, Joel Cayford, Reflections on Auckland Planning makes some telling and useful points with his advice directed straight at Auckland Councillors. These include the suggestion that in place of existing assumptions - that ratepayers should foot the bill for the city’s growth-infrastructure, affordability to ratepayers must become the central issue:

“Under the Council's present policy settings, ratepayers can't afford the Auckland Plan, and it's not equitable to require ratepayers to subsidise Auckland's economic growth. It's not that urban growth is a bad thing ... it becomes a bad thing, an unaffordable thing for existing ratepayers ... that does not justify overloading existing Auckland ratepayers with growth infrastructure costs”

Other worthwhile suggestions he makes for Auckland Councillors to consider ... “while they are at it’ are all matters that echo sentiments  true of many other New Zealand Councils. These include:

  • Ratepayers, not just self selecting focus groups should (“novel thought”) be asked “whether they would prefer cuts in their local services (parks, libraries, waste management, plantings, gardens, community services), or whether they would prefer you to spend less of their rates on growth infrastructure projects - then I think you'd get a clear answer. Local council and community services are highly valued in a liveable city”.
  • Watercare, (the Council controlled water company), itself, a huge burden of cost on ratepayers additional to Council rates, is accountable both to Councillors and ratepayers. Joel ruminates that “Watercare,  possibly knows something that the rest of us don't know, maybe the reason is that it has been ratcheting up its connection fees (thereby) giving strong warnings that water and wastewater rates are on their way up” ... and “ Councillors should not assume that Auckland Council would raise a ratepayer funded loan for Watercare’s plans.
  •  He points out where the accountability buck stops:
     “Don't think you can escape responsibility for Watercare charge increases by keeping rate increases down a bit. Watercare is your responsibility too. You govern it. No-one else does”.
  • In the context of consultative process relating to budgetary assumptions Joel insists that ratepayers are a living breathing part of the decision loop:
    “I think you would be assisted in your task if you asked officers for typical household scenarios with different policy settings. You should be provided with information at the individual ratepayer level of all the consequences of your plans, policies and assumptions. This would tally up rates AND Watercare charges AND any other Council charges - so you can see the total funding impact of your potential decisions on typical Auckland ratepayers across the region”. Hear Hear to that!

Joel concludes by taking a swing at the vexed Housing Affordability conundrum, not merely an Auckland issue. He presents it in this way:

My biggest policy concern with the growth pathway Auckland is headed down is the assumption that existing ratepayers will subsidise costs of growth infrastructure needed to accommodate new ratepayers ..., then the true costs of new accommodation will not be paid by those buying into that part of Auckland's property market. This inbuilt subsidy is already causing property market failure. The craziness of Auckland's property market is partly driven by Auckland Council growth policies.

Let’s hope that this time, Auckland Councillors do two things:

First: They must be persuaded of the importance of achieving what was hoped when the former Auckland councils were amalgamated in the first place. It was supposed to be driven by excellent performance management and reporting, high standards of accountability and value for money and

Secondly: They should take up the enlightened constructive suggestions of Joel and other commentators - in the interests of their long-suffering ratepayers.

Waste Watch: Auckland Council spends 100k on a curtain

Sometimes the truth is stranger than fiction - the Devonport Flagstaff reports:

$100,000 curtain raiser for Devenport

A $100,000 budget has been set aside for a space-dividing, silk curtain in Devonport’s new library.

But the public art piece will be mostly invisible during the day.

Creator of the curtain, Judy Millar, was selected from 85 artists to design an object ofpublic art for the new building and bring a unique energy to its interior.

Auckland Council project manager David Thomas said the curtain will be three metres high and made out ofdouble-sided silk. It comes with its own dry-cleaning schedule and a ten-year maintenance or replacement budget 0f$30,000. “We expect that people will want to touch it,” Thomas says. A large part of the project’s total $100,000 budget is going into the tracking, railing and security system to hang the curtain, as well as the printing and sewing ofthe piece, he said.

The curtain will be visible from the street after business hours, when it will be used to divide off and secure the facility’s main area from the community room that remains open to the public.

During library opening hours the curtain will be stored next to the new fireplace, where it will also be shaded from being bleached by the sun, Thomas says. It will also need to be treated with non-flammable chemicals, he says. Read more.

This is an inexcusable waste of ratepayer money. Does Auckland Council have no respect for those who pay its bills?

The culture of big spending in Auckland Council needs to stop. As our Ratepayers' Report shows Auckland already has eye watering debt, the highest in New Zealand on a per ratepayer basis, even before the big infrastructure projects have started.

 

Good intentions not enough for good policy

Science and Innovation Minister, Steven Joyce hit back at us regarding our recent criticism of the Government's corporate welfare efforts, such as the millions of taxpayer dollars going into ‘company incubators’. The NBR reported on Thursday:

Eight new company incubators are to receive funding under Callaghan Innovation’s incubator support programme.
Callaghan, the government funded innovation hub, has included three new technology-focused incubators and five founder-focused incubators in its latest funding round. 
The three new tech-focused incubators are PowerHouse, Astrolab and WNT Ventures, and will be eligible for up to $450,000 worth in repayable government grants, with the incubator companies matching funding at a one to three ratio of up to $150,000.
...
The tech-focused incubators will focus on commercialising Intellectual property, primarily sourced from publicly funded research organisations, like universities and Crown Research Institutes.
The repayable grants are a trial programme, which was allocated $31.3 million over four years in the 2014 Budget.
...
However, the Taxpayer’s Union executive director Jordan Williams has described the government grants as an “example of politicians thinking they know more than IT entrepreneurs.

On Friday, Mr Joyce went the offensive:

Joyce slams Taxpayers’ Union attack
Science and Innovation Minister Steven Joyce has slammed the Taxpayers’ Union’s attack on the minister as a “fundamental misunderstanding” by its executive director Jordan Williams.
Mr Williams described the $31 million worth of grants to eight new company incubators - under Callaghan Innovation’s incubator support programme - as an example of politicians thinking they know more than IT entrepreneurs.
Mr Joyce says Mr William’s comments show a fundamental misunderstanding of both technology-based start-up companies and the intention of the government’s policy.
Unfortunately Mr Joyce does not tell us what the 'fundamental misunderstanding' is, rather just explains what the 'purpose' and 'intention' of the policy is. The article goes on to say:
NBR ONLINE asked the Minister how Callaghan Innovation justifies a 3:1 funding ratio, with the taxpayer taking on 75% of the risk?
Mr Joyce replied that the incubators would be funding early stage companies that have arisen from public research organisations, where generally the taxpayer has paid up to 100% of the costs of the research.
“The projects that are funded via the incubator are still very early stage, with significant technical risk. The aim of the programme is to get private sector expertise in very early so that the projects have a greater chance of success. 

We have called on Mr Joyce to explain what the ‘fundamental misunderstanding’ is. Instead of rebutting our criticisms of the policy, Mr Joyce has just reiterated what the ‘intentions’ are. Unfortunately even the worst policies have the best of intentions.

We hoped to be proven wrong on our fear that the grants are interest free. Instead the Minister confirms the worst, with 40% of the grants expected to be written off and the rest not even adjusted for inflation.

In February the world's third largest software maker, SAP, which last year posted a profit of €1.80 billion, received a similar growth grant'.

For us, the key question are:

  • Where is the evidence that the return taxpayers get from the successful start-ups compensate for the money lost on the half that fail?
  • Who is ensuring that the decisions made by politicians on what businesses to back are better than what would have happened had the money stayed in taxpayers' pockets?

Guest blog post: Tony Joyce - KPMG Tax Partner

About two weeks ago Labour released its tax policy programme that it intends to implement if elected Government come 20 September.  Predictably the increase in personal tax rates by 3% to 36%, and the confirmation of a capital gains tax, was widely criticised by senior National ministers as envy taxes and a hindrance to investment.

Whatever one’s personal view, the good news for voters is that for perhaps the first time in a number of elections there are now very clear differences between the two large political parties on taxation policy. While tax will unlikely be the determining factor of which party voters will support, it is at least good to see some very clear and distinct alternative thinking between the two main political parties. The most obvious difference being a capital gains tax.

There is little doubt that a capital gains tax will come to New Zealand eventually. Whether it is in 2015, 2018 or 2028, New Zealand will get a capital gains tax. We are one of the only developed countries not to have a capital gains tax and while it is true that it takes some years before it becomes a significant revenue contributor, once implemented it will influence investment decisions and also contribute towards our infrastructure requirements and social spending needs. It is difficult to rationally argue against a capital gains tax on economic grounds. However, the timing of when such a tax should be introduced, and the immediate impact this might have on investment, are issues that voters will be weighing up. 

As someone that has a good understanding of how large companies structure their New Zealand business investments, it’s disappointing that almost all parties continue to seek to score political points at the expense of multi-nationals. Labour is no exception in making its tax policy announcement, highlighting its intention to provide additional funding to enable many specialist tax investigators to base themselves in the downtown offices of those multi-nationals considered to be serial tax avoiders. Apparently some $200 million per annum of additional tax revenue will be raised simply by doing this. Whether this is politics or a genuine expectation on the part of Labour’s finance spokesman David Parker is something that could be debated well into the night. National has not been innocent of similar point scoring and regularly highlights how much extra resource and effort it is putting into the fight against large multi-national tax avoidance.

