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

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

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

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

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

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

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

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

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

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

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

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

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

Stuff reports some interesting data:

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

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

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

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

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

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

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

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

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

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

IRD concluded:

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

So 20c saved for every $1 spent.

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

Middle class welfare.

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

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

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

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

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

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

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

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

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

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

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

CLICK HERE TO SIGN THE PETITION

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

We wish we had better news

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

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

The good:

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

The bad:

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

The ugly:

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

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

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

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

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

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

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

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

CLICK HERE FOR OUR POLL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here's our guide to use it:

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

2. Search for your address in the search bar.

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

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

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

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

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

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

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

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

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

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

The report is available to download here. 

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

You asked and we delivered

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

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

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

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

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

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

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

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

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

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

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

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

"Good news is coming," he told NewstalkZB.

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

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

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

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

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

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

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

We will be keeping a close eye on this issue.

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

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

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

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

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

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

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

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

It’s time for these panels to go.

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

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

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

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

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

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

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

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

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

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

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

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

Our letter is here: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Back-office Council staff have been receiving chic stylist advice courtesy of Auckland ratepayers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The real losers in this arrangement? Taxpayers.

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

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

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

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

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

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

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

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

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

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

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

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

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

So what is the Government doing?

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

Elsewhere in the same document, officials say:

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

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

What a complete shambles. $163 million is what it will take to implement the revised policy! An extraordinary cost - more than $100 for every New Zealand household with not a single dollar of it going to vulnerable kids or struggling families.

The Revenue Minster has some explaining to do. We hope that opposition parties will be ensuring this happens when Parliament return on the 10th.

Click here to read the Regulatory Impact Statement on the IRD's website.

This morning we called the bluff of MPs, some of who are crying crocodile tears in the media about their pay hike. We wrote to each asking whether they will be accepting the backdated pay increase.

We asked each MP the following: 

Dear Member,

Given various public comments that yesterday’s determination by the Remuneration Authority is unnecessary or unjustified, we seek your clarification by 5pm tonight whether you will be: 

a)    accepting the increase in pay and back-pay;

b)   refusing the amount (or refunding it to The Treasury); or

c)    giving the amount to a charity.

If you intend on giving the money to charity, please specify which charity.

The responses we received have been quite disappointing. One National MP was quick to respond with a one-letter message, “A”. We also received an odd response on behalf of all Green MPs.

Rather than answer our questions, the Greens provided a few points as to what their policy would be for the Remuneration Authority and future payments to MPs.

That’s all good and well. While their proposed solutions differ to ours, it would undoubtedly see a reduction in the rate at which pay rises occur. But what good is proposing a solution unless you practice what you preach?

When we pressed them further, the Greens refused to say what their MPs would be doing with their pay increases. We can only assume that despite their policies, they will be pocketing it.

The Remuneration Authority has approved another five and a half percent pay rise for backbench MPs, backdated to July last year.

With inflation close to zero this 5.4 percent boost is a slap in the face to taxpayers. In what other profession do you get paid an allowance for your family’s travel expenses?

For too many backbench MPs, $156,000 is the most money they will earn in their lifetime. How does that reflect the community service element of being an MP?

The current model has screwed the scrum against taxpayers. Not only should the remuneration be set once every 3-year Parliamentary term, but taxpayers need a voice in this decision. The Authority has a union representative for public sector workers, but no one representing taxpayers.

We've launched a petition calling on the Government to appoint a taxpayers'  representative (ideally an economist). We need someone in the room to push back against the continued creep of higher and higher salaries for MPs.

Click here to sign the petition

This morning we have released documents we've obtained from the Auckland Council revealing that ATEED, Auckland Council's economic development agency, has gifted $50,000 of ratepayers' money to the prestigious Remuera Golf Club for the Holden PGANZ Championship.

Auckland Council claims to have no money, but finds $50,000 of 'spare' ratepayers' money to give a hand-out to Auckland's richest golf club. While the spin doctors might label it 'economic development' - how can this hand-out possibly be given priority over roads, rail and housing?

