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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summary

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

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

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

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

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

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

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

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

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

The reasons the Council provided for overspending were:  

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

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

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

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

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

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

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

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

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

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

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

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

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

Local Government Nominees:

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

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

Central Government Nominees:

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

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

2018 Lifetime Achievement Award Winner:

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

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

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

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

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

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

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

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

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

Benefit Sanctions: Key Findings

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Breakdowns for Christchurch City Council and Ecan are available here:

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

Notable Findings:

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

Editors' notes:

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

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

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

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

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

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

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

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

The letter to councillors can be viewed here.

The payroll instruction template can be viewed here.

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

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

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

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

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

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

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

"The Dowry" to date:

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

 

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

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

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

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

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

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

"The Dowry" to date:

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

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

 

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

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

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

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

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

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

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

Some highlighted suggestions:

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

Some more novel ideas:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rex says:

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

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

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

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

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

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

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

"The Dowry" to date:

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

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

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

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

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

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

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

"The Dowry" to date:

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

 

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

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

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

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

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

Key findings of the report:

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

Key recommendations:

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

You can also download the report here.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Dear Supporter,

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

You can read our summary comments to media here.

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

Government books and the economy looking rosy

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

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

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

Two big wins for taxpayers:

1. Fiscal responsibility

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

1. Independent election policy costing office

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

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

Tax cuts for hot horses

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

More corporate welfare (this time green)

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

Treasury forecasts average earner paying top tax rate by 2022

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

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

Growing the pie vs dividing it

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

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

Initial reaction

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

Labour Delivers Predictable Budget In Sweet Economic Times Barrie Saunders

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

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

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

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

New Green-Tint Corporate Welfare Scheme Mistaken Joe Ascroft

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

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

Barrie Saunders
Chairman
New Zealand Taxpayers' Union

 

Key announcements of Budget 2018

- $4.05 billion for Health, including:

- $2.2 billion in additional funding for DHBs.

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

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

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

- $1.934 billion for Education, including:

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

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

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

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

- $1.216 billion for Justice, including:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

From the Budget 2018 lock-up, the New Zealand Taxpayers’ Union is welcoming Labour’s adherence to its pre-election ‘fiscal rules’ despite delivering significant Labour-Party style sweeteners in the Budget delivered today.
 
Taxpayers’ Union Chairman, Barrie Saunders, says:
 
“This is a classic Labour Party Budget, in probably the best economic times inherited by a new Government since Norman Kirk’s election in 1972. As a result Labour have been able to deliver significant spending initiatives, and keep to the prudent fiscal targets.”
 
“Nevertheless, much of the Government’s claims about boosting funding to health and education do not match the numbers, with the growth of overall funding actually growing at a slower rate than the final budget delivered by the last National Government. The big growth is actually in Social Security and Welfare, with spending increasing by 10.9%, compared to 3.2% in the last budget.
 
“Of real disappointment is the focus in this budget of dividing the pie, rather than growing it. The only economic initiative is the R&D tax credit change announced earlier in the year.”
 
“In terms of tax relief to grow business, the only initiative comes in the form of allowing tax deductions for racing studs – full deductibility for capital stock. The Taxpayers’ Union has been arguing that this measure would be the most effective way of boosting industry and wages across the whole economy. Winston Peters has traditionally had a close relationship with the racing industry, however we do not support favourable treatment for business types in the tax system."

UPDATE: You can email the Minister of Foreign Affairs about this issue by clicking here.

A subsidiary of the controversial Clinton Foundation is set to receive US$3.9m (NZ$5.5m) in taxpayer money in 2018/19, the New Zealand Taxpayers’ Union can confirm. This is in addition to NZ$8m given to the organisation since 2014.

MFAT claims that the organisation in question, the Clinton Health Access Initiative, is a separate entity. This is absurd – the Clinton Foundation appoints the organisation’s directors, making it a subsidiary in legal terms.

The Foundation is currently under investigation by the FBI over the way it obtained donations while Hillary Clinton was US Secretary of State – the same period in which the New Zealand Government began giving the initiative money.

Taxpayers deserve confidence that aid commitments are made to help the world’s poor, not to win favours with foreign politicians.

Even if aid money was meant to be used for diplomatic purposes, the funding’s justification for no longer holds with Secretary Clinton out of public office. It seems that all taxpayers have to show for our generosity is a stop on her book tour!

The new Government should follow Australia’s lead and cut ties with Hillary Clinton’s potentially corrupt organisations. She is perfectly capable of raising money without handouts from the little New Zealand taxpayer.

--> Click here to sign our petition to end taxpayer funding for the Clinton Foundation. <--

This is the kind of nonsense that our Minister of Foreign Affairs Winston Peters prides himself on exposing and cutting out. He should politely wait until Secretary Clinton leaves the country, then announce an end to the funding.

The documents confirming the funding, released to the Taxpayers’ Union under the Official Information Act, are available below.

The New Zealand Taxpayers’ Union has finalised and presented its submission to the Tax Working Group, along with submissions from more than 800 Taxpayers’ Union members and supporters.
 
We look forward to hearing the Working Group acknowledge not just our own submission, but those of the 800 or so taxpayers who have submitted via our website.
 
The basic message from our supporters is clear: the Tax Working Group should not be used as an opportunity to dig even deeper into taxpayers’ pockets. This theme is reflected in our own submission, which says that any proposals to hike or introduce new taxes should be offset with tax cuts in other areas.
 
A big thank you to all of our supporters who gave us helpful feedback on our Exposure Draft, ensuring our constructive suggestions for the Working Group are comprehensive and of a high standard.
 
Our full submission can be read here, or at the bottom of this page. Key points include:

1. Where new taxes are recommended, we say the Tax Working Group should make them revenue neutral – i.e. balanced with tax cuts in other areas.
 
2. No taxation without indexation: we call for income tax thresholds to be indexed to changes in average earnings or, at minimum inflation (as happens in Canada). This would end fiscal drag (also called 'bracket creep').
 
3. We call for the company tax rate to be cut for all businesses rather than cutting tax rates for smaller businesses (as the Working Group’s Background Paper proposed). Having multiple levels of company tax would create perverse incentives.
 
4. We call for full tax deductibility for businesses’ capital spending within the first year of purchase to increase incentives to invest in capital and productivity, and increase wages.
 
5. The loophole allowing charity-owned businesses (such as those owned by churches and iwi even when none of the profits are used for the 'charitable' purpose) to operate tax-free should be closed.
 
6. Similarly, Māori Authority-owned businesses should operate under the same tax rate as their competitors paying 28% income tax - and not be allowed pay the special 17.5% rate.
 
7. We explain why introducing a complex Australian-style capital gains tax would be a step backwards and bad for investment, growth and employment.
 
8. On retirement investment, we say taxpayers should be allowed to deduct inflation from taxable interest income.

We've made it easy for you to make a submission to the Government's Tax Working Group, chaired by Sir Michael Cullen. Our online tool will make sure your voice is heard.

Will you take a moment to send the Working Group a clear message? The Tax Working Group should not be used as an opportunity to dig deeper into our pockets.

--> Use our customisable template to make a submission to the Working Group <--

As if fuel taxes weren’t enough, the Group's chair, Sir Michael, has been talking about wealth taxes, asset taxes, environment and water taxes, and capital gains taxes. He's even been talking about taxes for 'bad behaviour', covering sugar, salt, fat, plastics, and more.

Our full submission is currently out for consultation with our members. You can view the Exposure Draft here (feel free to give feedback using this form).

Our key submissions are:

1. Where new taxes are recommended, we say the Tax Working Group should make them revenue neutral – i.e. balanced with tax cuts in other areas.

2. No taxation without indexation: we call for income tax thresholds to be indexed to changes in average earnings or, at minimum inflation (as happens in Canada). This would end fiscal drag (also called 'bracket creep').

3. We call for the company tax rate to be cut for all businesses rather than cutting tax rates for smaller businesses (as the Working Group’s Background Paper proposed). Having multiple levels of company tax would create perverse incentives.

4. We call for full tax deductibility for businesses’ capital spending within the first year of purchase to increase incentives to invest in capital and productivity, and increase wages.

5. The loophole allowing charity-owned businesses (such as those owned by churches and iwi even when none of the profits are used for the 'charitable' purpose) to operate tax-free should be closed.

6. Similarly, Māori Authority-owned businesses should operate under the same tax rate as their competitors paying 28% income tax - and not be allowed pay the special 17.5% rate.

7. We explain why introducing a complex Australian-style capital gains tax would be a step backwards and bad for investment, growth and employment.

8. On retirement investment, we say taxpayers should be allowed to deduct inflation from taxable interest income.

9. Any environmental tax proposals should (in addition to being revenue neutral) be sector neutral – i.e. politicians should refrain from targeting specific industries.

Our suggested submission can be altered as you wish.

--> Click here to make your submission to the Tax Working Group <--

Submissions to the Working Group close on Monday at midnight.

Thank you for ensuring there is a strong voice for taxpayers.

Taxpayer-funded health activists ignored advice from the Ministry of Health, Auckland Council, and Auckland Transport, to bully a company into dropping a promotion to raise money for Youthline, reveals the New Zealand Taxpayers’ Union.
 
Healthy Auckland Together (HAT), a coalition of public agencies and taxpayer-funded health groups, used taxpayer money to try and shut down a Youthline fundraiser because they objected to a Coca-cola billboard.
 
HAT complained to the Advertising Standards Authority about a Coca-cola bus stop billboard because it was 550m away from a school. This particular billboard encouraged people to text a number to donate to Youthline.
 
You would think that a public health group would be concerned about youth mental health, but in this case, HAT is blocking vital Youthline revenue for the sake of nannyism and anti-capitalism.
 
This organisation is turning into a group of zealots. They ignored advice from their own partner organisations Auckland Council, the Ministry of Health, and Auckland Transport.

Correspondence obtained under the OIA reveals all three had explicitly asked to be left off the ASA complaint, with the latter two citing a lack of evidence for making a complaint. The correspondence can be below.

 
At worst, we are looking at out-and-out dishonesty; at best, it is unprofessionalism of the worst kind.
 
The question remains as to why other taxpayer-funded groups are backing this political campaign. The New Zealand Transport Agency, for example, should have no role in this sort of thing.

 

You did it!

Earlier today our mascot “Porky the Waste Hater” presented our petition calling on the Hamilton City Council to ditch the proposal to change its name, to the Mayor and Councillors.

It is fair to say that the Mayor was NOT happy with the attention and our presence.  He wouldn’t even talk to us, or address our submission on his personal proposal to spend tens (or hundreds) of thousands of dollars to change the name of Hamilton City Council to Kirikiriroa City Council.

Your efforts – more than 1,500 signatures in only 36 hours – meant the Mayor didn’t even have a Councillor to second his motion.  Not even one. He withdrew the proposal soon after we presented the petition.

In the context of the Council wanting to hike rates by 20% in only two years, our spokesperson Louis Houlbrooke  – who presented to the Councillors – summed it up like this:

"Cases like this pose the question, if this is what you do with ratepayers' money in the light of day, then what are you doing when we're not looking?"

You can read more about what happened at the meeting on the New Zealand Herald.

Thank you to the fifteen hundred people who stood with with us on this issue to hold local to account on wasteful spending.

It is astounding that Hamilton City Council’s mayor is pushing a name change while Hamilton ratepayers face rate hikes of 9.5% a year, says the New Zealand Taxpayers’ Union, launching a petition on the issue.
 