The actual reality of the situation, however, is that our Inland Revenue Department is already perhaps one of the most aggressive revenue authorities in the developed world when it comes to applying the tax avoidance provisions to collect additional revenue. Where taxpayers legitimately take a tax position that the Commissioner does not like, all too often the response is not one of challenging the technical merits of the position, or recommending to Parliament a legislative response is required, it is to jump straight to applying the tax avoidance provisions to achieve the outcome the Commissioner considers just.

The impact of this approach on new investment in New Zealand is difficult to gauge, however, there is little doubt that foreign investors are not only aware of the “avoidance risks” of investing in New Zealand, they also place a risk factor on New Zealand investment that did not previously exist. Basing many specialist tax investigators at the premises of multi-nationals is therefore highly unlikely to bring in any more additional revenue than is already being collected; and certainly not the $200 million per annum that Mr Parker has budgeted. 

Without fundamental reform of how we tax non-residents, there is little that can be done to collect tax revenue from companies that do not have a significant presence in New Zealand. The solution lies in making New Zealand a jurisdiction where multi-nationals wish to be based, not in applying the tax avoidance provisions to those companies that currently are based here.

Remembering that this “tax avoidance” initiative announced by Labour is about ensuring everyone pays their fair share of tax, it was disappointing that perhaps the most obvious source of additional revenue under the “paying your fair share” heading has been overlooked. Rather than seeking to gain headlines at the expense of multi-nationals, a much greater return on investment could be achieved by targeting additional resources at our black economy. Estimated at as much as $20 billion by some economists, if only GST was collected on just 20% of this, an additional $600 million more tax revenue would result. This is greater than all of Labour’s personal tax hike, the capital gains tax and the additional $200 million avoidance revenue combined. If income tax was also collected this additional revenue could potentially double. Reduce the black economy by half, and up to $3 billion of additional tax revenue could be collected.

If Government, regardless of political persuasions, is serious about ensuring everyone pays their fair share of tax, then surely this must be where the significant investment is made. Better use of technology and a more strategic approach to information sharing could result in enormous amounts of additional revenue coming from a large sector of society which illegally operates outside the tax system.

Grandstanding at the expense of multi-national companies, whose investment dollars New Zealand needs if we are to prosper long term, is not a good look and will do nothing to raise additional tax revenue or encourage new investment. Our Inland Revenue officials are already overzealous in their application of the tax avoidance rules and if anything they should be encouraged to pull back a tad rather than become even more aggressive.

Regardless of the winner on September 20, the challenge for the post-election Government is to grow our revenue base in a manner that does not discourage investment and truly does result in everyone paying their fair share. Tax should be used as a tool to encourage, not discourage investment….and anyone operating outside of the tax system should be the focus of significant additional audit activity.

This article is the opinion of KPMG Tax Partner Tony Joyce

Seven Sharp: How much gas do you really get for your dollar

How much gas do you really get for your dollar: Seven Sharp - 01/07/2014

Yesterday we headed down to Z Energy Vivian Street where TVNZ's Seven Sharp filmed us refunding people's petrol tax. Not a single motorist guessed that for every dollar spent at the pump only 57 cents goes in the car!

The Government has locked in another 3 cent increase on petrol excise for next year  - now that we are back in surplus we're calling on the Government to ditch the tax hike.

Screen_Shot_2014-09-30_at_8.14.19_pm.png

How much gas do you really get for your dollar: Seven Sharp - 01/07/2014

New problems at BNZ Harbour Quays building

We've received confidential minutes and a briefing via the tip-line relating to CentrePort’s problematic BNZ building which suggests the building will not be fully reoccupied until the end of October.

What should be one of Wellington’s most modern and safest buildings looks to be still plagued with problems eleven months after the Seddon earthquake.

We understand that CentrePort is having to fork out more ratepayer money on seismic restraints on the risers and that there are now new problems with windows popping out in Pier 3.

If ever you needed an argument as to why ratepayers should not be underwriting property development, the BNZ fiasco is it.

Greater Wellington needs to abandon its policy of secrecy and explain how much these problems at the BNZ building are costing ratepayers. Latest estimates are in the tens of millions.

In May the Taxpayers’ Union revealed that the Greater Wellington Regional Council guarantees CentrePort’s debt, including borrowings related to property development.

 

MN_Minutes_PCG Meeting

 

Taxpayer's money spent on 'junket' - Taxpayers' Union

The Department of Conservation has spent over $100,000 to send staff overseas to learn how to conduct controlled burn-offs, despite the practice not being used by DoC, a taxpayers' lobby group claims.

The Taxpayers' Union says 47 DoC staff travelled to Australia this year at the taxpayer's expense to learn how to conduct controlled burn-offs - a skill that is not applicable in New Zealand.

DoC says the trip to Australia was about developing leadership qualities in the staff to deal with high stress situations.

However, the Taxpayers' Union says documents suggest the department was looking for an 'excuse' they could use for why they were sending staff members on the trip.

The documents also contained feedback from one staff member who made the trip admitting that the group didn't "really do much fire stuff", despite that being the apparent purpose of the trip.

"The documents reveal that DoC has been left searching for ad hoc excuses to justify this expenditure. Are DoC staff so well equipped that they need to send staff on training programs for things that only assist conservation in Australia?" says Taxpayers' Union Executive Director, Jordan Williams.

This isn't the first trip DoC has made to Australia. The department previously sent 25 staff on a trip in 2012.

It's estimated the 2012 and 2014 trips have cost taxpayers $106,000.

DoC says the trip to Australia was about: "enabling staff to experience a variety of fire behaviour in a controlled setting, applying fire control and suppression methods in different circumstances and generally allow staff to experience the intensity associated with large fire events and practice the appropriate responses."

Click here to read the story on the ONE news website.

Waste Watch: DoC sending staff to australia to burn taxpayer cash

Documents we've obtained show that the Department of Conservation has spent over $100,000 to send staff overseas to learn a skill not applicable in New Zealand. 47 staff have traveled to Australia to learn how to conduct controlled burn-offs, despite the practice not being used by DoC.

Included in the document is an email from a DoC official regarding the our enquires which suggests a an ‘excuse’ the Department could use for why staff were going on the trips.

Also released is feedback from staff that went the trips, including the admission by one that the group didn’t “really do much fire stuff”, despite that being the apparent purpose of the trip.

We think these trips were just an excuse for a junket, not training that furthers New Zealand’s conservation. They might as well have learned the didgeridoo. We're calling on the the Minister for Conservation should put an end to this ‘controlled-burning' of taxpayers’ hard earned money.

DoC response to OIA by New Zealand Taxpayers' Union 16 May 2014

DoC response to OIA by New Zealand Taxpayers' Union 18 June 2014

 

Auckland public transport campaign hypocrisy

$356,000 for train campaign The New Zealand Herald - 28/06/2014

 

 

 

 

 

 

 

Public transport bosses in Auckland spent $356,000 to improve their public image - even as they lined up a special shuttle so staff don't have to travel on buses and trains.

The marketing campaign came with the introduction of the new electric trains and was also intended to encourage people to "give the trains a go".

It was revealed this week Auckland Transport has set up a regular private shuttle service to move staff between its Henderson headquarters and its central Auckland waterfront office.

The shuttle was intended as a time-saving measure for staff, but attracted criticism from public transport advocates because it leaves from and arrives at the same places used by the slower public transport options.

The $356,000 spending on the April campaign came as the shuttle service was being prepared for launch. The documents, released to the Taxpayers' Union, show the campaign was intended to "increase positive perceptions towards Auckland Transport and our breakthrough projects".

… 

Taxpayers' Union director Jordan Williams criticised the spending.

"Instead of throwing money at advertising, Auckland Transport would have a better reputation if it stopped running the private shuttle between offices and started following its own advice to use public transport."

Auckland Transport chief executive David Warburton told Radio New Zealand criticism was "superficial".

Click here to read the full story on nzherald.

'Do as I say, not as I do' attitude from Auckland Transport

News that Auckland Transport forked out $122,000 of ratepayers’ money for a six month trial of an employee shuttle service has gone down in Auckland like a lead balloon.

Auckland Council has been left scrambling in an attempt to save face.

We are concerned by the prevalence of the cavalier attitude towards ratepayers’ money that is seemingly embedded in Auckland Council and some of its associated organisations.

A concerned supporter of the Taxpayers’ Union has written in to us with a list of questions that need to be raised about this latest Auckland Transport gaffe. We’ve condensed them down to the following:

  1. How many staff need to travel from the Henderson Auckland Transport office into the city office for meetings?
  2. How often are these commutes made?
  3. Have alternative options, such as using remote collaboration tools or programmes such as Skype been investigated?
  4. What efforts have been made to ensure greater efficiencies through the scheduling of all or most of these meetings on a single day?
  5. Have any feasibility studies been undertaken to ascertain whether or not it would be more efficient to relocate affected staff members from theHenderson office to the city office?