Ten tickets - that'll be 50k

We found out about this $50,000 gift after a Council run social media account advertised a competition, offering ratepayers ten tickets to the event. We suspect the ten tickets are all ratepayers are ever going to see of the $50,000! 

Officials have told us that there is a project sharing agreement in place where the Council receives 50% of any profits from the event over and above $150,000. We think that the answer shows that officials are trying to have it both ways by claiming that the grant is an 'investment' rather than a ratepayer-funded handout to sport. When it proves to be a flop, we suspect they will probably call it a tourism expense...

If anyone really thinks that this amounts to a genuine investment that will provide a decent return to ratepayers, well, we've got a bridge to sell ya... 

Click here to view the Council's response to our information requests.

You spoke and they listened!

Steven Joyce has announced that no taxpayer money is going to be used to support SkyCity’s convention centre. Instead, SkyCity are going back to the drawing board to come up with a cheaper design. Fantastic.

In just a few days more than fifteen hundred people signed our petition and the message got through to Mr Joyce and SkyCity. This is a win for the little guy.

While there could be devil in the detail - and don't worry we'll be making sure that SkyCity don’t now try to build something a fraction of the size that was promised - today at least taxpayers can breathe a sigh of relief.

Following yesterday's poll (94% said NO to SkyCity getting taxpayer money), and the even stronger result on last night's Campbell LIVE we've just launched an online petition to tell John Key not to give our taxpayer money on SkyCity.

Click here to sign the SkyCity petition.

The NZ Herald is reporting that Prime Minister John Key is not ruling out taxpayer money being used to subsidise the controversial SkyCity convention centre. Despite the deal being finalised in May 2013, it is reported that negotiations between the Crown and SkyCity are ongoing and nothing has been taken off the table.

The whole idea of the SkyCity deal was that Auckland would get an international class convention centre, paid for by SkyCity, in return for various concessions to the casino. That’s bad enough, but with Mr Key’s refusal to rule out taxpayer cash, it appears that SkyCity is about to hit the jackpot.

It was never suggested or intended that the taxpayer or ratepayer would have to shoulder any of the burden. If SkyCity underestimated the cost of the centre when they signed the deal, that's their problem. 

Any taxpayer support is nothing less than corporate welfare, no matter how the Government spins it. Our report on corporate welfare is available for download here - unfortunately it appears that we might need to bump the numbers up soon...

Poll: Should SkyCity be bailed out with taxpayer money?

According to the Trust's website:

The Arts Advisory Panel is made up of arts professionals who assist in the selection processes. The panel currently comprises arts practitioners, the director of the City Gallery, Wellington, curators and an architect. Urban design and public safety advice is provided by the Wellington City Council’s liaison officer.

Wellington City Council plays a significant role. It provides most of our sites, helps supervise the installation of sculptures, and becomes the owner and caretaker of the sculptures on behalf of the city and the Trust after an appropriate defect liability period.

The Trust also has honorary advisers separate from its arts advisers to broaden its resources. These people have expertise in fields such as engineering, financial management and law. 

Is the Trust's model better than the a council commissioning art? From what I understand the Wellington Sculpture Trust pitches art projects in a way that matches public money with amounts contributed by private donors.

We're running a poll on whether ratepayer money should be used for art. I'm certainly interested to see whether people prefer no ratepayer funding of art, or a Wellington/trust model. Clearly Auckland's decision-making process needs improvement.

Poll: Should ratepayer money be used for art?

Coverage of the Taxpayers' Union response to LGNZ's efforts to impose new council taxes such as local fuel, sales and even income taxes.

Taxpayers' Union fuming over council plan (3 News, 2 February 2015)

A ratepayer-funded plan which suggests imposing more taxes to raise cash for councils has the Taxpayers' Union fuming.

Rates are the primary source of income for local authorities, but in a discussion paper released today, Local Government New Zealand suggests other funding sources.

The report lists imposing road tolls or bringing in taxes on income, certain types of expenditure, fuel, or certain transactions as options.

But Taxpayers' Union executive director Jordan Williams says the average rates bill has doubled over the last two decades, and the paper is only about how to tax more.

"Instead of focusing on the quality of councils' spending decisions, this campaign is using ratepayer money on propaganda promoting new taxes," he said.