Taxpayers' Union spokesperson Louis Houlbrooke says, “The Mayor should be dealing with a rates crisis, not spending even more ratepayer money on something completely non-essential.”
 
“When the smaller Stratford District Council changed its logo, it was estimated to cost at least $65,000. The cost to ratepayers will be far higher in Hamilton. Perhaps a better comparison is when Auckland’s tourism agency updated its slogan, costing ratepayers $500,000.”
 
“Even setting the cost aside, the Mayor insults ratepayers by prioritising window-dressing rather than improving the city’s finances or basic services. It looks like a classic political distraction – dead-cat-on-the-table style – so people don’t see the Mayor’s hands reaching deeper into ratepayer pockets.”
 
“These types of vanity projects are costing ratepayers across the country. We must send a message to mayors across the country that they are paid to serve ratepayers, not to craft legacies for themselves.”
 
The Taxpayers’ Union has launched a petition to encourage Hamilton City Councillors to vote down the name-change project at Thursday’s meeting. Sign the petition here:  https://www.taxpayers.org.nz/name_change_petition

New Zealand Police handed out $2,505,317 in clothing allowances to non-uniformed staff in 2017, according to figures obtained by the New Zealand Taxpayers’ Union.

Most of this spending was on 1,412 staff in the Criminal Investigator Branch staff who receive allowances of $1,413.72 a year.

$1,400 a year would give you a pretty nice-looking wardrobe, but it’s not clear who the police need to impress.

Outside of the media, most people in the private and public sectors pay for their clothes personally. Why do the police have a different standard?

There is no way of tracking whether this allowance is actually spent on clothes, so it is really just a salary top-up.

High salaries for investigators might be justified – but it would be more transparent to just increase the main remuneration figure, instead of hiding wages in secret benefits.

The full set of figures, obtained via the Official Information Act, can be viewed below.

Wellington has seen a flurry of activity this week as Bill English declared that he would be stepping down as National Party Leader and resigning from Parliament. We thanked Mr English for his service on behalf of taxpayers, noting his success in cutting taxes in 2010 and making state owned enterprises more efficient in the previous Government’s second term. You can read our media statement here.

However, minds must now turn to the race for the leadership. So far Amy Adams, Simon Bridges, and Judith Collins have declared, although there is speculation that Mark Mitchell and Steven Joyce are also considering entering the contest.

The National Party leadership will be determined by a run-off vote among the Parliamentary caucus, with the vote scheduled to take place on the 27^th of February.

So, who should win?

Members and the media have contacted us asking who the Taxpayers’ Union will be endorsing.

The Taxpayers’ Union won’t be endorsing any of the candidates for the National Party leadership. However, it is important to acknowledge that the leadership race will shape the largest centre right party, and its policy platform, for years to come.

That’s true of any political party – you only need to look at the Liberal Party in Australia to see the difference between the leadership of Tony Abbot and Malcolm Turnbull. Closer to home, we saw very different visions of the Labour Party during their widely publicised leadership races in 2013 and 2014.

Whoever wins this race will have a significant impact on the political landscape, including issues facing taxpayers. We all have a stake in this race.

This contest is not proceeding behind closed doors. Candidates appear eager to prove their chops in the media. This is an opportunity for the public, because, while we may not have a vote on the leadership, we can secure some basic commitments from the candidates.

Here’s are the questions journalists should be asking the contenders:

- Will you retain National’s commitment to cutting personal taxes?
- Will you, in addition to cutting tax, index tax brackets to inflation?
- Will you cut the company tax rate to make New Zealand businesses more competitive on the global stage?
- Will you reverse Labour’s policy of free tertiary education?
- Will you rule out a sugar tax?
- Will you rule out an Auckland fuel tax?

But isn’t this a caucus matter?

Yes, and no.

While it’s true that only caucus members get a vote, Members of Parliament are ultimately accountable to the electorate.

Every National Member of Parliament will have a say in the leadership, and when the next National Party leader only needs 29 people to support their bid, your local National MP could be determinative.

Letting your local National MP know that taxpayers deserve a voice in the leadership could be crucial in shifting votes.

Contact details for all National MPs are available here.

Five months after it was requested under the Official Information Act, Callaghan Innovation has now released its 2016/17 entertainment expenses.

The bill increased from the previous year, going from $304,675 to $308,969.

It’s another long laundry list of taxpayer-funded purchases, largely of booze, fine dining, and flat whites for Callaghan staff and the bigwigs they entertain.

Earlier in the year, when we expressed concern about the last set of excesses, the public were assured that Callaghan had tightened up its spending policies. In fact, that looks to be a lie.

The Taxpayers’ Union requested an explanation of this policy change, and the date of implementation, but Callaghan has refused to meet with us or provide any information.

Callaghan refused to release the latest round of expenses to the Taxpayers’ Union last year, suggesting it would instead be included in their annual report. As this never came to pass, the Taxpayers’ Union filed a complaint with the Ombudsman. Callaghan Innovation is currently under investigation.

On Wednesday, Callaghan finally released their 2016/17 expenses by dumping them on its website.

Callaghan’s initial failure to release the 2016/17 spending figures allowed some journalists to dismiss earlier examples of spending largess as ‘historic’. We now see that Callaghan’s waste is anything but. This taxpayer-funded agency has a culture of gluttony. Sadly, it’s no surprise that an agency tasked with doling out grants to businesses would have little regard for taxpayer money.

One more note: certain pages of the latest expense figures are presented as images, not text, making it impossible for us to collate or search spending data. So, we asked Callaghan to provide us the information in a text-based format – and they have decided to process this request as another 20-day official information request. This is the same week they complained how many information requests we send them!

Callaghan Innovation claims to be focused on transparency, while using every possible tool at their disposal to withhold information from the public.

The key figures released to the Taxpayers’ Union this week are in the right-hand column:

Actual expenditure	2013/14	2014/15	2015/16	2016/17
Entertainment	205,416	322,172	304,675	$308,969
Domestic Airfares	667,500	875,954	1,014,171	$966,964
Domestic Accommodation/Travel Expenses	556,006	723,973	855,309	$783,621
Overseas Airfares	490,364	478,885	414,305	$402,459
Overseas Accommodation/Travel Expenses	359,314	483,925	308,341	$285,801

The full breakdown of entertainment purchases can be viewed below. We’re encouraging our 32,000 members and supporters to scan these records and see what stands out.

The New Zealand Taxpayers’ Union expresses gratitude on behalf of its 32,000 members and supporters to Rt Hon Bill English for his service to taxpayers.
 
Under his tenure as Finance Minister and Prime Minister in 2008-2017, the burden on taxpayers reduced, with core Crown revenue as proportion of GDP cut from 32.6% to 30.5%. That is despite having to respond to the Global Financial Crisis and rebuild our second largest city.
 
The tax cuts implemented by Bill English in 2010 were significant and working New Zealanders continue to reap the benefits today.

Partial privatisation, while controversial at the time, has been a resounding success, working to both reduce debt and improve dividend flows by applying market discipline to what were lazy state owned assets.

And with social investment, Bill English has championed value for money in spending on social services.

We wish Mr English all the best for his career after politics.

The New Zealand Taxpayers’ Union has today released the full breakdown (attached) of Callaghan Innovation’s entertainment expenses for 2015/16.

Earlier this month, we revealed Callaghan spent $304,000 on ‘entertainment’ in 2015/16. We can now confirm this was mostly purchases at cafes, bars and restaurants, and we have obtained receipts and explanations for the biggest purchases, showing booze forms up to 40% of a typical Callaghan dinner bill.

Examples (GST excluded) include:

• $5,212 on 188 visits to the Beer & Burger Joint, downstairs from Callaghan’s Auckland office
• $4,298 on lunches and dinners at Marvel Bar and Grill
• $3,290 at Mojo coffeehouses
• $2,063 on a team dinner at a drag queen cabaret bar (K Road’s Caluzzi)
• $1,719 on lunches and dinners at The George Hotel
• $1,225 on dinners for staff and clients at Da Vinci’s Italian restaurant
• $1,134 on one dinner with clients at Dunedin’s No. 7 Balmac
• $869 at a dinner the Kiwifruit Innovation Symposium & Hayward Medal Dinner hosted by Zespri
• $861 at Empire Tavern on a staff induction dinner
• $817 on dinner for ‘customers’ at Grand Century Chinese
• $769 on a lunch and team building function at The Conservatory
• $508 (GST included) on a dinner for seven at Dockside, including $201 of wine (40% of the bill), plus a $50 tip.
   

Much of this spending is justified as entertaining 'clients' – but that’s absurd considering this agency’s ‘clients’ are actually businesses receiving Callaghan’s taxpayer-funded handouts. These ‘clients’ are already getting taxpayer pork; boozy dinners and latte lunches are just the gravy on top.

One dinner at Wellington’s Dockside came with a $50 tip. Tipping is rare in New Zealand, it’s something you do to flaunt your wealth. So why are bureaucrats tipping with public money?

Callaghan staff are trying to ingratiate themselves with the corporate culture of the businesses they give money to. That would be fine if they were using their own wages, but instead they’re using taxpayer-funded credit cards.

Callaghan's travel costs also ballooning

The Taxpayers' Union has also learned that over $1 million was spent on domestic airfares, and over $400,000 on international airfares in 2015/16.

Divided by 384 staff (as per their 2016 Annual Report), that’s $2,641 in domestic airfares and $1,079 international per staffer – $3,720 per staffer all up. This figure seems extraordinarily high. It's enough money to fly every staffer to London and back, twice, in one year.

Where on earth is Callaghan flying? They already have teams based in Auckland, Wellington, and Christchurch.

The international travel spend is just as bad. Callaghan only operates in New Zealand, but still spent $414,000 on overseas airfares in just a year.

We suspect part of this travel expenditure is for ‘customers’, i.e. businesses applying for grants. This is absurd – these businesses are receiving taxpayer money, now we discover we also pay for their flights, accommodation, wining and dining.

The New Zealand Taxpayers’ Union can reveal that only 60% of seats were filled on the ratepayer subsidised Wellington-Canberra flight route, compared to an average of nearly 80% for all flights in and out of Australia.

Figures published by the Australian Government in their international airline review for 2016/17 make for sober reading. No one at the office is surprised that Singapore had to move their flight route to Melbourne after examining the flight utilisation figures from 2016/17. Making profit, even after ratepayer subsidies, on a route where 40% of seats are empty on an average flight would be very difficult. Unfortunately it's difficult to ascertain whether Wellington Regional Economic Development Agency expected this kind of result, because the documentation surrounding the subsidies (which according to some reporting, amount to $8 million over ten years) is extremely limited.

Changing the route to Melbourne is unlikely to be successful either. Jetstar had to discontinue their Wellington-Melbourne route in 2016 because it was unprofitable to compete with Air New Zealand and Qantas. Are ratepayers really getting a good deal by subsidising flights on a route which is already serviced by two airlines?

The failure of Singapore Airlines' Wellington-Canberra route shows what an utter waste the route’s multi-million dollar subsidy has been.
 
The Wellington-Canberra route should never have been subsidised in the first place. Now that the spending has proven to be a complete waste, you would expect WREDA (Wellington Regional Economic Development Agency) to scrap it. Instead, the agency says they’ll subsidise the new route – despite there already being regular flights between Wellington and Melbourne.
 
At this point unelected bureaucrats are just giving free ratepayer money to Singapore Airlines for no benefit. It’s corporate welfare at its worst.
 