101 ways for councils to cut rates

The Taxpayers’ Union has today published a new report by Jono Brown that suggest ways local councils can save money and reduce the rates burden on New Zealanders. Rate Saver Report: 101 Ways to Save Money in Local Government is a guide for local authorities on how they can cut waste, save money, reduce bureaucracy and ultimately lower rates. The report adopts many suggestions made by the country’s mayors, and is based on similar reports published in the United Kingdom.

Click here to read the full 101 ways

Too often we hear unimaginative councillors insisting that they have no choice but to increase the rates burden. Before they even consider increasing rates they should consider all of the suggestions in this report.  In future, any council claiming that raising rates is the only option had better be able to prove that they have implemented or at least considered implementing every single idea we are putting before them today. If not, they won’t be able to look their residents in the eye and insist that they have exhausted the possibilities for saving money.

Ray Wallace, Mayor of Lower Hutt, says in a foreword to the report:

"I urge local government people to take these suggestions as a challenge. If you do not like them, come up with some better ones."

Tim Shadbolt, Mayor of Invercargill City, says in a foreword to the report:

"Having been a mayor for 28 years and finally achieving a rate increase of less than 1%, I’ve learnt to face many challenges and this publication is certainly challenging. Some of the ideas are obviously worthy of discussion and others are clearly designed to provoke discussion."

Highlights of how councils can save money:

  • Pay back council debt (#1)
  • Incentivise innovation (#2)
  • Stop providing free lunch and booze for councillors (#3)
  • Don’t fund or join chambers of commerce (#4)
  • Publish all accounts payable transactions (#5)

Other notable suggestions include:

  • Scrap political advisors (#10)
  • Get rid of professional sports subsidies disguised as ‘economic development’ (#17)
  • Cancel annual subscription to Local Government New Zealand (#24)
  • Stop producing glossy brochures (#33)
  • Lease art the council can’t sell (#99)

The Taxpayers’ Union would like to thank the many Mayors across the country who responded to the Union's invitation to submit ideas and examples of their council saving ratepayers’ money.

When phones go down, Dyson knows who to call

A fault caused telephones in Parliament to be temporarily blocked from making long-distance calls yesterday, prompting long-serving Labour MP Ruth Dyson to suggest Right-leaning lobby group the Taxpayers’ Union might have been behind the problem.

‘‘No toll calling available from Parliament,’’ Dyson tweeted.

‘‘Saw ‘taxpayers’ ‘union’ in the building earlier. Money-saving move? Lights next?’’ Dyson tweeted. Click here to read more.

Margaret Thatcher Conference on Liberty: Live streaming

While in the UK seeing family, I'll be pausing my vacation to fly the Taxpayers’ Union flag at the Margaret Thatcher Conference on Liberty. The conference will be hosted for the Centre for Policy Studies, a UK-based independent think tank advocating for greater economic liberalism. The event will coincide with the 40th anniversary of the establishment of the Centre for Policy Studies.

The conference will host speakers from around the globe, including current and former Prime Ministers, academics, MPs, MEPs and political influencers. A full list of speakers can be found here.

The Centre for Policy Studies will be live-streaming the conference, which will begin at 10pm New Zealand time from two locations at the event: the Great Hall and the breakout groups. (I'll also be tweeting interesting tidbits via @BGCraven).

I’m hoping to learn a great deal about the challenges facing the representatives of each nation and how these compare and contrast to New Zealand’s  domestic policies.

Greater Wellington loses $43million on one building

The Taxpayers’ Union is slamming the property management skill at Greater Wellington Regional Council which has lost 95% of the purchase price of the building it used to occupy.

Information released to the Taxpayers’ Union under the Local Government Official Information and Meetings Act show that ‘Pringle House’ in Wakefield Street, also known as the 'Regional Council Centre', was purchased in 1987 for $22 million. In 2014 dollars, that is equivalent to $45.2 million. According to a recent independent valuation, the property is worth only $2.3 million. The documents reveal that ratepayers have taken a loss of more than 95% of the purchase price.

This shows why councils should be extra careful about managing property. At the time when Greater Wellington is taking a 95% loss on its own building, the port it owns is pushing ahead with the Harbour Quay property development, which Wellington ratepayers underwrite.

Last month the Taxpayers’ Union revealed that Greater Wellington had not bothered to enquire into the extent of damage and potential loss resulting from the Cook Strait Earthquakes (click here for DominionPost coverage).

These new revelations do not give us confidence that Greater Wellington are good stewards of ratepayer money. The Council should leave the funding of property development to the private sector and put a stop to risking public money.

Notes:

  • Pringle House, the former offices of Greater Wellington Regional Council, were purchased for $45.2 million (inflation adjusted) in 1987.
  • The building is now worth $2.3 million and is earthquake prone.
  • Consultants have estimated that it will cost $32 million to bring the building up to acceptable standards.
  • The costs to physically relocate the Council offices after the Cook Strait quakes last year were nearly $90,000 (not including staff time).
  • Despite sitting empty, the building is costing ratepayers $17,000 per month.
  • The Council has considerable property risks as debt guarantor of Centre Port’s ‘Harbour Quay’ property developments. 

 Letter from GWRC to NZTU 23 May 2014

 Attachment 1 to OIA 2014 065 - Telfer Young Market Valuation

Attachment 2 to OIA 2014 065 - Spencer Holmes Final Report on the RCC Building

Attachment 3 to OIA 2014 065 - Dunning Thornton Seismic Status Peer Review Report

 

Leaked report shows efforts LGNZ making to protect poor performing councils

The Taxpayers’ Union has been provided a copy of a leaked report Local Government New Zealand (LGNZ) commissioned. The report was prepared in response to work by the Taxpayers’ Union to improve transparency in local government. Earlier today Ratepayers’ Report – interactive local government league tables  launched at ratepayersreport.co.nz.

We've also been leaked confidential briefing papers for council CEOs. These appear to have been prepared by LGNZ's spin doctors as an aide for councils to avoid any criticism resulting from questions relating to Ratepayers' Report and other efforts by the Taxpayers' Union.

We approached LGNZ earlier in the year and sought its help to ensure New Zealanders got a fair picture of how their local council is doing. Instead, LGNZ went into defence mode and hired an accountancy firm to discredit the expert analyst we were using. They were not interested in ensuring ratepayers got an accurate picture, rather creating reasons why we shouldn’t be providing the public with the information.

Despite promising that the report would be made available to the Taxpayers’ Union, we’ve only seen it today because it was leaked to us. The report suggests that LGNZ is more interested in toeing the party line, rather than identifying the councils which are under-performing.

The report, by Grant Thornton, appears to have little basis for what they deem as ‘acceptable’ for the financial measures they apply to councils. They've not provided a league table, or a scoring system and even the data points on the graphs do not reference the councils they relate to.

It appears they’ve put in the data then picked the spot that shows that everyone is doing well.

The report makes soft criticisms of Kaipara District and Waitomo District Councils - but then defends them. It makes assertions that all under-performing councils are dealing with their issues. To us it demonstrates that LGNZ is a lobby group to protect local councils rather than a champion of best practise.

Grant Thornton Report_Local Government a Financial Snapshot

Ratepayers' Report

The Taxpayers’ Union, in collaboration with Fairfax Media, this morning launched "Ratepayers’ Report” hosted by Stuff.co.nz. 

 

Ratepayers’ Report builds on the work of local government expert and financial analyst, Larry Mitchell and his work in previous years comparing New Zealand’s 67 territorial authorities. The data was pulled together by the Taxpayers' Union and supplied to Fairfax Media. Fairfax has had the data checked independently and supplied it to councils for viewing before its publication.

For the first time, New Zealanders now have an interactive online tool to compare their local council to those of the rest of the country. Go to Ratepayersreport.co.nz to compare your local council including average rates, debt per ratepayer and even CEO salaries.

Ratepayers’ Report compares, for the first time, average residential rates.  The figure has been calculated using a methodology developed within the local government sector to compare average residential rates.  Only Kaipara District Council was unwilling to provide the Taxpayers’ Union with the average residential rates information.

Some highlights: 

  • New Zealand’s highest average residential rates are in the Western Bay of Plenty District, $3,274
  • The Mackenzie District has the lowest average residential rates, nearly two thirds less at $1,104
  • The average council liabilities are $4,386 per ratepayer
  • Auckland Council’s liabilities are now $15,858 per ratepayer (and increasing!)
  • Dunedin is not far behind. For every Dunedin ratepayer, the Council owes $15,093

Herald covers Taxpayers' Union outrage taxpayer funding joke party

Civilian's gain major parties' loss Herald - 11/06/2014

The Civilian, a satirical website, has been allocated taxpayers' money to fund election policies such as 'free icecream' and a 'llama for each child'. The Herald covers Taxpayers' Union Executive Director Jordan Williams on the wasteful allocation of taxpayers' money. 