"Nowhere in the discussion paper do we see a disciplined analysis of why local government spending is out of control." [...]

-

Council Digesting Report (Rotorua Review, 4 February 2015)

ROTORUA Lakes Council (RLC) won’t rule out a raft of possible new taxes that have been outlined as options in Local Government New Zealand’s (LGNZ) funding review discussion document.

LGNZ, a lobby group made up of 78 councils, including RLC, has issued the document which outlines options for addressing shortfalls in local government funding.

The options, which it says would sit alongside rates, include a local income tax, local expenditure tax, regional fuel taxes, transaction taxes and what it calls ‘‘selective taxes’’. RLC chief executive Geoff Williams said the document was intended to stimulate a discussion about possible funding opportunities and constraints in New Zealand, and declined to rule anything out.

[...]

Unsurprisingly, Yule’s claim that the discussion paper was not meant to pre- empt an overall increase in taxes was met with some scepticism by lobby group The Taxpayers’ Union.

Local Government New Zealand, is spending considerable ratepayer money on a campaign promoting local income taxes, regional fuel taxes and regional GST-style regimes to increase the tax burden of local councils. LGNZ today launched a review document on various options for new taxes. You can download the paper here.

This diagram illiterates well the growth of local government (source):

New Zealand’s average rates bill has doubled in the last 20 years, tracking at twice the rate of inflation.

Instead of focusing on the quality of councils' spending decisions, LGNZ appear to be using ratepayer money on studies and propaganda promoting new taxes. We have long been concerned that LGNZ too often represents the interests of councils, rather than those paying the councils' bills! Nowhere in the discussion paper for example, do we see a disciplined analysis of why local government spending is out of control.

We've also been alerted to emails where LGNZ spin doctors are sending  draft opinion pieces to local mayors so that they can 'leverage local media' and promote these new taxes. 

"Trust us we're politicians"

In the LGNZ press release, the lobby group's President, Laurence Yule, says that:

“The goal is not to increase the overall tax burden for New Zealand, but rather to determine whether a different mix of funding options for local government might deliver better outcomes for the country.”

Mr Yule is telling the public that the goal isn’t to increase the overall tax burden while at the same time releasing a report that isn't on ways to save money, but on ways to tax more.

Former North Shore City Councillor, North Shore City Council David Thornton writes:

LGNZ Review is about more money for more spending

Few ratepayers object to the principal that all citizens should contribute to the cost of running their communities, and that those contributions should be within the ratepayers’ ability to pay.

The Local Government New Zealand funding review revisits many of the issues raised in the Independent Rates Review of 2007 and repeats some of the same conclusions reached then.

The difference between the two reports is that the 2007 review was looking for alternatives to rates, while this new report is aimed at raising new funds in addition to rates.

In other words LGNZ, on behalf of all councils, wants to spend more, and needs more money to feed those expansive ambitions.

We agree. The Taxpayers' Union isn't against new taxes per say. Our view is that new taxes should replace old ones (i.e. an equal decrease to compensate). In the case of local government though, LGNZ's efforts are so the local government spending binge can continue...

Poll: Should councils be given new powers to impose local GST, fuel and income taxes?

Vote by clicking here. 

A few weeks ago we went public with our concerns about the ’No Beersie' campaign by the Health Promotion Agency. To recap:

• * the campaign cost taxpayers $1.2 million;
• * it doesn’t target those most likely to be affected by alcohol related harm; and
• * even the HPA’s own focus groups found the campaign confusing (some even thought it was advertising beer!).

Despite the bad press (including this scathing Waikato Times editorial) the HPA is feeling very jolly indeed with your money.  It’s either that or the HPA so desperate to be liked they’re giving away fishing rods, surf boards and even $100 petrol vouchers! 

All this with money that should be helping those who have a problem with alcohol.

We’ve launched a petition to tell the Government to end to these sorts of silly taxpayer funded advertising campaigns promoting common sense and feel-good nonsense.

Do you agree that this is a waste of money? Will you support us? Sign the petition by clicking here.