Remember, the Wellington-Canberra route was celebrated with a $50,000 ratepayer-funded party. Can Wellington ratepayers get a refund now? They certainly deserve one.

The Taxpayers' Union has launched a petition to end ratepayer subsidies to Singapore Airlines. You can sign it here: http://www.taxpayers.org.nz/wreda_petition

The Taxpayers’ Union can reveal that a small government agency spent over $300,000 on ‘entertainment’ in 2015/16 – including a drag queen dinner and show for staff.

The Union gained receipts for Callaghan Innovation’s entertainment purchases via the Official Information Act.

From a laundry list of receipts from bars, cafes, and restaurants, we're still working through abuses of taxpayer money. Already we've discovered a blatant example: $2,063 ($2,372 including GST) spent on a team dinner at a drag queen cabaret bar, K Road’s Caluzzi.

Dinner at Caluzzi includes a show, and a promise that ‘you will be entertained and served by our fabulous drag queen hostesses throughout the night.’ The bill included eleven bottles of wine, and one non-alcoholic drink.

We’ve got nothing against drag queens, but this was an event for staff, funded by taxpayers. It’s an appalling display of largesse from an agency the average taxpayer hasn’t even heard of.

All up, $304,675.22 was spent on entertainment in the 2015/2016 year. That’s enough money to host a Sunday barbeque for the entire city of Invercargill*.

Our researchers have also requested and are awaiting the entertainment expenses for 2016/17 with anxiety.

*Based on a barbeque for four, including 1kg of sausages ($6), a box of Lion Red ($15.99), a can of tomato sauce ($1.60), and a loaf of bread ($1).

To coincide with the implementation of the latest tobacco excise hike of 10%, plus inflation, we've released a new report that shows the ineffectiveness of tobacco tax hikes as a tool to reduce smoking rates, and reveals the unintended consequences of the policy: direct financial harm to smokers and their families, and crime towards retailers.

The goal of excise tax – to reduce smoking rates and prevent smoking-related illness – is a noble one. But it’s not enough to judge a policy by its intentions. Our new report evaluates tobacco excise tax based on its actual results, both intended and unintended.

Impact on smoking rates

Despite tobacco prices increasing by over 60% since 2012, only one in ten adult smokers quit. Amongst Maori and Pasifika, there has been no statistically significant reduction in smoking rates over the last decade. In other words, it’s completely failed to achieve the goal of reducing smoking rates in those communities where they are the highest.

Cost to households

We could tolerate an ineffective policy if it caused no harm. But tobacco tax hikes cause enormous harm, devastating the incomes of the vast majority of smokers who haven’t quit.

A pack-a-day smoker is nearly $3,000 per year worse off in real terms than they were in 2010. This direct financial harm will only worsen as the tax is hiked year after year – salt in the wound for New Zealanders already addicted to a harmful substance.

Crime

Higher tobacco prices have made smokers more willing to purchase black market tobacco, and there is an increased incentive for illegal supply, sourced through burglaries and robberies.

Robberies, many of which are violent, have increased by 26.6% since 2014. Frustratingly, we don’t know the exact extent to which this is caused by tobacco tax hikes, because Police haven’t been asked to record the data.

It’s a huge concern then that, without relevant data, we have a four-year plan to hike the tax. To proceed blindly with this policy is to disregard the physical safety of law-abiding retailers and their staff.

Alternatives

The best the Government could do would be to hurry and legalise the sale of nicotine e-cigarettes, which are still technically illegal to sell, but are a much safer alternative to smoking, and a proven pathway to quit.

Dragging the chain on nicotine e-cigarettes suggests the Government is more interested in the money tobacco taxes bring in, than reducing the harms of the addiction.

14 DECEMBER 2017
FOR IMMEDIATE RELEASE

With the Budget Policy Statement indicating fiscal restraint, and the Government not signalling increases in revenue over and above nominal growth and fiscal drag, the Tax Working Group should be tasked to offer fiscally neutral solutions says the Taxpayers’ Union.
 
Jordan Williams, the Union’s Executive Director, says:
 
“We were pleasantly surprised, and welcomed, Grant Robertson’s public comments resulting from our calls prior to the election that any policy changes by the Tax Working Group could be fiscally neutral. Now that he’s in office Mr Robertson should task the Tax Working Group with finding ways to reduce existing taxes to compensate for the costs of any new taxes it suggests.”
 
“Today’s mini-budget is a signal to Kiwis that the Government does not intend to smack taxpayers with an expensive rejig of the tax system. A credible way to do this, would be to make sure the Tax Working Group understand this.”

ENDS

14 DECEMBER 2017
FOR IMMEDIATE RELEASE

“Grant Robertson’s pre-Christmas spend-up appears to tie his hand in years to come, and offers a welcome dose of fiscal restraint,” says the Taxpayers’ UnionExecutive Director, Jordan Williams, reacting to today’s Half Year Economic and Fiscal Update.
 
“Today’s HYEFU was a mini-budget – it changes the direction of the Government’s spending priorities in the short term, and returns the tax system to a more complex tax and credit churn system.”
 
“But on the other side of the coin, Labour deserve real credit. There is no enormous tax grab forecast and Mr Robertson is signalling that he will run a very tight ship. Uncommitted operational spending is only $6.6 billion, or $660 million per year, out to 2022. That is only about half what National budgeted over recent years, and will need to also cover those coalition agreement policies not already costed and factored into the books.”

ENDS

14 DECEMBER 2017
FOR IMMEDIATE RELEASE

By the next election, the Government will have spent two billion dollars on KiwiBuild, but only a little more than a third of that will have translated into additional houses according to Treasury analysis pointed to by the Taxpayers’ Union. 

New Zealand Taxpayers’ Union Economist Joe Ascroft, says, “Treasury has highlighted capacity constraints that means only 35% of the two billion dollars being spent by the Government will translate into additional housing by the next election.”

“When there are only so many builders, and so much land, big Government building schemes just take away from private investment and construction. That’s exactly what we’ll see for at least the next three to four years.”

“While residential investment is expected to increase over the long term, that relies on a number of assumptions, including increased work visas for foreign workers, and the use of foreign firms to encourage greater competition. That alone is totally inconsistent with Treasury’s assumption used for its financial modelling that net migration will reduce from 75,000 per year down to 15,000 by 2022.”

“Reform to the RMA, and freeing up contrants on building, would lead to a much larger increase in housing investment, and wouldn’t cost anywhere the two billion dollars Labour have budgeted for KiwiBuild. Better for the Government to get out of the way, rather than throw $2 billion of our money into a fund which will raise the costs of construction for such little gain.”

ENDS

14 DECEMBER 2017
FOR IMMEDIATE RELEASE

With the Budget Policy Statement indicating fiscal restraint, and the Government not signalling increases in revenue over and above nominal growth and fiscal drag, the Tax Working Group should be tasked to offer fiscally neutral solutions says the Taxpayers’ Union.
 
Jordan Williams, the Union’s Executive Director, says:
 
“We were pleasantly surprised, and welcomed, Grant Robertson’s public comments resulting from our calls prior to the election that any policy changes by the Tax Working Group could be fiscally neutral. Now that he’s in office Mr Robertson should task the Tax Working Group with finding ways to reduce existing taxes to compensate for the costs of any new taxes it suggests.”
 
“Today’s mini-budget is a signal to Kiwis that the Government does not intend to smack taxpayers with an expensive rejig of the tax system. A credible way to do this, would be to make sure the Tax Working Group understand this.”

ENDS

Earlier this week, we sent this Offical Infomation Act request (OIA), to the Cabinet Secretary (a senior official in the non-political Department of Prime Minister and Cabinet) asking what information he has, or knows, about the contents of the 36-page secret document. 

Even if the DPMC does not actually have the document, any knowledge of its contents is 'official information' for the purposes of the Official Information Act. So, that is precisely what we have asked for.

Back in November the Prime Minister, Jacinda Ardern, said her Government would be "the most open, most transparent Government that New Zealand has ever had". So we started a petition calling on the secret 36-page agreement between Labour and New Zealand First, to be released. 

If you want the Government to live up to their campaign promise, click here to sign our petition.

 

 

 

$380 million = $190,000 each

Earlier this week, the Government announced the details of its plan to make the first year of tertiary study free fully taxpayer funded. For the princely sum of $380 million, an extra 2,000 students are expected to pursue tertiary study from next year – that’s $190,000 each.

Giving every student free education in order to encourage a small number to pursue university or a trade offers anything but value for money. If the Government is concerned about some young people not receiving an education, they should target their policies, not give in to universalism.

As covered in our report published prior to the election, 'Robin Hood Reversed', this policy represents a huge wealth transfer from middle-income earners to tomorrow's rich.

The Government's policy gives every future doctor, lawyer and accountant a free ride — at the expense of the average taxpayer. We say it would be much cheaper to give scholarships for those who need them, and spend the money improving the quality of courses (or boosting the funding of schools or education providers).

The officials agree with us

Yesterday, the post-election "Briefings to Incoming Ministers" (BIMs) were released. Our team has been busy working through them and were interested to see the Tertiary Education Commission (TEC) BIM fire darts at Labour's policy.

TEC points to poor decision-making from prospective students as a major problem already. It advises the new Minister that students already change their course, drop out, or act impulsively too much. How much worse will that be once students have no financial stake?

In addition, TEC explain that an increasing focus in recent years has been on 'investing in outcomes' rather than simply measuring success by the number of participants in tertiary education, or the number of degrees awarded. Nevertheless, the Government has ploughed ahead with a "free fees" policy specifically designed to do the opposite: get more bums on seats.

The Value(s) of Auckland DHB

Earlier this week we blew the whistle on the Auckland DHB spending $171,000 updating its ‘values’. That involved holding a ‘values week’ which entailed 17 workshops and 750 hours of staff time. A London business consultant was even flown in – twice – to provide expertise.

The ADHB’s former values of ‘Integrity, Respect, Innovation, Effectiveness’ were replaced with ‘Welcome – haere mai, Respect – manaaki, Together – tūhono and Aim High – angamua.' 

Put another way, the DHB spent $170,000 to replace the value of ‘effectiveness’ with merely ‘aiming high’!

The Taxpayers’ Union was happy to offer the ADHB some alternative values, except our suggestions were free of charge. We thought ‘Sticking to our knitting’, or ‘Not flying in a London consultant to legitimise our waffle-fest when sick people are literally relying on DHB resources for survival’, were both good options. You can read our comments to the media here, and coverage on Stuff here.

175,000 more questions for Wintec

The CEO of Wintec, Mark Flowers, appears to be scared of the media. He's reportedly spent an incredible $175,000 of public money hiring lawyers to protect him from the local Waikato Times questioning him about an investigation relating to serious allegations. The allegations are yet to be made public, but if they are as untrue as he claims, why spend $175,000 of our money on lawyers and literally hide in his car in the polytechnic's carpark to prevent having to answer questions?

Our research team are digging deep into this story — as well as similar issues at other polytechnics — so watch this space.

 

Our 2017 Ratepayers' Report - local government league tables - has identified Otorohanga, and Grey District Councils as the only two local authorities in New Zealand to govern without an Audit and Risk Committee.

Earlier in the year, Ratepayers' Report showed that Otorohanga, Grey and Waitomo District Councils were the only New Zealand councils failing to follow best practice in this area. Now that Waitomo District Council has introduced an Audit and Risk Committee it means Otorohanga and Grey District Councils are the only two not in line with the rest of the country.