Mr Uffindell, the writer behind satirical website The Civilian, has been targeted by lobby group the Taxpayers Union and Prime Minister John Key for wasting taxpayer funding after last week being allocated $33,635 in taxpayer funds for broadcast election advertising for the coming campaign.

"In reality, the Civilian Party will be thinking the biggest joke's on us, the taxpayer," Mr Key said.

Taxpayers Union spokesman Jordan Williams said for the party to accept the money to promote its policies of free ice cream and a llama for each child in poverty was "outrageous".

"This is an affront to very important issues like health and education. It is absurd that while people wait for surgery, the Civilian Party receives $33,000 of taxpayer money for what is essentially a hobby horse."

But Mr Uffindell told the Herald the money was coming from a $3.28 million pool which would be fully allocated - mostly to National and Labour - anyway.

Click here to read more.

How not to reform GST: Changing the rules with a Friday press release

Robin Oliver and Mike Shaw, a former Deputy Commissioner at IRD and former Deloitte tax partner respectively have provided a guest post on the changes to GST relating to bodies corporate announced by Revenue Minister, Todd McClay this morning.

GST and Bodies Corporate

What is proposed?

All Body Corporate supplies under section 84 Unit Titles Act 2010 (all things bodies corporate are required to do) to be deemed to be exempt supplies meaning that bodies corporate are not able to register and receive GST input credits for the GST they pay on purchases.

If the Body Corporate registered before 6 June 2014 (date of announcement) it retains registration BUT is compulsorily de-registered as of 6 June.

There is a complex look-though rule for registered unit holders.  For example a commercial property owned by unit holders who lease offices –  their share of Body Corporate expenses are deemed to be their own expenses so that they can claim a proportion of input credits relating to the Body Corporate.

 Legislation is to be introduced, presumably after the election, which has effect from 6 June 2014.

This is justified by Minister of Revenue as fair, consistent, and reducing compliance costs.

Comments

The proposal is a stunning attempt to legislate by press statement.  The proposal

    • Is not fair
    • Produces inconsistent tax treatment
    • Increases compliance costs.

The proposed legislation by press statement is a naked revenue grab exploiting the misery of the many unit holders who have already suffered as a result of leaky home problems and the costs and misery that entails.  The government helped create the leaky home problem and now they are changing the tax rules to make money out of the resulting misery.

The Proposals are Not Fair

Where a body corporate has been compensated by an out of court settlement to address remediation costs from leaky home problems, post 6 June 2014 they are unable to claim GST on the costs of remediation.  This is in effect a tax grab by the government.  The out of court settlement was paid with no input by the builder/developer etc.  GST was in this way charged on the payment.  This was offset by the payment being free of GST in the hand of the Body Corporate but with GST input tax still available on all subsequent remediation costs.  This no longer applies post 6 June.  The right to input credits is proposed to be removed.  This is a confiscation of GST properly entitled to be refunded to Bodies Corporate and results in two levels of GST being levied (one by the payer of the compensation payment, second on the input tax credit for the Body Corporate).

Many registered bodies corporates have build-up maintenance funds by charging the unit holders levies plus GST.  This will be neutral if the body corporate could recover the GST when they spend the funds to paint the building and undertake their maintenance plans.  Post 6 June 2014, the body corporate cannot claim back the GST on this expenditure, this has resulted in a windfall gain by the Government of GST as GST has been collected on the levies and no GST will be able to be claimed on the subsequent expenditure.

It Results in Inconsistent Tax Treatment

Where instead of getting a compensation payment the builder repairs the building, the builder gets input credits for the costs.  This is the same as current law where the Body Corporate gets the input credit; but it is proposed that these be arbitrarily denied.

Where a Body Corporate employs a cleaner/manager to provide services to unit holders the no GST on that service will now be payable since it is an exempt supply.  If other people purchase cleaning services then GST is normally charged.

The Proposal Will Increase Compliance Costs

For Bodies Corporate which have primarily unit holders that conduct taxable activities, this proposal will materially increase compliance costs in that the GST portion is claimed by the unit-holder and not that body corporate, this will mean monthly reporting to unit holders of detailed financial information (i.e. each payment which has a GST content) to every unit holder.

Legislation By Press Statement Is a Mess

Legislation will not be enacted until some unknown time in the future, therefore what do registered bodies corporate do post 6 June 2014.  Until we have enacted legislation, they are required to comply with requirements to charge GST that will presumably have to be refunded when legislation is enacted.

IRD issued its Issues Paper reaching the interim view that Bodies Corporate are liable to register in May last year.  It has remained silent for 13 months.  Then the government issues a press statement after all this time. 

Robin Oliver and Mike Shaw are principles of OliverShaw. More information is available on their website.

Waste watch: Auckland Council funds conference on polyamory

Yesterday afternoon we received a tipoff that Auckland Council recently funded a one day conference to explore the practice of engaging in multiple sexual relationships with the consent of all the people involved, also known as polyamory. 

Last month the gaynz.com website reported that among the first recipients of Auckland Council’s first ever 'Rainbow Door Fund’ was 'Poly Panel, Discussions around Queer Polyamory’, a one day event exploring a framework of ethical, healthy polyamory relationships.

We think that Auckland ratepayers will be horrified that it appears their rates are being used to promote alternative lifestyles.

Why should Auckland Council be concerning itself with matters in the bedroom?

This is just as concerning as it would be were Auckland Council funding conservative lobby group conferences such as for Family First.

Earlier this year the Rainbow Door Fund was established to provide grants for glbti people. We think it is questionable for Auckland Council to fund community groups based on the sexual preferences of their members. Conferences such as these should be funded by the interest groups themselves, not from money meant for roads and core services.

Given the spiralling levels of Auckland Council debt, the Council should be focused on value for money, not throwing funding at favoured groups.

Happy Tax Freedom Day

Today is Tax Freedom Day – the first day of the year when Kiwis stop paying for the state and start working for themselves. The Taxpayers’ Union believe that it is high time ordinary people saw the rewards of hard work going into their pockets, not the taxman’s.

Congratulations New Zealand, as at 10.04am today you are working for yourself. However, the fact the Government accounts for all the money earned until today means it is unlikely New Zealanders will be celebrating. The government has effectively sucked up all of our earnings for the first 154 days of the year.

OECD figures put the current burden of government in New Zealand as 42.2% of GDP. This is larger than the 30% recently quoted by Finance Minister Bill English because it also takes into account crown entities, such as SOEs as well as local government.

At 42.2% this year, the burden of government is even larger than when National took office in 2008. While core government expenditure has gone down, the wider crown portfolio and particularly local government has exploded.

We need to aspire to countries like South Korea, Switzerland and Australia. Tax Freedom day this year fell on 21 April in South Korea, 2 May in Switzerland and 11 May in Australia.

Tax Freedom Day is a day for New Zealanders to consider the egregious amount of tax foisted upon us by successive governments. Tax should be used to deliver the key functions of government in the most efficient way possible.

We should be aiming to start working for ourselves in April, not still working for politicians in June. The only way to do that is to reduce the high tax burden on New Zealanders.

We want to keep working to make sure next year's Tax Freedom Day is earlier. Help us do it, by joining, or supporting, the Taxpayers' Union.

Are our priorities right in Tonga?

This morning we received the following press release from the Government:

NZ to contribute to the upgrade of Teufaiva Stadium
John Key
4 JUNE, 2014

Prime Minister John Key has today announced New Zealand will contribute around $2 million towards upgrading Tonga’s national stadium in Nuku’alofa ahead of the 2019 Pacific Games.

Why are Kiwi taxpayers contributing to this?

“New Zealand looks forward to working with the Tongan Government to improve Teufaiva Stadium in the lead up to the 2019 Pacific Games and other international events,’’ says Mr Key.

“Teufaiva Stadium is already an important site for domestic rugby, athletics and community events and will be a great venue for the Pacific Games.

“New Zealand supports a fit-for-purpose upgrade of the stadium that will expand its utility while supporting the strong community that participates in current stadium events.

“I’m happy that New Zealand can assist Tonga in its efforts to promote sports and healthy lifestyles in Tonga,” says Mr Key.

We’re not sure that contributing funds to a sports stadium is much of a promotion of healthy lifestyles, but more importantly is this really the highest priority to better the lives of those living in the Kingdom of Tonga? If the goal is to improve health, why isn't New Zealand spending the $2 million directly on health, implementing exercise programmes in schools or encouraging a healthy lifestyle?

The first step in the upgrade work will be a New Zealand-funded feasibility study and design, and technical support for the Tongan Government.

Mr Key made the announcement in Tonga today where he is visiting from June 3-5, as part of the 2014 Pacific Mission.

We would have thought that spending $2 million on a sports stadium is a purely nice-to-have rather than something that makes a difference to the lives of struggling families.

While drafting some comment on the Government's priorities we received the following: 

NZ to invest $5 million to rebuild Tongan schools 
John Key
4 JUNE, 2014

Prime Minister John Key has today announced New Zealand will contribute $5 million to rebuilding schools in Tonga’s Ha’apai islands following the devastating Cyclone Ian earlier this year.