The Taxpayers’ Union is releasing figures obtained from Creative NZ showing that author-turned-policy-critic, Eleanor Catton, has received tens of thousands of dollars worth of grants courtesy of New Zealand taxpayers.

Some might question why Ms Catton would have a go at New Zealand when it's Kiwi taxpayers who have largely funded her education and career.

In addition to the usual government support of students, Ms Catton has received special Creative NZ funding amounting to tens of thousands for her artistic endeavours. Ms Catton's most notable work, The Luminaries, was completed while being on a six-month residency funded by Creative New Zealand. Far from not supporting the arts, it appears that taxpayers have been rather generous.

Despite The Luminaries being a commercial success, taxpayers still paid for the book to be translated into three languages. If that's not generous support, what is?

We said in our media release on Wednesday that if Ms Catton isn’t thankful for the support by the New Zealand Government while she wrote The Luminaries, maybe she should use some of the substantial royalties to pay the money back.

Click 'read more' for the raw data.

Today we released documents which detail the cost and focus group feedback on the ridiculous “Not Beersies” campaign by the Health Promotion Agency.

The documents show that:

1. the campaign had the least positive impact on entrenched, high-risk drinkers;
2. it instead targets those least likely to face harm from alcohol consumption;
3. the HPA spent at least $1.2 million on the campaign (we say at least because officials refused to tell us how much advertising agency fees taxpayers covered; and
4. the HPA conducts no cost benefit analysis on its campaigns. 

The Taxpayers’ Union had feedback that the ‘Not Beersies' ads were making people thirsty for beer. Some participants in the Agency’s own focus groups said the same - that the ads encouraged drinking or were confusing.

Is promoting a cultural change now synonymous with health promotion?

The Health Promotion Agency acknowledge that the campaign probably won’t reduce alcohol consumption and won't affect the most at-risk of alcohol harm - but they spent the money anyway.

The HPA spent over $1.2 million of taxpayers’ money in order to promote a ‘culture change’. No wonder no one bothered to do a cost benefit analysis.

It’s a creative campaign, but it’s using taxpayers’ money for social engineering rather than for the purpose of reducing harm or promoting health. The documents show that the HPA knew that they were woefully off the mark. They pushed ahead and spent the money anyway.

In December the Advertising Standards Authority received a complaint from an individual who incorrectly thought the ads were promoting beer. The campaign has also been publicly labelled "sexist and offensive" and with claims they miss the point as beer consumption continues to fall. Cleary the campaign message has become confused and contorted.

We think the campaign is an own goal. What do you think? Does the HPA and its ad agency have more money than they know what to do with? Should the Government be requiring the HPA to justifiy its budget and force it to invest in measures that actually reduce harm? Let us know on our Facebook page.

We're running a poll on whether the Police's zero tolerance speed policy is just about road safety or also has an element of revenue gathering. To vote, click here.

We had 478 votes and here are the final results:

Do you agree? Join the discussion on our Facebook page.

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.

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.

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, 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.

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. 

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.

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 largest 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.

$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

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.

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').

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.

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.

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.

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.

A 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.

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.

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

Jordan 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. 


 

We 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.

Our 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.

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

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.

"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.

 

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

Economic 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 ($)

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. 

The Waikato Times has picked up our Monopoly Money report and recent comments by Trade Me founder Sam Morgan.

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.

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.

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.

In 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?

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.

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.

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.

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.”

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.

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…

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.

 

 

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.

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’.

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.

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.

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.

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:

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.

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.

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.

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

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. 

Earlier today Jordan Williams joined Marcus Lush on RadioLIVE about the Office Senior Citizens brochure on common sense.

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 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.

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

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

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

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

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.

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.

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.

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. 

Candidate’s campaign on city debt Sunlive - 16/07/2014

Allegations made by the NZ Taxpayers Union yesterday that Clayton will be “double-dipping” if he remains a councillor if elected are rubbished by the councillor.

“It's not about double-dipping I didn't get into council for the salaries that you got – I'm passionate about making changes.

Click here for the full article.

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.

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.

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.

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.

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.

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.

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.

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?

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

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.

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

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

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.

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

$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.

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?

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.