Today we launched a campaign on behalf of the Otorohanga, and Grey District ratepayers, calling on their Council to introduce an Audit and Risk Committee.

According to LGNZ, Audit and Risk Committees provide councils with:

• Internal control framework and financial management practices;
• internal and external reporting and accountability arrangements;
• and financial risk management.

The costs associated with having a dedicated Audit and Risk Committee are minimal when weighed against the millions in potential savings of ratepayer money.

How can Otorohanga and Grey District Councils assure they are delivering value for money and managing risk, when they both refuse to implement the most basic oversight that is standard at nearly every other town hall in New Zealand?

If you agree that both Otorohanga and Grey District Councils should have an independent committee to oversee financial risk, click here to sign our petition.

 

Ratepayers' Report is free to access and online at www.ratepayersreport.nz.

 

 

 

 

 

 

 

 

 

 

 

The secret agreement

When the new Government was formed, Deputy Prime Minister, Winston Peters, let slip that a "hidden addendum" to the Labour-NZ First coalition agreement had been agreed to, which clarified how the new Government will operate. Mr Peters promised that the document, apparently 38 pages long, would be released at a later date.

That document is of obvious public importance – it contains Ministerial directives and records the deal between the two parties. Despite that, and Mr Peters' comments, the Prime Minister’s Office has refused to release the document in responses to requests under the Official Information Act. Incredibly, Ms Ardern claims the document doesn’t represent “official information”. 

We say that’s absurd. This document allegedly sets down to Ministers the rules and expectations of the coalition. Matters such as whether NZ First has a veto on budget expenditure, or changes in tax settings, are apparently covered. It is at least as constitutionally significant as the Cabinet Manual - the core of Executive Government.

We say that taxpayers, voters, and the public are entitled to know what is in the document and what the Government has agreed to.

Jacinda Ardern made much of transparency and freedom of information while in opposition. We say she should walk the walk and are asking our supporters to join us in signing this petition to tell the Prime Minister to follow the Official Information Act and release the secret agreement.

"We call on Jacinda Ardern to respect the official information act and release the secret 38-page addendum to the Labour - NZ First coalition agreement."

We can shed more light on the expense scandal at the Waikato DHB, with the release of documents we requested under the Official Information Act arriving on Friday. Documents were released showing a number of important details for taxpayers (see below).

To our surprise, and despite numerous assurances that the money has been (or was about to be) paid back, the documents reveal that the former DHB CEO, Dr Murray, still owes up to $50,000 in unauthorized spending that’s not been paid back. What makes this particularly disappointing is that Dr Murray was earning $560,000 a year. 

Waikato DHB ended their investigation partially in exchange for a commitment from Dr Murray to pay back all unauthorized spending. There’s no good reason that debts are still outstanding. 

The documents also reveal a timeline of events related to the DHB’s investigation.

It was pleasing to see that Waikato DHB Chair Bob Simcock visited the State Services Commission the day after he was informed of issues related to Dr Murray. That shows prompt action by Mr Simcock who we’ve been calling to front up more information about the investigation into Dr Murray’s actions. Hundreds of people have even signed a petition calling on Bob Simcock to resign for his failure to hold the CEO to account during his tenure at Waikato DHB.

There are still a number of questions that need answers, however, it appears Waikato DHB were under significant pressure to end their investigation. Since the release of the documents, the Minister of Health, David Clark, has announced an enquiry investigation into the events at Waikato DHB and the expense scandal.

We’ll keep you posted.

Our new report, titled Fare Game? Flagging down the cost of public sector taxis, shows that bureaucrats choosing more expensive taxi services over ride-sharing apps like Uber have cost taxpayers at least $9.81 million since Uber’s introduction in mid-2014.

Currently, the 28 tier-one public service departments spend about $9.3 million a year on taxis. That’s compared to just $77k on ride-sharing apps. If all public servants opted for ride-sharing apps over taxis, we calculate the potential savings for taxpayers being around $3.27 million per year.

Despite the recent regulation of the ride-sharing industry, a number of departments still have policies in place banning their staff from using Uber or Zoomy for staff travel. Not only is that not keeping up with the times, it means many more millions are wasted on flash cabs, when a cheaper Uber would do just fine.

The report also assesses the opportunities for increased efficiency in departments who embrace ride-sharing as a means of staff travel. It also shows that internationally, the New Zealand public service is lagging behind.

Gone are the days of paper receipts and employee reimbursement forms. Ride-sharing’s electronic based system facilitates remarkably efficient internal staff travel processes. It’s no wonder federal officials in the United States and Australia have been encouraged to use the new technology.

Key findings:

• Over the 28 public service departments, $9,334,755.87 was spent on taxis over the period of a year, up until 1 June 2017. This is compared to just $77,102 spent on ride-sharing apps.
• By applying fare estimates between Wellington Airport and MBIE offices, the report estimates that using Uber over taxis saves around 35%.
• Applying that figure to government departments, taxpayers could have saved $3.27 million if public servants used ride-sharing over taxis, or $9.8 million since Uber launched in mid-2014.
• Five government departments have travel policies banning their staff from using ride-sharing for staff travel (Department of Conservation, Ministry of Justice, Crown Law, Ministry for Women, and the Department of Internal Affairs).
• Only tier one government departments were included in the survey data.  That means that many more millions are likely to have been wasted (and have the potential to be saved) across the wider public sector.

Disclaimer: Neither Uber, or any other ride-sharing interest, have donated, joined, or financially contributed to the Taxpayers’ Union or the publication of this report.  To join the tens of thousands of New Zealanders who have, donate now at www.taxpayers.org.nz/join

 

 

Labour’s coalition agreements with New Zealand First and the Green Party were released on Tuesday. While they set out the policy priorities of the new government, they do not breakdown the costs. Failing to mention the expenses, both in the agreements and most of the media commentary, should be of real concern to taxpayers. 

Headlining the agreements was a new one-billion-dollar “Regional Development (Provincial Growth) Fund”. Despite its infancy, both Labour and NZ First are touting it as a bonanza to their respective supporters. No wonder, ‘Regional development’ is usually code for corporate welfare and pork-barrel politics.

At a cost of $645 per year for the average Kiwi household, more than just political whim will be necessary for any sort of ‘provincial growth’ to result. For every dollar ‘invested’, a dollar is taken from a hard working taxpayer. Disciplined cost-benefit analysis, similar to that done for major roading projects, will need to be legislated to prevent the fund from turning into a slush fund, or make-work scheme.

The risk for taxpayers is the billion being sucked into projects with very low cost-benefit ratios. It could see more government agencies such as Callaghan Innovation, who ‘pick winners’ by giving money to favoured businesses and fashionable industries.

Prime Minister Jacinda Ardern is already indicating the fund will include “a number of regional rail projects” even though KiwiRail is notoriously unprofitable. Treasury have been advising the Government for decades that money spent improving roads offers far more bang for buck than rail. A report released by KiwiRail last year concluded that closing its own freight lines entirely delivered the most long-run value to taxpayers. Ouch. Ms Ardern is picking political popularity of trains, over sound economics.

Some policies don’t even have a budget number attached. 

The Green Party has negotiated for "significantly increasing the Department of Conservation’s funding”. The amount? Unknown. It could double the funding of DOC, be a cunning trick on the Greens, or an invitation to the new Green Party Minister of Conservation to raise revenue, such as taxing tourists entering national parks.

To get to power, Ms Ardern has also promised to expand benefits for SuperGold Card holders. The coalition agreement is light on detail, but if NZ First get what they want, expect the annual costs to shoot up by $300 for the average household. That would buy a free annual GP visit and discounted power bills for everyone aged over 65. 

Clearly, some would benefit from cheaper power and a free doctors’ visit. But offering universally, instead of targeting the support to those who need it most, suggest this was about satisfying a voter constituency than improving living standards.

There are also the ‘studies’ and ‘reviews’ NZ First has negotiated. A ‘feasibility study’ into moving the Ports of Auckland could see billions spent shifting freight services to Whangarei. Another report, again published by KiwiRail, indicated that just the cost of upgrading the rail freight line from Northland would be up to four billion dollars. The cost to the average household would be $2580.

With Mr Peters’ support so expensive, Finance Minister Grant Robertson’s will need to find a way to pay for it all. Labour’s ‘alternative budget’ made no allowance for coalition negotiations, and very little allowance for new spending.

Jacinda Ardern has indicated that Labour’s tax working group will plough ahead. In any case the new Labour-led government will need to find the money to pay for the coalition ‘compromises’ somehow. Taxpayers, brace yourself to have your pockets opened.

Inland Revenue’s new IT system, implemented in February for their GST services, has been a disappointment. According to official data from IRD, the time spent handling GST related enquiries increased by 50% when the system was first introduced in February earlier this year. As of August, months after implementation, there was still a 20% increase in wait times compared to the previous year.

 

 
The point of investing in a new IT system was to make services more efficient at IRD, but this data shows taxpayers are receiving a worse service after the new system was introduced.
 
Many callers can’t even get to the hold tone. When the system was introduced in February, it faced so much pressure that nearly 2000 callers to the GST line were disconnected without even being put on hold. In the two months prior to implementation, that didn’t happen once.
 
Over 10,000 calls to the GST line were disconnected in May because IRD systems simply couldn’t cope. Inland Revenue either needs to train existing staff more thoroughly, or bring in additional staff during months they know will be busy. How the IRD is proposing to cut 1,500 jobs in this environment is astounding.

See the IRD's OIA response below:

Auckland Council has been caught out providing false information regarding the average rates paid by Auckland households, with revised figures showing that Aucklanders pay the second highest rates in New Zealand.

Over multiple years, officials have provided incorrect information to the Taxpayers’ Union and Auckland Ratepayers’ Alliance researchers under the Local Government Official Information and Meetings Act 1987, presumably as an attempt to avoid criticism of the Council’s very high costs in comparison to the rest of the country.

As a result of these illegitimate figures, Auckland Council came out much better in our local government league tables than justified. It appears the Council has coordinated responses to deliberately mislead the public on what the average ratepayer pays.

In the initial report, Auckland Council's rates were comparable to New Zealand’s average. Now that the Council has coughed up the true figures, we know Auckland rates are actually the second highest in the country.

Before the Ratepayers’ Report local government league tables were published, we wrote to Auckland Council’s CEO and specifically asked for the rates figure to be checked a third time and were assured it was accurate.
 
With light finally shed on the truth, we have exposed that Aucklanders pay the second highest residential rates in the country.

This new set of data shows that if Auckland Council were as efficient as others in New Zealand, they would be better fiscally prepared to invest in the infrastructure that our city desperately needs.

Ratepayers’ Report was jointly published by the Taxpayers’ Union and the Auckland Ratepayers’ Alliance.

The ‘please explain’ letter sent to Mayor Phil Goff is here:

An article published last week by Fairfax has left an incorrect impression on the reason why the Taxpayers' Union objects to the Government signing an R&D cooperation agreement with Israel. 

The Union wishes to clarify that it is the nature of the agreement – that Callaghan Innovation's corporate welfare R&D grants will favour companies working with a particular country – not that the agreement is with a particular country.

Our staff just issued a media release where I clarify:

"When asked by the journalist who called, I specifically said that as an organisation the country is irrelevant and tied my comments back to our long-held position against corporate welfare."

"The journalist then asked whether some taxpayers would have an objection to it being Israel, and I agreed but said that personally, and as an organisation, we didn't."