 Good! 

“The $7.5m joint project with the Asian Development Bank and the Tongan Government will have a big impact on the lives of nearly 1,300 students affected by the cyclone,” says Mr Key.

“Getting children back into a regular school is vital for their education, safety and emotional well-being. Education is one of the priority areas for Tonga under the New Zealand Aid Programme and we are very pleased to be able to respond to the Tongan Government’s request for assistance,” says Mr Key.

We couldn’t agree more with the value ascribed to education by Mr Key in this quote.

In January of this year, Cyclone Ian caused extensive damage to infrastructure, public utilities and services, agriculture and housing, as well as severely damaging schools in the Ha’apai island group. 

The funding will be used to reconstruct classrooms and staff quarters, and replace school equipment across the island group by 2016.

“New Zealand enjoys a strong relationship with Tonga and the two countries are important regional partners,” says Mr Key.

“There is a significant Tongan population living in New Zealand, so it’s important that we are able to help Tonga in times of need.”

Mr Key made the announcement while visiting Government Primary School in Nuku’alofa today. While in Tonga, Mr Key also met with Tongan Prime Minister Tuʻivakanō and had high level discussions with Tongan members of cabinet. 

Mr Key is visiting Tonga as part of the 2014 Pacific Mission. He will visit Niue on Thursday before returning home.

Whilst we applaud our foreign aid obligations being spent on such worthy causes, it doesn’t alleviate our concern around the sports stadium funding.

That $2 million would still be better off earmarked for the core services of government that influence daily life for the people of Tonga.

We're disappointed that our Government is effectively saying funding for the vanity project of a sports stadium is 40% as important as rebuilding Tongan schools and getting children back into regular education.

Taxpayers' Union calls for changes to the Official Information Act to include trusts

Trust investigates 'irregular payments' claim The New Zealand Herald - 27/05/2014

A taxpayer-funded South Auckland disability support provider which received $30 million last year is investigating its own accounts, after claims from New Zealand First leader Winston Peters of "irregular payments".

… 

The Taxpayers' Union called for changes to the Official Information Act to cover groups such as the trust.

"Unlike government agencies, these non-profit groups are not required to comply with the act. This means that too often, taxpayer money disappears into a void," union executive director Jordan Williams said.

Click here to read more.

Te Roopu Taurima O Manukau Trust shows need for OIA reform

The NZ Herald has picked up our comments in response to the recent scandal surrounding "irregular payments" at the taxpayer-funded South Auckland disability support provider, Te Roopu Taurima O Manukau Trust

Trust investigates 'irregular payments' claim NZ Herald 27 May 2014

Trust investigates 'irregular payments' claim

A taxpayer-funded South Auckland disability support provider which received $30 million last year is investigating its own accounts, after claims from New Zealand First leader Winston Peters of "irregular payments".

Te Roopu Taurima O Manukau Trust confirmed yesterday that its investigation had been ongoing for several months.

Among Mr Peters' claims were $360,662.90 paid to a bakery over two years for property maintenance, $250,000 to two firms unqualified to give financial advice and payments to a security systems company that does not exist. [...]

The Taxpayers' Union called for changes to the Official Information Act to cover groups such as the trust.

"Unlike government agencies, these non-profit groups are not required to comply with the act. This means that too often, taxpayer money disappears into a void," union executive director Jordan Williams said. Read more.

London return for the money written-off on rail since 2008

We’re currently working though the budget announcements and stack of material released last week.  What’s caught our eye are the unbelievable amounts taxpayers are forking out for KiwiRail.  On Budget day the Government announced a further $198 million of funding for KiwiRail’s Turnaround Plan. That brings the total cost to taxpayers of rail to a whopping $12.2 billion dollars since rail was renationalised in 2008.

Worse, Transport Minister Gerry Brownlee has warned that KiwiRail is likely to need more what the Government is calling a 'turn around plan'.

The $12.2 billion taxpayer money written off on KiwiRail is equivalent to over $2,700 per taxpayer - nearly enough buy every Kiwi a return flight to London.

Per household, the amount is $6,900 - enough to buy a good, reliable second hand car.

The $12.2 billion refers to the total Crown investment of $2.4 billion since 2008 and write downs totalling $9.8 billion. 

We've put out a statement calling on the Government to do a U-turn on KiwiRail. At what point will the Government stop throwing good money after bad? Taxpayers should not be burdened with bringing dead rats to life.

It is incredible that for all this money, we still have locomotives with asbestos and ferries that are lemons. We think taxpayers deserve better.

Wairoa responds to Taxpayers' Union rates claim

Further to our questioning of the use of a rates figure that does not include new targeted rates, the Wairoa District Council has issued a media release:

Wairoa District Council Defends Against Negativity

Wairoa is transforming into a vibrantly energetic part of New Zealand and will no longer accept spin-driven criticism. This is the message from newly-appointed CEO of Wairoa District Council Fergus Power, in response to recent criticism by the New Zealand Taxpayers Union over a proposed budget increase.

Describing it as just another example of ‘Wairoa-bashing’, Mr Power said it was a cheap shot that distracted from the fact that the district is very much open for business.

“I have been appointed to bring about a transformation within Council, and within the district. The first step requires active rebut of the sort of nonsense that has been promulgated for years – that Wairoa is in decay, has inept leadership, and is incapable of a sustainable, prosperous future. In fact, Wairoa district has the youngest and most vibrant population structure of all of the cities and districts in the Hawke’s Bay region – with 25% of the population aged between 0-14,” said Mr Power.

“That is backed up with some of the warmest and most welcoming people, a rich and proud Maori culture, the kindest climate imaginable, and a surfeit of fish, game, and opportunities to recreate in the vast outdoors – which includes the stunning Lake Waikaremoana and Te Urewera National Park, and the world-renowned beaches of the Mahia Peninsula, with sun, sand and surfing”, he said.

Wairoa Mayor Craig Little said Wairoa would no longer accept baseless scaremongering.

“I will defend Wairoa district’s reputation aggressively. We are no longer a punching bag. We are punching above our weight and we have much work to do as a community”.

"When the punching bag looks like blue sea, warm sand, sunshine, and an energised and dedicated community committed to a complete transformation of the district – it becomes a slightly harder target. In fact, why would you even want to diminish it?

NZTU criticism was centred around the Draft Annual Plan 2014-2015, which is currently in the consultation phase.

The plan includes a 5.43 percent increase in the budget, which does not include the funding requirements for the Mahia and Opoutama Wastewater Schemes. Ratepayers not involved in either wastewater scheme are not affected by these funding requirements.

Participants in the wastewater schemes are being consulted with separately, as they have several options for repayment. Figures that relate to these schemes in the Draft Plan reflect the default repayment option, although the choices those participants make will have a significant impact on the projected rates requirement.

All Wairoa ratepayers are sent individual draft rates notices, which record the proposed rates amount for their individual properties under the Draft Annual Plan.

Visit www.wairoadc.govt.nz to view the plan in full and make an online submission. Consultation closes at noon on Thursday, June 12.

Ends

We reject that our comments were 'Wairoa bashing' and would rather stick to the issues. 

We accept that the Wairoa District Mayor and CEO were not intentionally misleading Wairoa ratepayers in relation to rate increases related to the Mahia and Opoutama Wastewater Schemes. We also accept that the Council has consulted widely on those schemes and those ratepayers affected are likely to be aware, or will soon be aware, of the financial implications of the schemes and following further clarification we without reservation apologise for any malignment of the character of the Mayor and CEO of the Wairoa District Council.

We still believe that the Council was wrong to use the 5.43% in material issued publicly, without making it clear that this figure did not include spending and rates related to the wastewater schemes. The draft annual plan shows that total rates income (including the targeted rates) is estimated to increase by 15.9%. We thought that it was proper, and still think it proper, to raise the matter publicly. In part we relied on a statement from a Council officer  that the wording was ‘loose’. After assurances from the Council’s CEO that the Council had not meant to mislead the public, we are happy to let the matter be debated as part of the normal draft annual plan consultation process.

Oops - $2 billion mistake in budget appropriations

 

We’ve spent most of this week immersed in the budget documents and making notes of potentially questionable spending or unusually large increases.

To our great surprise yesterday we noticed that one of the primary growth partnerships (PGPs) that the Government is funding appeared to have undergone a massive growth in spending. We’ve expressed much concern in the past about PGPs and consider them inappropriate corporate welfare and the Government picking favourites.

According to the budget estimates distributed on Budget Day, the New Zealand Sheep Industry Transformation Project (NZSTX) is to receive 644 times more than in 2013/14. As you can see from the scan below, the budget documents show an increase in spending from  $3.3 million to just under $2.4 billion dollars.

For comparison, $2.4 billion is roughly the same amount of appropriations for corrections, courts and customs combined!

We've previously made noise that the hundreds of millions committed to PGP funding is wasteful spending.. So you can imagine our shock when we saw that the Sheep Industry would be receiving close to $2.4 billion of hard earned taxpayer money.

We emailed the Minister of Finance’s office and have been told, to our relief, that the figure is mistakenly 1,000 times more than intended.

We are delighted that the Sheep Industry haven’t had a bank error in their favour of over $500 from every New Zealander. Like anyone else they might want all their Christmases to come at once, but thankfully the New Zealand Merino Company, who runs the programme, won’t get to run off into the sunset with designer sheep bedecked in glittering jewels.

The mistake reminds us of the Westpac couple who went on the run after $10 million was mistakenly deposited in their bank account. Luckily this one is more easily rectified as the money is not yet spent!

Vote Primary Industries by TaxpayersUnion

 

***Correction*** In much the same way Treasury made a mistake, an earlier version of this post referred to 2.4billion equalling roughly the same as the total amount spent on Education in Budget 2014. That was incorrect. The $2.4 billion only relates to output expenses in Vote Education.

Where does 5.43% actually equal 15.9%?

Wairoa ratepayers should be furious with the Wairoa District Council for misleading the public on its forecast rate hikes. Earlier today the Taxpayers’ Union discovered that statements by the District’s Mayor and CEO that rates are forecast to increase by 5.43% are fanciful. The real figure is in fact 15.9%.

Earlier today the Taxpayer's Union were alerted to a slight problem with two statements contained in Wairoa's draft annual plan, currently open to public consultation.

In the introductory statement by the Mayor and Council CEO they claim that on average rates are increasing by 5.43%. But when we do the math, not based on the spin but on the financial numbers in the same paper, we come to a whopping 15.9%

So how do the two amounts reconcile? We wrote to the CEO to ask:

 

Here's the draft annual plan we quote. Note pages 1 and 91: 

Late this afternoon we received a call from a Council official who reports to the CEO and had a frank conversation. Amazingly the official acknowledged what he termed as 'loose' wording by the CEO and Mayor. Apparently when the figure was originally reported to the Council it included a significant proviso that two new rates were not included.

The 5.43% figure does not include two new rates which relate to two waste water schemes. Once you include those the rates increase is nearly three times the percentage the Mayor and CEO were trumpeting.

We're calling on the Wairoa Council CEO, Fergus Power, and Mayor, Craig Little, to apologise to Wairoa ratepayers, and correct their misleading statements in the draft annual plan.

What do you think? Acceptable spin, or misleading the public? Comment on our Facebook page here.

Dusting off the cheque book to qualify for tax relief

Yesterday we were scathing of Mr English's lack of tax cuts in yesterday's budget.

Nevertheless, we were eager to qualify for the only tax cut that was it - the removal of cheque duty - worth about $1 a year per New Zealander.

Budget lock up

To avoid missing out on the tax cut, earlier today we delivered a cheque to The Treasury to cover the lunch provided at yesterday’s budget lock-up.

Rather than pay for our taxpayer funded lunch with cash, we dusted off our cheque book to make the payment. As only the minority of New Zealanders who still use cheques will qualify for the tax relief, we wanted to make sure we are among them.

Yesterday’s budget forecasts that over the next four years, total surpluses will equal $4,935 per household. Of that, Kiwi taxpayers get back $1 from the only tax cut contained in yesterday's budget.

We’re calling on the Government to lay out a clear and meaningful program of reducing tax and compliance costs.

Cheque and note to Treasury

The Taxpayers’ Union fights for lower taxes and value for money from every tax dollar. New Zealanders are welcome to donate their tax cut by clicking here (or of course sending a cheque!).

NBR: Ratepayers underpin vested interests’ development ambitions

With all the focus on yesterday's budget we nearly missed this piece in yesterday's NZ Property Investor.

Ratepayers underpin vested interests’ development ambitions

The Taxpayers' Union says councils around the country are not telling ratepayers about the cost of capital that ratepayers are underwriting for local authority subsidies.

Jordan Williams brought up the issue in relation to Greater Wellington Regional Council and losses arising from its subsidiary CentrePort as a result of earthquake damage last year.

Click here to continue reading (requires NBR subscription).

Autotalk on electric vehicles

White elephant says Taxpayer’s Union, not so says APEV Autotalk - 01 May 2014

The Taxpayers’ Union says it has uncovered what is probably the most expensive staff car park in the country, located at Z Energy on Customhouse Quay in Wellington.
However the Association for the promotion of electric vehicles (APEV) disagrees.
Between 2010 and 2012, the Wellington City Council spent $100,000 on a zero-emissions vehicle programme, and only thing to show for it is a charging station, which is a white elephant claims the Taxpayer’s Union.
Most days it is occupied by conventional vehicles owned by the staff at the Z Energy station according to the Taxpayer’s Union.
“Instead of being used to charge electric vehicles, the ratepayer funded charging station is used as a staff car park for the service station attendants,” says Taxpayers’ Union executive director Jordan Williams.

John Bishop on consultation irony

On Monday a fellow Taxpayers' Union board member and I spent a fascinating morning with a group of academics, middle level public servants and representatives of NGOs responding to a request for our views about 'open government'. Sounded interesting; well yes, but it turned out to be a quick fire consultation about how the government could fulfil its requirement to report progress of open government to some international body and agreement it signed up to.

The report is due by the end of July and along with some discussions on Loomio this meeting seemed to be about the sum total of consultation on the matter.  This is deeply ironic given that some of the values of open government are that consultation should be timely, appropriate and that there is enough time taken for interested parties to discuss and debate their positions and learn about the positions of others. The session was very top down. The first question as whether a bunch of documents, variously called Better Public Services, ICT Strategy and Action Plan and the National Integrity System, were an appropriate starting point. They probably were, given that there was really no other obvious starting point.

But the real agenda quickly became apparent when those attending said plainly and simply that making data available wasn’t actually the most important part of open government. Nor was enabling citizens to transact with government agencies (renewing their car registration, applying for a passport, and the like) really anything about more democracy – welcome though such initiatives were.

Officials looked a bit disconcerted and chagrined.  This wasn’t going according to plan. Their primary interest was finding something meaningful to report and preferably with enough of patina of consultation to enable them to say that this was a consensus view from societal groups and not simply the view of officials. The participants, mainly Wellington based policy wonks and advisors, well understood the game and worked to fulfil their needs.

However the discussion was constructive and useful. There was clear consensus about

·       Reviewing the Official Information Act to reduce delays and obstruction

·       Publishing Best Practice guideline on public consultation

·       Defining and codifying “accountability” and responsibility” in the public sector, consistent with the ability of officials to give quality advice

·       Giving the responsibility for open government to a single agency.

For what it’s worth the Taxpayers' Union view of accountability (or responsibility) revolves around being able to find out who made which decision, when and why, seeking to achieve which specified objectives, based on what evidence and costs, knowing that the evidence and costs were themselves robust, and when the programme or activity has been implemented being able to find what results were achieved, and where these results were short or astray from the original objectives what will be done about it, by whom and when.

We believe that it is far too difficult to find out how well (or badly) taxpayers money was spend by government, and that goals such as transparency and accountability needed to be strengthened by coherent actions which match results against objectives and count achievements against costs.

Bureaucratic speak

Finally a couple of examples of bureaucratic jargon to round out the day: My two favourites were:

“We need to systematise our learnings here and develop some protocols around them.” And this little gem of positive sounding word smithing; “develop” became “develop a strategy to strengthen”. Of such debates is a day of discussion in Wellington composed.

Union welfare at Parliament

This morning's Herald on Sunday carries a story on bonus for Parliament's unionists:

The agency in charge of parliamentary staff has agreed to a cash bonus for union members, despite John Key's National Party previously denouncing such deals as discriminatory.

An email obtained by the Herald on Sunday shows union members will receive a one-off, $1000 bonus from the Parliamentary Service - double the amount non-union members will get.

During the Helen Clark Labour administration, union staff once landed an $800 bonus. Act and National blasted the pay-off then, calling it "corrupt" and accusing Labour of cronyism.

Despite that this is union welfare and a political subsidy for the left goes on. We know of parliamentary staff who feel uncomfortable with the pressure and financial incentive from the Parliamentary Service to join a union.

The Government should scrap these kinds of deals. It made sense that the Labour Party would want to ensure its trade union donors are well funded. The fact it is continuing under National is outrageous.

Email on bonus to Parliamentary staff

The email the Herald on Sundays refers to was sent through to our tip line last week.  Click "continue reading" to view.

 

What does the taxpayer get from Lydia Ko?

I take my hat off to Lydia Ko.  A young women with an impressive talent and no doubt a bright career ahead.  New Zealanders can rightly take pride in her accomplishments.  But why does taxpayer funding necessary follow pride?

This morning’s Dominion Post reports:

Golfer Lydia Ko is asking for more taxpayer support since turning pro than she received when she was an amateur.

The 16-year-old prodigy can now reap big financial rewards from professional tournaments, as well as millions in management contracts and endorsement deals.

She pocketed NZ$181,000 for winning the Swinging Skirts World Ladies Masters tournament in Taiwan last year and so far this year has collected more than $280,000 in winnings.