I'm very annoyed that the caption below my picture on the Stuff website suggests that I objected to the agreement because of being "a deal with Israel whose military is in violent conflict with Palestine". Those words are Fairfax's, not mine. Similarly, where the article states: "Williams said many taxpayers would have an issue with New Zealand signing an agreement with a Middle Eastern country whose military continued to engage in violent conflict" - again not my words.

The Taxpayers’ Union has accepted a settlement and apology from Local Government New Zealand President Dave Cull relating to public statements he made about the accuracy of the Taxpayers’ Union’s local government league tables, ‘Ratepayers Report’, and honesty of the organisation.

We've had a great response to our full-page newspaper ads which ran across the country yesterday.

The figures are based on our election policy costing "Bribe-O-Meter" which is based on the parties’ own estimated costs of their policies and they have been tracked and verified by our own independent economists. The total figures per household assume that each party spends what it has promised, and does not take into account possible changes arising from negotiations to form a government.  As you can see, the NZ Frist figure, when paired with Labour is lower than the National and New Zealand First total because, in some cases, Labour is also promising to spend the same amounts in the same areas as New Zealand First.

We've just started our online advertising campaign (Ad-roll YouTube, Stuff.co.nz and Facebook ads) to help spread the message.  If you agree that taxpayer rights are important to be protected at this election, chip-in to our online advertising fund at www.taxpayers.org.nz/bribe_o_meter_donate.

Thanks to the thousands of supporters who have chiped-in to make this work possible.  To help spread the word, click here.

Well known former Wellington lobbyist and former journalist, Barrie Saunders, has been appointed to the board of the New Zealand Taxpayers’ Union.

Barrie retired from the government relations consultancy, Saunders Unsworth, in March 2015, after 25 years as a government relations consultant.  The company specialises in the management of public policy issues on behalf of its clients, which are predominantly business organisations and corporates.  

As a government relations consultant, he worked for corporates, groups of corporates and industry organisations including: fishing, used vehicle imports, pharmaceutical advertising, meat, pipfruit, timber, institutes of technology and polytechnic and the New Zealand Business Roundtable, a free market think tank.  Barrie was the executive chairman of the 14 member Port CEO Group, a virtual organisation from 2002 to 2015.   

He was President of the Wellington Regional Chamber of Commerce  2000-2002 inclusive, is now a life member of the Chamber.  Chairman of CBL, the Chambers investment company 2003/9.  He was a trustee of the Wellington City Mission 1999/2006 and a member of the Housing NZ Board 1994-97.  In 2011 he was appointed a director of TVNZ and completed his second term on April 2017. 

Prior to establishing his government relations business in 1990, Barrie worked as a journalist (radio and TV in New Zealand, Australia and the UK), and the National Business Review, of which was the founding editor in 1970.  He later worked in public relations.  He was press secretary to the Labour Party Leader Bill Rowling (1976-79), Public Relations Manager for the Manufacturers Federation (1979-83) and Public Relations Manager for the NZ Meat Producers Board 1983-86.  He was the Board’s North American Director based in New York from 1986 to the end of 1989.    

A print quality, royalty-free, photo of Barrie is available here. 

In the final Bribe-O-Meter update before the election, the Taxpayers’ Union has put together the combined manifesto costings for a range of potential coalitions. These figures will allow voters to gain a better understanding of the fiscal implications of a potential Government over the next three-year parliamentary term.
 
This week we have put together all the likely coalition options so that voters have a better idea of what their vote might cost taxpayers. While the coalition totals account for crossovers in policy (so there is no double counting), the figures assume that each party spends what it has promised. It does not take into account possible changes arising from negotiations to form a government.

A National-ACT coalition has promised the lowest new spending, combining for a total of $5.9 billion, or $3,441 per household. National has promised $8.3 billion, and ACT a net-reduction in spending of $2.4 billion over three years.

ACT, National and the Maori Party have promised a combined $18.1 billion, or $10,501 per household. However, 67 percent of this total spending is from the Maori Party alone.
 
A Labour-Green coalition has promised $35.2 billion in new and unique spending, equivalent to $20,397 per household. There is considerable crossover in Labour-Green policies, which has been accounted for.
 
National and New Zealand First have promised a total of $35.8 billion, or $20,788 per household. 77 percent of this spending is from New Zealand First.
 
Labour and New Zealand First have promised $49.6 billion, or $28,744 per household. The Labour-New Zealand First total is made up of 46 percent of Labour Party spending, and 54 percent New Zealand First.
 
A Labour-Green-New Zealand First coalition has promised $61.7 billion, or $35,787 per household. This comprises 37 percent Labour Party spending, 20 percent Green Party spending and 43 percent New Zealand First.

Cost of party coalition combinations 

• National/ACT: $5.9 billion, $3,441 per household.
• National/ACT/Maori: $18.1 billion, $10,501 per household. 
• Labour/Green: $35.2 billion, $20,397 per household. 
• National/NZ First: $35.8 billion, $20,788 per household. 
• Labour/NZ First: $49.6 billion, $28,744 per household. 
• Labour/Green/NZ First: $61.7 billion, $35,787 per household.

Note that the coalition totals account for crossovers in policy (so they do not necessarily match the sum of the individual party figures listed above).

Transparency Rating

As part of the Bribe-O-Meter, our economic staff have assessed political party's transparency across policy detail and cost and given each a score out of five (see below). The most transparent party has been National. The least transparent is NZ First, closely  followed by the Māori Party.

Click here to visit the 2017 election Bribe-O-Meter

Key findings (as at 9am 18 September):

• National has promised $8.3 billion in new spending over the next parliamentary term. This equates to $4,821 per household. Transparency rating: 5/5
• Labour has promised $23.0 billion in new spending over the next parliamentary term. This equates to $13,353 per household. Transparency rating: 4/5
• The Green Party has promised $14.9 billion in new spending over the next parliamentary term. This equates to $8,645 per household. Transparency rating: 4/5
• NZ First has promised $27.5 billion in new spending over the next parliamentary term. This equates to $15,967 per household. Transparency rating: 0/5
• ACT has promised $2.4 billion in savings over the next parliamentary term. This equates to $1,381 in savings per household. Transparency rating: 3/5
• The Māori Party has promised $12.2 billion in new spending over the next parliamentary term. This equates to $7,060 per household. Transparency rating: 1/5
• The Opportunities Party has promised $13.7 billion in new spending over the next parliamentary term. This equates to $7,939 per household. Transparency rating: 4/5 

Another week of expensive election promises typifies the penultimate weekly Bribe-O-Meter update. The Green Party and TOP are this week’s big movers, each with over $3 billion in new spending announced in the past seven days. Other m

overs include New Zealand First (a further $1.5 billion) and the National Party ($500 million). The Labour Party are up just $100 million, now with total spending of $22.9 billion over the next three years.

The Green Party has promised to pay the forestry sector an aggregate $630 million per year by 2020, as well as a $990 million universal payment to all working-age New Zealanders, or $250 per person. These two new spending proposals will be funded from a charge on pollution. In addition, the Green Party will establish a Climate Commission at an estimated operating cost of $6 million per year. This brings total Green Party spending over the next parliamentary term to $13.3 billion, which is equivalent to $7,703 per person.

TOP has proposed to hand out $1 billion in unspecified subsidies for fruit and vegetables, to be funded from a 20 percent tax on all junk food. The sum of TOP’s new spending is now $13.7 billion over three years or $7,939 per household.

 
New Zealand First has pledged to increase SuperGold Card entitlements by $800 to $1,000 per person per year. With a growing super-annuitant population, currently about 650,000 people, this policy will cost the Crown more than $500 million per year. New Zealand First spending now totals $27.5 billion over the next three years or $15,967 per household.
 
The National Party has proposed a $74 million per year boost in subsidies for first-home buyers, $180 million in additional funding for elective surgeries over three years, and $57 million toward a specialist mental health facility in Christchurch. National has now promised $8.2 billion, or $4,736 per household, over the next parliamentary term.

Transparency Rating

As part of the Bribe-O-Meter, our economic staff have assessed political party's transparency across policy detail and cost and given each a score out of five (see below). The most transparent party has been National. The least transparent is NZ First, closely followed by the Māori Party. 

Click here to visit the 2017 election Bribe-O-Meter

Key Findings (As of 9am 12 September):

• National has promised $8.2 billion in new spending over the next parliamentary term. This equates to $4,736 per household.Transparency rating: 5/5
• Labour has promised $22.9 billion in new spending over the next parliamentary term. This equates to $13,287 per household. Transparency rating: 4/5
• The Green Party has promised $13.3 billion in new spending over the next parliamentary term. This equates to $7,703 per household. Transparency rating: 4/5
• NZ First has promised $27.5 billion in new spending over the next parliamentary term. This equates to $15,967 per household. Transparency rating: 0/5
• ACT has promised $2.4 billion in savings over the next parliamentary term. This equates to $1,407 in savings per household. Transparency rating: 3/5
• The Māori Party has promised $12.2 billion in new spending over the next parliamentary term. This equates to $7,060 per household. Transparency rating: 1/5
• The Opportunities Party has promised $13.7 billion in new spending over the next parliamentary term. This equates to $7,939 per household. Transparency rating: 4/5

For the first time ever, the ACT Party is the biggest spender in this week's update of the election Bribe-O-Meter. ACT’s big jump is on the back of its education policy, costing $3 billion over the next parliamentary term. This week the Bribe-O-Meter also sees Labour and the Green Party jump by more than $1 billion and National by approximately $0.5 billion.

Getting in on the ACT

ACT has announced a $1 billion per year increase in teacher funding. However, when combined with their other policies such as removing corporate welfare and a cancellation of Budget 2017 welfare increases, ACT’s total package would reduce net government spending by $2.4 billion over the next three years. That’s $1,407 per household.
 
The Labour Party continues to steadily push the fiscal boundaries, with total new spending over the next three years now at $22.8 billion. $22.8 billion is equivalent to $13,237 per household. This week’s new spending came primarily from bringing forward free tertiary education by one year and increasing the student allowance by $50 per week. These two policies will cost taxpayers $2.4 billion over three years. Although it should be remembered that the zero fees policy will be much more expensive once it comes into full effect in 2024.
 
The Green Party has announced a string of environmental policies, with a particular target on farmers. A new nitrogen tax will raise $392 million over three years, accompanied by a $20 million per year increase in funding for sustainable farming and $5 million a year to establish an organic farming certification scheme. However, the Green Party have also promised to cancel all future unappropriated irrigation subsidies so some of this new spending is offset. We have estimated that cancelling these irrigation subsidies will save $280 million in the next three years.
 
Major announcements this week from National included $62m to crack down on meth, $52m to go towards Predator Free New Zealand, and an extension of paid parental leave to 22 weeks at a cost of $205 million over three years. Labour has similarly proposed to increase paid parental - from 26 weeks instead of 22 - costing an estimated $420 million over the next three years.

Transparency Rating

As part of the Bribe-O-Meter, our economic staff have assessed political party's transparency across policy detail and cost and given each a score out of five (see below). The most transparent party has been National. The least transparent is NZ First, closely followed by the Māori Party. 

This week we have taken one star off the Green Party because they have failed to release their full alternative budget, as promised. Refer to: http://bit.ly/2eErKvJ 

Click here to visit the 2017 election Bribe-O-Meter

Key Findings (as at 5 September):

• National has promised $7.6 billion in new spending over the next parliamentary term. This equates to $4,422 per household.Transparency rating: 5/5
• Labour has promised $22.8 billion in new spending over the next parliamentary term. This equates to $13,237 per household. Transparency rating: 4/5
• The Green Party has promised $9.9 billion in new spending over the next parliamentary term. This equates to $5,765 per household. Transparency rating: 4/5
• NZ First has promised $26.0 billion in new spending over the next parliamentary term. This equates to $15,062 per household. Transparency rating: 0/5
• ACT has promised $2.4 billion in savings over the next parliamentary term. This equates to $1,407 in savings per household. Transparency rating: 3/5
• The Māori Party has promised $12.2 billion in new spending over the next parliamentary term. This equates to $7,060 per household. Transparency rating: 1/5
• The Opportunities Party has promised $10.7 billion in new spending over the next parliamentary term. This equates to $6,199 per household. Transparency rating: 4/5

 

Following on from Jacinda Ardern's announcement today of Labour's tertiary education policy offering 'free' university study for up to three years, we have released a briefing paper examining whether "zero fees" university really is what the left say it's cracked up to be.

We find that the implementation of a zero fees policy for tertiary education would reach into the pockets of the disadvantaged, to line the wallets of the future’s wealthy.

Big spending packages targeted at New Zealand’s major cities account for the majority of the increases in the latest update of the Bribe-O-Meter. Labour has been the most ambitious with expensive new packages targeted at each of the major cities, with other smaller promises from National and the Green Parties.

More Labour Party lollies

In the last week the Labour Party announced new spending packages targeted at the four largest cities. $300 million for a Christchurch Capital Acceleration Fund, $100 million for transport investment in Christchurch, $30 million for the Auckland Skypath, $22 million for a new rail line between Upper Hutt and Trentham and a renewal of the $100m Urban Cycleways Fund.
 
Labour has also committed to building a new Dunedin Hospital. However, unlike National’s proposal, they will not make use of a Public-Private Partnership. Labour claims their Hospital will cost the same as National’s – approximately $1.4 billion over seven years. The Bribe-O-Meter has taken Labour’s costings as being accurate, although this is questionable given the historic efficiency advantages that public-private partnerships have over Government builds.
 
The total cost of these targeted packages is in excess of one billion dollars over the next three years. Labour’s total new spending in the next term is now $20.4 billion, only behind NZ First at $26 billion. Labour’s spending amounts to $11,828 per household compared to $15,062 by NZ First.

Other party promises

Elsewhere, the Green Party has increased their total new spending promises to $9 billion or $5,215 per household. Their major announcements last week were regional transport policies and new environmental spending funded by a plastic bag levy.

The National Party has increased education spending by $290 million over three years and promised $120 million for a new Christchurch sports stadium. Smaller spending includes $500,00 in funding for Winter Olympians and $150,000 to stimulate demand in geothermal energy.

Transparency Rating

As part of the Bribe-O-Meter, the Taxpayers' Union economic staff have assessed political party's transparency across policy detail and cost and given each a score out of five (see below). The most transparent parties have been National and the Greens. The least transparent is NZ First, closely followed by the Maori Party. 

Click here to visit the 2017 election Bribe-O-Meter

Key Findings (as at 28 August):

• National has promised $7.2 billion in new spending over the next parliamentary term. This equates to $4,159 per household. Transparency rating: 5/5
• Labour has promised $20.4 billion in new spending over the next parliamentary term. This equates to $11,828 per household. Transparency rating: 4/5
• The Green Party has promised $9.0 billion in new spending over the next parliamentary term. This equates to $5,215 per household. Transparency rating: 5/5
• NZ First has promised $26 billion in new spending over the next parliamentary term. This equates to $15,062 per household. Transparency rating: 0/5
• ACT has promised $5.4 billion in taxpayer savings over the next parliamentary term. This equates to $3,103 in savings per household. Transparency rating: 3/5
• The Maori Party has promised $12.2 billion in new spending over the next parliamentary term. This equates to $7,060 per household. Transparency rating: 1/5
• The Opportunities Party has promised $10.7 billion in new spending over the next parliamentary term. This equates to $6,199 per household. Transparency rating: 4/5

National Party Doubles New Spending Promises In Just Seven Days

National spends-up large...

The National Party has more than doubled its new election spending in the space of just one week. Since last Monday, the National Party has increased promised spending from $2.5 to $6.8 billion across the next parliamentary term. $6.8 billion is equivalent to $3,920 per household.

The most expensive new policy Bill English has announced is the proposed roads of national significance. The cost works out at approximately one billion each year over the estimated ten-year timeframe. This was accompanied by $290 million in agreed-in-principle treaty settlements; $285 million in cheaper GP visits for children; and $459 million over three years towards the building of a new hospital in Dunedin.

...so does the Maori Party

The Bribe-O-Meter has also been updated to reflect the Maori Party's manifesto, which was only released last week.

Unfortunately, the encompassing policies have about as much fiscal transparency as NZ First. That is they are nearly impossible to cost.

From just the policies we have been able to estimate, the Maori Party's policies would cost $12.2 billion over the next parliamentary term. This is equivalent to $7,060 per household. Maori Party policies are predominantly a list of giveaways and subsidies, neither of which come cheap. For example, the largest component of the manifesto that we have been able to cost is an estimated $4 billion write-off of student loan living cost debt.

Little Difference with Ardern

There has been some criticism in the political commentariat of the Labour Party not being substantively different in policy under Jacinda Ardern – compared to her predecessor Andrew Little. The Bribe-O-Meter appears to validate this view. Since Ms Ardern has taken over, there has been very little new policy aside from water taxes and a commuter rail service between Auckland, Hamilton and Tauranga.

Total Labour Party spending is now at $19.4 billion, which is within $1 billion of Andrew Little’s Labour Party.

United Future removed

Peter Dunne’s resignation has led us to remove United Future from the Bribe-O-Meter as without Dunne there is almost zero possibility of United Future returning to Parliament.

Last week we criticised Mr Dunne for trying to buy himself into Parliament with taxpayer money. Taxpayers will be breathing a sigh of relief now that they won’t have to front up for Mr Dunne’s $4.7 billion of pork barrel politics.

Transparency Rating

As part of the Bribe-O-Meter, the Taxpayers' Union economic staff have assessed political party's transparency across policy detail and cost and given each a score out of five (see below). The most transparent parties have been National and the Greens. The least transparent is NZ First, closely followed by the Maori Party. 

Click here to visit the 2017 election Bribe-O-Meter

Key Findings (as at 22 August):

• National has promised $6.8 billion in new spending over the next parliamentary term. This equates to $3,920 per household. Transparency rating: 5/5
• Labour has promised $19.4 billion in new spending over the next parliamentary term. This equates to $11,242 per household. Transparency rating: 4/5
• The Green Party has promised $8.5 billion in new spending over the next parliamentary term. This equates to $4,939 per household. Transparency rating: 5/5
• NZ First has promised $23 billion in new spending over the next parliamentary term. This equates to $13,324 per household. Transparency rating: 0/5
• ACT has promised $5.4 billion in taxpayer savings over the next parliamentary term. This equates to $3,103 in savings per household. Transparency rating: 3/5
• The Maori Party has promised $12.2 billion in new spending over the next parliamentary term. This equates to $7,060 per household. Transparency rating: 1/5
• The Opportunities Party has promised $10.7 billion in new spending over the next parliamentary term. This equates to $6,199 per household. Transparency rating: 4/5

This morning, in partnership with our sister group, the Auckland Ratepayers’ Alliance, we published the 2017 "Ratepayers' Report" - our local government interactive league tables. The tool allows ratepayers to see how their local council performs on metrics including average rates, staff numbers, liabilities per resident, and even CEO salary.

Ratepayers' Report is the result of months of work by our local government researcher, Garrick Wright-McNaughton.  We did it so that New Zealanders can easily compare their local council's performance and financial position against similar councils

Every dollar spent by a Council was earned by a hard working ratepayer. This tool allows ratepayers to see how that money is being spent.

Click to here to view the 2017 Ratepayers' Report

For most of New Zealand's territorial authorities, debts continue to increase, even on a per person basis. This is a worrying trend we highlighted back in 2014 when we last published the league tables.

From an Auckland persepctive, the data shows why Auckland ratepayers, in particular, have cause for real concern. Council debt is now $22,189 per ratepayer, more than three times the national average of $6,989. Even with low interest rates, $839 of everyone’s rates is now required just to service the Council’s borrowing.

Ratepayers’ Report also reveals that Auckland Council has the second highest ratio of staff per residential ratepayer – one staff member for every 69 residential properties.

This strongly suggests that Auckland Council is overstaffed. Whilst a high staff to ratepayer ratio can offer more face-to-face interaction, it requires significantly more funding. In comparison, Marlborough District Council employs a one to 97 staff to ratepayer ratio – representing a $200 difference in staff costs per residential ratepayer compared to Auckland.

Not only does Auckland Council have a lot of staff, it also pays them generously. Nearly fifteen percent are paid more than $100,000 per year compared to only nine percent in the general workforce.

Ratepayers' Report is available online and free of charge so all ratepayers can judge for themselves the performance of their local town hall.

Ratepayers' Report facilitates straightforward comparison of average residential rates using a formula first used by Napier City Council which allows for an 'apples to apples' comparison of average residential rates and charges. Only one Council, Kaipara District Council, was unable (or unwilling) to provide the Taxpayers' Union with the necessary information.

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

The previous Ratepayers’ Report was published in 2014. All territorial authorities (excluding Chatham Islands Council) are included.

Ratepayers’ Report is free and available to the public at www.ratepayersreport.nz

Note: All references to rates in the above comments, refer to residential rates.

Notable findings:

• Auckland Council is New Zealand’s second most indebted local authority, with liabilities per residential ratepayer of $22,189. More than three times the national average, only Waitomo District Council has more debt per residential ratepayer ($24,600). 
• Auckland Council has the second highest ratio of staff to ratepayers of New Zealand’s unitary authorities, with one member of staff for every 69 ratepayers.
• Auckland Council pays 15% of its staff a salary of over $100,000 per year. Of all of New Zealand’s city councils, metropolitan councils, and unitary authorities, only Palmerston North pays proportionally more of its staff a salary of over $100,000 (18%). 
• The highest average residential rates in New Zealand are in Western Bay of Plenty ($3,234 per year).
• The lowest average residential rates in New Zealand is the Mackenzie District ($1,637 per year).

Tens of thousands of New Zealanders still can't get through to the IRD, according to new figures which show only a slight improvement in the numbers of callers being rejected by IRD due to under-staffing. In the space of a month, almost 170,000 callers have not even made the hold tone, making up 31% of callers who called IRD in the space of a month. The data comes after the Taxpayers' Union revealed last month that 55% of callers to IRD were being rejected over a 3-day period.

"These numbers come off the back of the IRD announcing that it will cut its staff force by about 1500 in the coming years," says Researcher Matthew Rhodes. "How are these cuts justified when there is not even enough staff around to pick up the phone?"

"A significant increase on the number of forecasted calls has meant that IRD have had to ‘cap’ 31% of calls coming in. When IRD say they 'cap' calls, what they actually mean is hanging up on customers before they even make it to the hold music."

"Either there is something wrong with the forecasting procedure, or staffing levels are simply not adequate to meet the demand. What’s equally as concerning is 73% of the calls being rejected are enquiries relating to personal tax – the very people who need the most help when it comes to tax time. Paying tax is bad enough but having to wait hours on the phone only to be hung-up on, is a slap in the face by the taxman."