As an amateur, she received $115,000 from High Performance Sport NZ in 2012 and $185,000 last year, chief executive Alex Baumann said.

New Zealand Golf's application for this year is for $208,000 to pay for her coaching, physiotherapy and mental skills training. 

 

The Dominion Post picks up Taxpayers' Union criticism of Government funding the America's Cup


Taxpayers' Union criticise Government funding $36m towards the America's Cup
The Dominion Post - 28/03/2014

Government claims that last year's America's Cup campaign has paid for itself more than twice over have been criticised by the Taxpayers' Union.

Economic Development Minister Steven Joyce yesterday released an independent report into the "direct and indirect benefits" of entering the high-speed yachting regatta.

"From a $36m taxpayer investment, the evaluation shows an estimated positive impact of $87m to the New Zealand economy," Joyce said.

However, Taxpayers' Union executive director Jordan Williams said there was no reason to celebrate the funding of a sport for rich men.

"The analysis is based on the questionable assumption that private money would not have flowed into Team New Zealand without taxpayers coughing up," he said.

The report also says Team New Zealand contributed to 1220 new jobs.

"Of course politicians like Mr Joyce will claim to have created jobs by spending other people's money," Williams said.

"The jobs and economic activity lost due to the tax taken from the economy in the first place, is ignored. Even a sport full of the richest men in the world doesn't turn down government money," Williams said.

Click here to read more.

John Bishop on Judith Collins

Being involved in political activity makes it tempting to comment on each and every movement in the political dimension. Early on, the Taxpayers’ Union decided that it would focus on instances of waste and extravagance in central and local government spending, and on cases where spending had clearly not achieved its purpose.

Hence we criticised Tony Marriott of the Christchurch City Council for charging a visit to Hooters’ Bar to his council funded credit card. And we decried Transpower for spending over a million dollars on a swept up cafeteria in its building for staff when there are plenty of cafes within easy walking distance. 

We also decided that, generally speaking, we would not go after what politicians’ poor performance, bad decisions, and questionable judgements unless there were circumstances to justify our intervention. Much of that is partisan debate and we were simply not going to get involved in every public issue, particularly when there were plenty of others making the same points as we would make.

Yes, that makes us look selective in our criticism, but we have taken on Peter Dunne over the cost of passports, and Len Brown over Auckland’s debt burden. We were also quick to point out that Hekia Parata’s inquiry into the Te Kohanga Reo National Trust asked questions about the wrong body, but we have stood back from the row over Judith Collin’s trip to China. 

In the first matter large sums of public money are involved and the misuse of funds is alleged. In the second, the cost of the Collins trip is not large, and her “crime” is not about the misuse of money. It may be a fine distinction, particularly for those who wish to attack us for existing at all, but it is a real one.

Contributors to our blog pages and tip line are constantly urging us to get involved in issues, whether it’s the funding of programmes promoting recreation and sport, the operation of the ACC scheme, the worth of the defence forces, or whatever else is on their minds.  We would love to be able to question policy matters, and to test whether a wide range of policies actually deliver on their objectives and represent value for taxpayers’ money.

It’s early days.  We only launched in October and we are still reliant to a large degree on volunteer time. Because of that we’re focused on exposing instances of clearly bad, mad and wasted spending - until we have built up our resources to do more.  Our record shows that we’re not favouring one party or another. For example, our exposé of the DOC IT cost blowout is precisely why we were established.

Waste and poor spending are our targets, not people and or partisanship.

 

John Bishop
Chair, New Zealand Taxpayers’ Union

Turning a blind EY

You may recall that back in October, allegations of misspending within the commercial arm of the Te Kohanga Reo National Trust came to light as a result of an exposé by Maori TV’s Native Affairs programme. Allegations included a staff member spending Kohanga Reo funds on a wedding dress, a separate Trelise Cooper dress, a 21st birthday present and a $1000 cash withdrawal from a BP station as koha for a tangi which she did not attend.

Taxpayers were told at the time that the allegations would be subject of an urgent independent audit commissioned by the Ministry of Education.

The Minister of Education and her Associate Minister hastily called a press conference last night and released the report by accounting firm EY. The Dominion Post held their front page and led with the story this morning.

Kohanga Reo probe avoids key claims

The Government is dodging questions about allegations of misspending by a company linked to Kohanga Reo after a press conference tonight where it claimed the firm had been cleared – before admitting none of the claims sparking its inquiry were investigated.

After holding on to an audit report for a week, Education Minister Hekia Parata tonight called an urgent press conference for 8pm with just over an hour’s notice to announce the Kohanga Reo National Trust had been cleared of any wrongdoing - though the report by Ernst & Young raised questions about the processes surrounding a $50,000 koha payment to an unnamed recipient, and credit card controls.

But under questioning Parata and Maori Affairs Minister Pita Sharples confirmed none of the original allegations surrounding spending by the trust's commercial arm Te Pataka Ohanga were investigated. Read more.

That’s right. The Ministry commissioned EY to do a report that doesn’t cover the key allegations!

So why is the Minister telling the public that the Kohanga Reo National Trust has been cleared? You’ll need to bear with us here. The National Trust receives around $90million funding per year from the Government which is transferred to the individual kohanga reo. Each kōhanga reo then contracts a company called Te Pataka Ohanga for various services such as insurance, IT and property loans.

Te Pataka Ohanga is a subsidiary of the National Trust.

Amazingly, because it is a subsidiary, and because the taxpayer money flows through the individual kohanga reo, the Ministers are saying that Te Pataka Ohanga cannot be examined and argue that it is not public money.

In the last few hours Fairfax has picked up the Taxpayers' Union press release on that point:

Kohanga Reo audit a ‘whitewash'

Parata said it was a private organisation so outside the Government's scope - although it was later confirmed TPO ultimately received its funding through the Ministry of Education.

Jordan Williams, executive director of the Taxpayers' Union, today called the late-night press conference and "mischaracterisation" of the report "shameful" as it ignored the key allegations around the personal use of company credit cards.

"The Ernst Young review did not even look at the key allegations at Te Pataka Ohanga," he said.

"It's not vindication, it's a whitewash."

Williams asked what other publicly funded entity could avoid audit scrutiny by creating a subsidiary company.

"If this attitude was the norm, the public audit process would be meaningless," he said.

"Instead of getting to the bottom of the allegations, Hekia Parata and Dr Pita Sharples have chosen to turn a blind eye to what are serious allegations."

Labour's Nanaia Mahuta said given the seriousness of the allegations it was "inadequate" for Parata to say she had no oversight of TPO.

"The reality is that public monies are transferred from the Kohanga Reo Trust to Te Pataka Ohanga and there should be a line of sight to ensure that the money is spent properly and that there's a level of transparency and accountability for that.” Read more.

What do you think? Drop us a line, or comment on our Facebook page.

Game On - 194 days

The Prime Minister has announced an election date of 20 September. 

The role of the Taxpayers' Union through the next 194 days is to make sure politicians are promising value for money - and not vote buying through pork barrel politics and government waste.

Without fear or favour, we intend to critique the various promises made with taxpayers' money as well as fight policies that will increase the overall tax burden faced by kiwi households.

If you've not already joined our campaign, you can do so here. It's going to be a lot of fun.

A question of value for taxpayer money

This morning there has been some criticism of my comments in a story on the Herald website about a trip Mojo Mathers took to Masterton from Christchurch apparently just for a short interview on a community radio station.

For clarification:

  • The Taxpayers' Union did not seek media attention on this story. There is no associated press release. The Herald called yesterday evening asking for comment, as happens often.
  • The Taxpayers' Union operate 24 hour media line for comment on taxpayer issues. Yesterday's call came through to me and I was asked whether it was value for money for an MP to fly 800km for a radio interview on a small community station. I said it was not value for money when the interview could have been done on Skype as well as the comments that are quoted in the story.
  • I've made no comment about Ms Mathers disability. In fact, if the travel was necessary I would not criticise the spending. But answering questions posed by the Herald, on matter which as far as I know are completely unrelated to her disability, is legitimate.
  • Accusations that I (or the Union) sought to go after Mathers are ridiculous. To repeat, we were asked for comment by the Herald who were running the story. The comments would have been the same whoever the MP.
  • Accusations that the Taxpayers' Union are partisan are also silly. I am proud that the Union has gone after National MPs and the current government for expenses, wasteful expenditure and corporate welfare. See http://info.scoop.co.nz/New_Zealand_Taxpayers'_Union 

On reflection, I wonder why an MP from a party that prides itself for having a low environmental footprint choose to fly to a radio interview that could have been done on Skype. Perhaps Ms Mathers had other engagements in Masterton. If so, that was not the information provided to me at the time by the Herald reporter.

Jordan Williams.

Update on Dunedin Mayor’s “Gentleman’s agreement”

We now have more details of the deal uncovered by the Taxpayers’ Union over the weekend between Dunedin’s Mayor Dave Cull and former MP, Pete Hodgson, which the Mayor described in the media as a “gentleman’s agreement”.