"These figures also show that it's not just at peak tax time that the phones are going unanswered - the problem is rife."

See IRD's OIA response below: 

Bribe-O-Meter week 3: All minor parties added, NZ First spending in excess of $22.5b

In this weeks update, all parties currently in Parliament have been added to the Taxpayers’ Union Bribe-O-Meter, which tracks the costs of election policies as they are announced.

To date, NZ First has the most expensive set of policies, totalling $22.5 billion in new spending over the next three years. This is equivalent to $13,024 per household. 

It should be noted that this is a conservative estimate and likely understates the true cost of the NZ First manifesto. A significant amount of NZ First policies are yet to be included because they lack sufficient detail.

ACT are the only party that will reduce Government spending, by eliminating $3.4 billion of corporate welfare and reversing the welfare increases announced in Budget 2017. ACT will save taxpayers $5.35b over the next three years – or $3,103 per household. 

United Future has promised $4.7b in new spending, or $2,737 per household. This comprises an estimated $2.7 billion to build the Ngauranga Gorge Tunnel and $1.9 billion to abolish tertiary tuition fees.

The Maori Party are yet to release their election manifesto so the only policy included to date is IwiRail, which is estimated to cost $1.55b over the next parliamentary term.

There have been few changes to National, Labour and the Green Party from last week. 

NZ First have proposed a set of policies that are largely ambiguous and lack detail. $22.5 billion is by far the most expensive set of policies of any party so far. However, even this understates the true cost of the NZ First manifesto because a significant number of policies lack enough detail to be included.

Notably expensive NZ First policies include: 

• Write-down of student debt: $4.6b per annum
• Buy-back of Meridian, Mighty River Power and Genesis: $4.3b
• Northland rail: $850m
• Installing 200km of new median barriers: $443m over three years
• Banning 1080 and undergoing pest control with solely traps: $386m over three years
• Reintroducing a non-commercial public service television channel: $45m over three years

It is worrying that New Zealand First shows no inclination of explaining to voters how they intend to fund their policies. They promise the world without any indication of how it will be fulfilled.

As it stands, and not accounting for some crossover of policy, a Labour-Green-NZ First coalition would spend $50 billion extra over the next parliamentary term. Considering Core Crown revenue is expected to be $80 billion in 2017, this figure is material.

Next week we intend to release policy costing’s for the Opportunities Party.

Key Findings 

• National has promised $1.4 billion in new spending over the next parliamentary term. This equates to $814 per household.
• Labour has promised $17.6 billion in new spending over the next parliamentary term. This equates to $10,223 per household.
• The Green party has promised $8.1 billion in new spending over the next parliamentary term. This equates to $4,692 per household.
• NZ First has promised $22.5 billion in new spending over the next parliamentary term. This equates to $13,024 per household.
• ACT has promised $5.4 billion in taxpayer savings over the next parliamentary term. This equates to $3,103 in savings per household.
• United Future has promised $4.7 billion in new spending over the next parliamentary term. This equates to $2,737 per household.
• The Maori party has promised $1.6 billion in new spending over the next parliamentary term. This equates to $899 per household. Although this only includes one policy (the Maori party manifesto is expected to be released this week). 

You can read detailed breakdowns of each party's policies (and the costs) here:

• National Party cost breakdown
• Labour Party cost breakdown
• Green Party cost breakdown
• New Zealand First cost breakdown
• Maori Party cost breakdown
• ACT Party cost breakdown

• United Future cost breakdown
  

Click here to view the Bribe-O-Meter

The Taxpayers’ Union mascot, "Porky the Waste-hater", visited Rotorua this morning, and awarded the Rotorua Mayor a “Supreme Achievement Award” for imagination and achievement in wasting public money, following the Mayor’s decision to spend $90,000 of public money to import five tonnes of mud from South Korea. The mud is to supplement the local variety at Rotorua’s ‘Mudtopia' festival later in the year.

After some waiting, Ms Chadwick failed to front (apparently she was too busy). Nevertheless, an official accepted the award on her behalf.  

The award recognises the most creative use of taxpayers’ money we have seen yet. The favourite pastime of our mascot Porky is playing in mud, but even he condemns this total waste of money.

Steve Chadwick has created New Zealand’s very own ‘coals to Newcastle’ story.  Even the BBC has covered this ridiculous and frivolous waste.

The whole reason Rotorua Lakes Council received a tourism grant from MBIE was to promote Rotorua and its mud as a destination.  Instead, these geniuses flew to Korea and used the money to buy the foreign variety.

We elect politicians to be guardians of the ratepayer and taxpayer purse.  Unfortunately, that’s clearly not happening here in Rotorua.

What makes this Council’s behaviour particularly galling is the fact that Councillors tried to defend the spending in local media by saying that it’s ‘only taxpayer’ money, since a large amount was funded from an MBIE grant. What a disgraceful attitude to the hard-working taxpayers who earned that money.

 

The Taxpayers’ Union is repeating its popular election costing tool with the launch of the 2017 General Election Bribe-O-Meter to keep track of the cost of party manifestos in the lead up to polling day.

The Bribe-O-Meter provides transparency on what the promises made by political parties will cost and it holds to account politicians who make up numbers when announcing policies.

The Bribe-O-Meter is the most comprehensive independent policy costing project undertaken in New Zealand and was first launched prior to the 2014 election and was run again for the 2015 Northland by-election. 

The first release of the Bribe-O-Meter shows all current proposals by the National and Labour Party. Minor parties will be added in the next few weeks, as well as updates for any new policies by the two major parties.

To see the most up-to-date version of the Bribe-O-Meter, click here or on the image below. 

Q&A:

What is the Bribe-O-Meter?

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. Costs only include policies that will fall during the next election cycle (Budget 2018 to Budget 2020).

Budget 2017 is used as a baseline. So only policies that deviate from Budget 2017 are included in the Bribe-O-Meter. Items of spending contained in Budget 2017, which a party proposes to cut are subtracted from a party's total figure.

Who provides the figures for the Bribe-O-Meter?

Both internal and external economic advisors produce the Bribe-O-Meter figures. Political and communications personnel at the Taxpayers' Union are not involved in the Bribe-O-Meter reports.

How often will the Bribe-O-Meter be updated?

The Bribe-O-Meter will be updated on a weekly basis.

Are the graphics free to use?

Yes, the media are free to use the graphics, but we ask that they are attributed to the New Zealand Taxpayers' Union.

What were results of Bribe-O-Meter in 2014?

The results can be found at http://www.taxpayers.org.nz/bribe_o_meter_2014 

The Taxpayers’ Union can reveal that over $7 million of taxpayer money has been spent on the power bills of 94 of New Zealand’s largest companies since July 2014. The Energy Efficiency and Conservation Authority’s (EECA) ‘large energy users programme’ provides funding to businesses, in an attempt to encourage them to reduce energy use. Of this $7 million, more than $1 million has been wasted on 'initiatives' which haven't recorded any energy savings to date.

Taxpayer money doesn’t need to be spent telling the country’s largest power users to save power. All of these companies pay millions for power, and have every interest as it is to lower their energy use.
 
As a lawyer, I used to act for an association of major electricity users. If the EECA don’t think that the corporations at the big end of town aren’t looking at how electricity costs can be saved, they are delusional.
 
This whole regime is a little bit of a rort. Electricity users are taxed so that officials can tell people to use less power, meanwhile, people rightly scratch their heads about why electricity is so expensive.

We asked how much money has been recovered from companies where taxpayers' money has been thrown at projects where the promised energy savings cannot yet be demonstrated, and it appears that not a single dollar has been recovered.
 
At best, it’s a waste of money and pointless, at worst, it is corporate welfare in an environmental jacket, paid for by kiwis who have to pay more to turn on their heater.
 
A response to our Official Information Act request shows:

• - A total of $7,086,004 has been paid to companies since July 2014, up until the 21 March 2017 (the date of release by EECA);
• - The largest payment was made to ANZCO Foods Limited, who had received $668k since their partnership with EECA began in 2012;
• - Around $1.1 million of funding has been delivered to corporations who had not recorded any energy savings to date. 

See the response below:

Under the large energy users programme, the country’s largest energy users can enter into an agreement with EECA to enter co-funded projects, with up to 40% provided by EECA, which aim to reduce the company’s energy use and emissions. 

More information can be obtained on EECA’s website: https://www.eecabusiness.govt.nz/funding-and-support/support-for-large-energy-users/

Up to 55% of calls from taxpayers are being rejected by the IRD because it does not have enough staff rostered on to answer the phones, according to data supplied to the Taxpayers' Union covering a 2-week period in May this year.

At tax time, the least the Government could do is make sure it answers the phone," says Jordan Williams, Executive Director of the Taxpayers' Union. "On each of the three days the IRD have had to cap the calls coming in, they didn't even answer the number of calls their own estimates said they could expect.

These problems with the phones came on top of significant downtime of the IRD's website recently.

Paying tax is bad enough but having to wait hours on the phone only to be hung-up on, is a slap in the face by the taxman.

IRD's slogan used to be 'We're here to help'.  Nowadays, you're lucky if they're even there.

The Green Party’s attempt to increase the welfare state in their policy launched over the weekend, is not only an unnecessary burden on taxpayers but also founded on a misunderstanding of the economic realities facing New Zealand.

Firstly, the Green's claim that inequality has been increasing in New Zealand. This is quite simply not true. Two recent reports by the New Zealand Initiative and NZIER, respectively, demonstrate that inequality is unchanged in over two decades.

Secondly, the Green's policy to increase the minimum wage by $2 an hour, and eventually index it to 66% of the average wage, comes in spite of New Zealand already having the highest minimum to average wage ratio in the OECD. As it currently stands, the minimum to average wage ratio in New Zealand is approximately 0.52. This is significantly higher than other comparable countries such as Australia (0.44), the UK (0.41), Canada (0.40), and the US (0.25).

The irony is that indexing the minimum wage to the average wage may become self-fulfilling under a Green Government. Their combination of policies deters growth, innovation and productivity, as well as pours away taxpayer money. It is therefore quite possible that the average wage will fall – achieving their 66% average wage policy without even having to increase the minimum.

The Greens do not seem to grasp the concept that New Zealand can only get wealthier and increase living standards if we become more productive, innovative, and increase output. The Greens seem to think that disincentivizing the productive and rewarding the unproductive will make us better off.

The Greens are the only party to date who has proposed a tax increase, in the form of a new 40% top tax rate. Not only is this envy politics, but it is quite alarming that when the Governments books project enormous surpluses into the foreseeable future, the Greens still don’t think New Zealand taxpayers are parting with enough of their money.

 

The Taxpayers’ Union can reveal the Human Rights Commission’s recent “Give Nothing To Racism” anti-discrimination campaign has been funded by discriminatory levies payable only by international students and new migrants.

The Human Rights Commission campaign featuring advertisements of Neil Finn and Taika Waititi was funded from the Export Education Levy, a tax paid by international students enrolled in New Zealand institutions, and a separate targeted levy payable solely by migrants.

What total hypocrisy by the race relations commissioner, Dame Susan Devoy and the Human Rights Commission. On the one hand, they lecture New Zealanders how sinful it is to make the slightest jest on stereotypes based on race, but on the other are more than happy to apply for and take funding from a pool funded from a racist tax.

Taking advantage of a tax based on race is ten times worse than any of ‘casual racism’ jokes the HRC’s propaganda campaigns lecture us against

In emails to the Taxpayers' Union (in addition to the material below) Ms Devoy’s staff initially tried to argue that this area of spending shouldn’t be of interest to the Taxpayers’ Union because they claimed the foreigner's levy income isn’t 'taxpayer money’. We find that deplorable. Claiming foreign students aren’t taxpayers because they’re not New Zealanders. There’s an R-word for that attitude, and maybe her office needs to have a good look at themselves in the mirror before they get back on their usual high horse.

The Dunedin Mayor’s pitch to local councils in his campaign to be elected the new president of Local Government New Zealand is nuts.
 
Despite the vast majority of ratepayers considering the move silly, Dave Cull wants to use ratepayers’ money to lobby the government to force cat owners to register their cats.  

The proposal would also see annual cat fees, cat curfews and even cat rangers to patrol the streets looking for cats off their designated property, or breaching curfew hours (yes really!).

This is the ultimate in the local government trying to find expensive solutions to a problem that doesn’t exist.

Earlier in the month, LGNZ released its latest performance survey showing record low levels of confidence in the decision making of local government.  With the so-called ‘leaders’ of the sector too busy talking about cat rangers to focus on New Zealand’s enormous infrastructure deficit, no wonder local government is in crisis.

To sign the petition to stop this ridiculous policy click here.

NZ First has announced its ‘carpet policy’ - to line all Government offices with wool carpets.

NZ First are calling for wool carpets to be put back on the floors of government departments and state houses.

Party leader Winston Peters believes the move would revitalise New Zealand's declining wool industry and make for better building.

It's a clear bid for the rural vote, which NZ First have been chasing ever since Peters' win in Northland in 2015.

What wasn't mentioned in Mr Peters' speech is that the cost would be approximately $120 million, based on the Government Property Group’s estimate of Government floor space.

While smarter carpets for government bureaucrats may be appealing to some, in comparison to what $120 million will buy you in nurses, policeman or teachers, we’re not so sure.

In another context, $120 million is the income tax take of over 6,000 average New Zealand households. The Taxpayers’ Union questions whether taxpayers would really get $120 million of value for bureaucrats having wool carpet and a more comfortable walk around their office.

In the lead-up to the election, we would encourage all political parties to provide costings with their policy announcements. If not, the Taxpayers' Union will be here to help.

Notes:
• Using a standard price of a woollen carpet of $79 per square metre, and a floor space of 1,524,524 metres squared, the total cost is $120,437,396.
• If new carpets were only installed as part of usual replacements, the marginal cost of wool is $60 million to $93 million (in today's dollars) more than usual synthetic commercial carpets

In my opinion piece in Wednesday's New Zealand Herald, I laid out a list of reasons why a sugar tax on soft drinks would be a bad piece of public policy and would do little, if anything, to reduce obesity rates.

In brief, I pointed to the failure in other jurisdictions - such as Mexico and Denmark – to reduce obesity. I addressed the common empirical oversight by advocates to not account for substitution of consumption to other high-calorie goods. I also argued that soft drink consumption is relatively inelastic – it takes a relatively large price change to induce just a small reduction in consumption. This price hike is regressive and hurts the poor the most. Also, given soft drinks only make up 3.5% of non-alcoholic beverage consumption it seems nonsensical to target a tax at a single ingredient of a single product as a remedy for reducing obesity. And lastly, I indicated my unwillingness to defer health decisions to government bureaucrats who purport to know what is ‘good’ for me. 

Click here to continue reading.

Today we have released our latest report, ‘Socialism for the Rich’, by Jim Rose. The report shows that the annual cost of corporate welfare is now $1.6 billion - or $931 per New Zealand household.

‘Socialism for the Rich’ collates the costs of all the corporate welfare expenditure in Budget 2017. It shows that the company tax rate could be six percentage points lower if these favoured handouts were abolished and spread fairly across all New Zealand businesses.
 
Instead of rewarding profitable businesses with an across the board tax cut, these subsidies pick winners by directing subsidies to businesses that cannot keep afloat on their own.
 
Budget 2017 has allocated $294 million to commercialising science and innovation. In the past, the Government has directed investment at ‘public good’ science - research and development that has low commercial viability. Now, funding is going towards trying to commercialise technologies in the private sector. It’s socialised costs for privatised profits.
 
A further $148 million is going towards subsidising the film industry, $12 million less than the last budget. Since 2008, $997 million of taxpayer funds have been spent trying to attract the glitz and glamour of Hollywood.
 
The largest recipient of taxpayer funded corporate welfare is KiwiRail. The latest budget has allocated $396 million to KiwiRail, a 50% increase on the previous year. KiwiRail has now received more than $4 billion in taxpayer handouts since 2008 despite being valued as a $1.5 billion liability.

Corporate welfare is not only a waste of taxpayer money but also counterproductive. Look at Emirates Team New Zealand. Removing the direct corporate welfare saw Team New Zealand bring home the Auld Mug. Forcing private businesses to compete on their own footing, rather than rely on government handouts, will inspire competition and innovation. On the other hand, corporate welfare slows down the boat.
 
The report's author, Jim Rose, says, “The role of government is to provide essential public goods and social welfare that the market cannot. This Government has significantly overreached this role and actively engaged in picking winners and propping up failing businesses.
 
Key Findings:

• Corporate welfare in Budget 2017 is $1.6 billion, an increase of $203 million on the previous year's budget and the highest since 2008.
• That cost is the equvilent to $931 per household.
• $394 million is going to KiwiRail bailouts (50% more than the last budget).
• KiwiRail has received more than $4 billion in bailouts since 2008.
• $294m is being spent on commercialisations of science and innovation.
• $212m is allocated to Primary Industries (i.e. irrigation), an increase of $103 million since the last budget.
• $148 million is allocated to subsidising the film industry, a $12m decrease from the last budget.

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

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

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

 

 

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

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

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

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

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

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

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

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

Key findings:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. We like markets — a lot. We think that markets are by far the best way of organising most human affairs that involve scarce resources, because they align people’s incentives in ways that communicate where resources can be used most efficiently, and give people reasons to come up with new ways of using existing resources. We are proud of New Zealand leading the world in implementing a tradeable quota fishing rights management system.  This serves to prevent the near-certain degradation of the natural resource when in common ownership.  We want to harness markets and market-like systems in areas they’re not present at the moment — healthcare, education, water allocations, organ allocations, traffic congestion, land-use planning.
   
   
2. We base our beliefs on empirics, not principles. There is an unlimited number of stories that you can tell about the world, but only a few are true.  You find out which are true by comparing the stories to reality with experiments and throwing away the ones that don’t fit.  It doesn’t matter if a theory appears to be internally coherent — if it can’t stand up to experimentation, it is probably wrong.  In particular, quantitative empirical research is what we look for.
   
   This annoys our libertarian friends.  We appreciate the inefficiency of the ACC-model and the necessary health and safety approach lacking economic incentives (and safeguards) created by personal injury tort-law.  Nevertheless, we wouldn’t give it up in favour of our previous legal lottery – where fault (and the ability to pay by a tortfeasor) is determinative of whether compensation is receivable following injury.  It is not perfect, but better than the alternative.
   
   
3. We are liberal consequentialists. A system is justified if it is the one that best allows people to live the lives that they want to live, or makes them happiest or more satisfied than any other.  There are no inherent rights that override this.  People’s wellbeing is all that matters, and generally individuals are best at defining what is best for themselves.  We are suspicions of big government, and appreciate that, in general, people make better choices about how to spend their money than public agencies or politicians.
   
   
4. We care about the poor. Caring about people’s wellbeing leads us to caring about the worst-off people. Usually an extra $200 makes a pauper better off than it makes a millionaire.  This diminishing marginal utility means that poor people’s lives are the easiest to improve for a given amount of time, energy and money.
   
   
5. We care about the welfare of everyone in the world, not just those in NZ. It’s natural to feel more in common with people who live near you and live like you, just as it’s natural to care much more about your family than about strangers. But when it comes to policy, we care about improving everyone’s lives, wherever they are. Increased international trade, less barriers, and adoption of ‘neo-liberal’ market reforms, have seen extreme poverty fall from 44 percent in 1980 to around 10 percent today.  We know this is a good thing, even if we would prefer that developing countries worked harder and faster to bring their labour standards up to par.
   
   
6. We try not to be dogmatic. Testing your beliefs against the world requires you to be prepared to throw out the ones that are wrong, even though it’s often painful to do so. This means that we have to be willing to change our minds, contradict our friends, forsake our heroes, and be unpopular with fellow-travellers who think that they’re obviously right.  Sometimes we wonder whether we’re contrarian, or find ourselves respecting those who we disagree with, but value their holding truth to power.
   
   One way to deal with the emotional costs of this is to internalise the virtue of open-mindedness so that changing your mind makes you feel just as good as being ideologically consistent once did.
   
   
7. We think the world is getting better. And, really, it is: pro-market ideas have taken hold nearly everywhere, raising living standards by an extraordinary amount for a huge number of people. The centre-ground consensus in nearly every developed economy is extremely pro-market and liberal compared to where it was fifty years ago, and although they are often less pro-market than they were one hundred years ago, that is offset by major advances in the rights of women and non-whites.
   
   Assuming life-expectancy is the best single measure of economic, health and social progress, the world is a tremendous place. Two hundred years ago no country enjoyed average life expectancy of more than 40 years old.  Today, no county’s population has an average life expectancy of less than 50.
   
   
8. We believe that property rights are very important. Predictable and formalised ownership of scarce resources is extremely important. It allows people to make long-term plans for the future, which incentivises improvement of their own circumstances. Overriding property rights capriciously undermines the incentive people have to hold off from consuming and invest in their futures instead, because they will be unsure about whether they’ll actually get to enjoy the returns of that investment. This is extremely important in the developing world, where weak or nonexistent property rights preclude capital accumulation and growth.
   
   
9. But we’re comfortable with redistribution, in principle. Because we’re consequentialists we don’t think that property rights are morally significant in and of themselves — they’re a useful rule that allows the economy to function properly but there is no intrinsic value to them.  People don’t really deserve the talents they’re born with any more than they deserve to have been born in a rich country rather than a poor one, or to be born in 1996 rather than 1896.  Because of this, redistributing wealth or income from lucky people to unlucky people may be justifiable, if it’s done without depressing economic growth too much.
   
   Too much redistribution can have bad consequences because taxes tend to depress investment and growth, but too little redistribution has bad consequences too — poor people don’t live good enough lives.  A neoliberal is someone who believes that markets are astonishingly good at creating wealth, but not always good at distributing wealth.
   
   
10. We think the rule of law is important. We understand that there is a difference between the rule of lawyers and the rule of law.  We approve of English-law bright line doctrines: law which is certain and predictable, as opposed to principle-based and interpretive or flexible.  Even if regulation isn’t perfect, better to have certainty so people can order their businesses and lives around predictable regulative outcomes.  We are suspicious of regulatory discretion, applaud permissionless innovation and generally welcome technological innovation/disruption.

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

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

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

Joyce’s budget soothes path to re-election

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Budget 2017 overview - a taxpayer perspective

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Budget 2017: Guide to Possible Tax Changes

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

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

Bracket Creep

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

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

Fiscal Impact: $0.96 billion

A “Meaningful Tax Cut” - John Key

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

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

Fiscal Impact: $3 billion 

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