This morning’s Christchurch Press editorial analyses the deal:

Editorial: Gentlemen sign contracts too

...

There is no reason to believe that Cull and Hodgson are anything other than honest gentlemen, but the geographic accident that also gives them "southern man" status should not put them above the usual requirements by which local government business is conducted.

The standards that apply to council administration in the south should be no less rigorous than in Auckland city or the Whangarei district. Why should ratepayers in Dunedin tolerate a more easy-going attitude towards the spending of their money than anywhere else, just because of a romantic notion that southerners are somehow more honourable? Actually, they aren't.

 

Internal Affairs misleading public with five year passport justification

Earlier in the month, we launched Jordan McCluskey's briefing paper on the lousy deal New Zealand passport holders are getting. 

Following the briefing paper, and our presentation to the Parliamentary select committee considering a petition to reintroduce ten year passports, we've learned just how thin the justification is for the current five year passport regime.

The Department of Internal Affair's response to our request under the Official Information Act casts doubt on Internal Affairs' claim that five year passports are necessary for New Zealanders to retain visa-free status to many parts of the world.

The Department's '5 year passport' Q&A webpage still states:

What would happen if we had a ten year passport?

...

A longer validity period would mean fewer visa free arrangements with other countries (and potentially higher travel costs as New Zealand travellers need to apply for more visas. More delays would be a likely result because new features could only be introduced every ten years).

So we asked what counties expressed concern and what countries did New Zealanders gain visa free access because of the move to five year passports in 2005.

Officials could not provide a single document that supported the Department's claim that ten year passports would jeopardise New Zealand's visa-free arrangements with other countries 

In recent weeks the Prime Minister and Minister of Internal Affairs have told media that ten year passports are necessary for security. But not a single country has expressed concern with New Zealand’s old passport regime.

It appears that passport bureaucrats are inflating justifications for the existing regime rather than reflecting genuine concerns about passport security.

The prediction that other Anglo-Saxon countries would move to five year passports was wrong

The advice that prompted the last government to cut the term of passports has proved to be wrong. The documents also show that officials were wrong in advice given to the Government in 2003 that Australia, the UK and the US intended introduce five year passports. All three countries have remained at ten years, with others moving from five to ten.

Come on Mr Dunne, do the right thing, cut the passport tax and reintroduce ten year passports.

Jordan McCluskey's briefing paper “Sky High” is available to download here.

DIA letter on passports

 

Passports Documents released under the OIA

Payments by Dunedin City Council to former MP with no documentation

This morning the Taxpayers’ Union went public with material concerning a payment (or payments) totalling $3,400 by the Dunedin City Council to former MP Pete Hogdson with no documentation or contract.

We're questioning the internal controls at the Council after the uncovering the payment following a recent media report that Mr Hodgson had been recruited by the Council for lobbying. We asked for information about the services being provided by Mr Hodgson under the Local Government Official Information and Meetings Act. Click "continue reading" below to view the Council's response.

According to the Council, Mr Hodgson’s work consisted of “lobbying and advocating on behalf of the Council” and there is no supporting documentation. 

The Council has told us that:

  • Everything was verbal. The Council could not provide a single report, email, or even letter of engagement.
  • All of the contracts were negotiated verbally.
  • The contracts were negotiated by the Mayor and there is no documentation to explain the deal.

We asked for copies of any work by Mr Hodgson. All we got back was two letters by the mayor on which Mr Hodgson apparently had input. It is not clear what precisely that was. For example, there is no 'tracked changes" document.

We think Dunedin ratepayers will be alarmed that their Council paid $3,400 apparently without so much as an invoice. Dunedin ratepayers should ask their Mayor:

  • What did Mr Hodgson do? Was this just expensive proof reading?
  • Why was the Mayor negotiating this in the first place?
  • Why verbally?
  • Why is there absolutely no documentation for the arrangement, not even an email?
  • Is Mr Hodgson friends with the Mayor?
  • Why doesn't Dunedin Council have the most basic internal controls, requiring amounts to be paid by invoice only?

The Council’s response raises serious questions.  We can't think of another government agency that would spend $3,400 without being able to provide as much as an invoice. 

Without an explanation from the Council, we are left wondering whether the Auditor-General should get involved."

Dunedin City Council LGOIMA response - Pete Hodgson

Fizz using Health Research Council's logo without permission

The Taxpayer’s Union has discovered that the 'Fizz' group of academics campaigning for a ‘sugar tax’ on soft drinks appears to have been falsely claiming the endorsement of the Health Research Council of New Zealand (HRC).

A group of academics who have received a lot of publicity recently, calling themselves "Fizz" and pushing a sugar tax, appear to have been caught out. On the 'programme guide', which was available on their website, fizz.org.nz they listed the Health Research Council of New Zealand (HRC)'s logo. The full document is available here.

 

We wrote to the HRC asking what the nature of its support is for Fizz. We wondered why this group of academics, clearly pushing for political ends (i.e. a sugar tax) were receiving taxpayer support from the HRC.

We found that "Fizz" were fibbing - HRC are not supporting their sugar tax campaign.

The letter from the HRC's Chief Executive, Dr Robin Olds, is below. It states that Fizz is not receiving any support form the HRC and suggests that Fizz has been misleading its supporters, the public, and the media.

Subsequently, we've also learned that Dr Olds has asked that the HRC logo be removed from Fizz’s promotional material. In an email to the Taxpayers’ Union Mr Olds said,

“In a phone call to the conference organiser we pointed out that using our logo was inappropriate, given that [Fizz] did not seek our permission, and that some appeared to interpret the logo as the HRC endorsing the conference."

We've also written to the other government bodies that are apparently supporting this Fizz group. We want to know whether they are supporting Fizz's political activities or whether Fizz is also falsely claiming support. 

In the meantime, we think that one has to be sceptical about a group claiming to be 'evidence based' and about science when they use the HRC’s logo without permission. We think it potentially calls into question their academic credibility.

Wellington town hall strengthening cost blowout

Yesterday we issued a media release in response to a Dominion Post report stating that earthquake strengthening work on the Wellington Town Hall has been halted due to a $17 million budget blowout. The total cost of the work is now estimated to cost $60 million. We noted that this equals $871 per Wellington household.

Whilst the town hall is a lovely building, at this cost it seems unaffordable, and our understanding from a property expert is that it could be much cheaper to replace it with a new, fit for purpose building using the existing facade and features Wellingtonians treasure. Newstalk ZB covered our release here.

Today the Dominion Post followed up the story, reporting:

Wellington City Council has refused to reveal how much it has already spent on town hall strengthening work, which has been put on hold after a budget blowout of about $17 million.

The Dominion Post revealed yesterday that the cost to strengthen the hall had ballooned from a budgeted $43m to about $60m.

City councillors will have to go back to the debating chamber later this year to decide if it is worth spending that much.

They could look at cheaper alternatives, or at replacing the town hall on the same or a new site.

The council intended to use a base isolation system to bring the strengthened hall up to 140 per cent of the new building standards (NBS).

Engineers have assessed the building as meeting just 20 per cent to 25 per cent of the NBS. Anything under 33 per cent is deemed earthquake-prone.

Work has now stopped, just three months into the three-year programme, as the council considers its options.

Given that ratepayers are paying for the work, we think they should know how much has already been spent on the building, even if work has now been halted due to an overspend. We're requesting the information under the Local Government Official Information and Meetings Act.

The Council faces the same problems as many Wellington property owners. In some cases it has declined resource consents to demolish dangerous buildings that have been uneconomic to upgrade. It will be interesting to see what the costs (and solution) are.

Minister wrong on claim he's returned passport tax to New Zealanders

TV One’s Breakfast this morning had the Minister of Internal Affairs, Peter Dunne, interviewed about the figures provided in the briefing paper we released yesterday.

Mr Dunne told Rawdon Christie that the profits the Government has made from passports have “been returned to people via a lower fee” (click here to watch the interview).

Mr Dunne is wrong. Our paper shows that New Zealanders are getting the worst deal in the world for a passport. In fact, Mr Dunne’s is sitting on $20.8 million dollars of passport fee profits which are, in effect, a tax on getting a New Zealand passport. That isn't 'cost recovery', it's a 'cost plus' model.

Come on Mr Dunne, stop taxing Kiwis for a passport and bring us into line with the rest of the world by lowering the fees and reintroducing ten year passports.

John Key open to change on passport tax

Following yesterday's submission to the Government Administration Select Committee looking at the issue of ten year passports, and release of Jordan McCluskey's briefing paper showing that a New Zealand passport is the most expensive in the world on a per year basis, the PM isn't ruling out change.

TVNZ's reported John Key's comments that the Government is 'constantly having a look at' the passport term and position and 'the arguments for keep it at five years are about security'.

We don't accept that.  Canada and the Netherlands, countries which have very similar visa-free requirements around the world have both recently introduced 10 year passports. Is their passport security less than ours?? 

Click here to watch the One News report.

What do you think? Click here to comment via our Facebook page.


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