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Briefing paper: The jobs cost of taxpayer-funded projects

The New Zealand Taxpayers' Union can reveal that the $11.7 million payment to the Green School will result in 25 fewer jobs in the private sector.

This calculation was made based on a new briefing paper, The jobs cost of taxpayer-funded projects, released by the Union today.

Union spokesman Louis Houlbrooke says, "Our latest research examines work by the Treasury and New Zealand economists estimating the 'deadweight loss' of our tax system this is the measure of the cost of taxation that is not the amount of money taken from the private sector, but the way the taxation motivates people to work less, and spend and invest less, leading to economic distortions."

"Because government spending is funded via taxation, we can examine the deadweight loss of handouts such as that announced by James Shaw last week."

"Research from local economists leads us to a conservative estimate that the deadweight loss of tax (or the spending it funds) is about 15%. That means the Green School handout didn't just take $11.7 million from taxpayers; it cost the economy an additional $1,755,000."

"So how many jobs did this eliminate? Based on the government's own job creation estimates, a job can be created for around $70,000. That means the deadweight loss of the Green School handout cost the economy 25 jobs." 

"Too often, our politicians fall into the trap of thinking they can create employment with increased spending. But if that were true, high-spending countries like Greece and Spain wouldn't be facing employment crises. While it's true that economic stimulus is needed in the era of COVID-19, this needn't come in the form of giant cheques. Leaving this money in the economy via lower tax rates will allow money to circulate in a way that creates jobs passively, without costly perverse incentives."

Spending items singled out as examples in the briefing paper include:

• The $72.5 million support package for the racing industry generated $10.9 million of deadweight loss and cost the economy 155 jobs.
• The $1 billion annual allocation for the Provincial Growth Fund over the last three years has generated $150 million of deadweight loss per year and cost the economy 2140 jobs per year.

Opinion: Ratepayers deserve the right to fire their representatives

This op-ed is written by Taxpayers' Union Co-Founder Jordan Williams and was published in the print edition of The Northland Age on 3 September 2020.

Sir Winston Churchill said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.  He is right, but not for the reason opinion leaders now pontificate.

In modern times democracy is lauded for its ‘representation’. But if that were true, surely we’d want a system better at picking the best and brightest to ‘represent’ us. No, it’s not the representation that makes democracy great, it’s the opposite: the ability to sack our elected leaders – to ‘kick the buggers out’.

But as we’ve seen so often in local government, the chance to kick the underperforming, the dishonest, or the lame ducks out does not come round enough.  Auckland was lumped with Len Brown for three years too long after his antics and abuse of office became public. We’ve now got a Mayor under investigation by the Serious Fraud Office and offering no assurances that he will stand down if charges are laid.

Voter recall options are gaining popularity overseas and it's time New Zealand had the conversation. That’s why the Taxpayers’ Union has launched a proposal with other ratepayer groups advocating for the introduction of recall elections at all levels of local government, including District Health Boards.

A motion to recall an elected official would need the signatures of at least ten percent of voters in that official’s constituency. This is called the trigger threshold. If the threshold is reached, there will be a poll to determine if the representative should be recalled. If recall is supported by a majority, a by election would occur. A recalled official would be eligible to stand in that election (unless they are otherwise prohibited by existing law).

A recall option would improve democratic accountability by holding officials to account directly. When a local politician ignores public sentiment, misbehaves, or breaks an election promise, they would risk having to face the people again, prior to the next scheduled poll. The policy would enable voters to have a say within a term of office, rather than just at election time every three years.

It affirms the basic concept of “sovereignty of the people”. The right to elect should include the right to eject.

We propose some constraints, such as not allowing for a recall to be triggered within six months of a scheduled election and preventing the same official facing a recall election within six-months of winning an earlier poll. We also suggest the term of local government bodies could be extended by one year to four years, once the safety mechanism of recall elections is in place.

A ten percent trigger threshold is the same as applies for citizens-initiated referenda. For the Auckland Mayor, it would mean around 38,000 signatures would be required – not an easy task. A recall poll for an Auckland City Councillor could be triggered by around 11,000 signatures from the applicable ward.

With recall elections, Auckland ratepayers could have ejected Len Brown for his expense shenanigans, histrionics, and tabletop dalliances. Kāpiti Coast ratepayers could have ousted David Scott who refused to resign for more than a year after being convicted of indecently assaulting a female colleague by rubbing his genitals against her during a council morning tea.

It's time to return the power to the people, and ensure that our elected officials have voters firmly in mind as they exercise their civil decision making on behalf of us all.

The joint proposal paper, ‘Recall Elections for Local Government’, is available to read at www.taxpayers.org.nz/recall_paper

Police plan to turn motorists into cash cows

Title image

Did you see the news break yesterday that the Police are abolishing their 10km/h speed tolerance nationwide?

That means that from today Police will be issuing fines for going as little as 101km/h on the open road – even when passing another vehicle!

This Government has put up fuel taxes every year, and introduced the Auckland Regional Fuel Tax.  Now they’re using the Police as tax collectors.

Click here to sign our petition against this nasty revenue grab.

Road safety advocates have labelled the move as “petty, vindictive and ineffective”.  Deliberate speeding is one thing.  But unintentional speeding where it’s a few kms over, such as when a driver is not fixated on the speedo, should not be fined.  Crashes caused by speeding are seldom due to a driver doing one or two kms over the limit.

This new policy that will see thousands of New Zealanders fined for going only one or two kms over the posted limit – even while passing another vehicle.

Police Minister Stuart Nash can overrule this policy

The one person who can overrule this policy is the Police Minister Stuart Nash. 

Jordan knows Stuart pretty well from his electorate in the Hawke’s Bay.  Jordan says that Minister Nash will almost certainly buckle to public pressure if we put enough on him. 

We'll deliver the petition to the Minister when it reaches 5,000 signatures, but in the meantime, let the Minister of Police know you've signed by flicking him a message at s.nash@ministers.govt.nz.

Thank you for your support.

Louis circle


Louis Houlbrooke
Campaigns Manager
New Zealand Taxpayers' Union

PS. You can share our petition to keep the 10km/h tolerance on Facebook by clicking here.

Revealed: Taxpayer-funded ‘wellbeing’ goodie bags during Level 4 lockdown

Farro parcelThe New Zealand Taxpayers’ Union can reveal that the NZ Super Fund spent over $15,000 on “COVID-19 well-being parcels” from designer supermarket Farro Fresh for the Fund’s highly-paid staff over lockdown.

Taxpayers’ Union spokesperson Louis Houlbrooke says: “At a time when global markets were plummeting, and the fund’s investment portfolio was dwindling, the leadership at NZSF were focused on buying goodie bags for their well-remunerated staff.”

According to NZSF, the parcels included ‘sundry goods’ such as coffee and hot cross buns. Assuming every full-time staff member received a goodie bag, the average parcel cost about $106.

“The CEO of NZSF is paid around a million dollars per year.  Forty-five staff are paid more than $300,000. Pretty much everyone else is paid more than $100,000 – 121 out of 135 full-time staff.  These people do not need home-delivered hot-cross buns funded by taxpayers who are going without during COVID-19 lockdown.”

“The pandemic has once again highlighted the mismatch between the public and private sectors during an economic crisis. The unprecedented economic fallout of COVID-19 left many in the private sector reeling. Businesses unable to trade during the Level 4 lockdown were left scrambling to make up the losses on their balance sheets, with closures and lay-offs common.”

“In stark contrast, staff at NZSF enjoyed complete job security and hot cross buns while the taxpayers who fund their salaries were cutting back.” 

The Taxpayers’ Union requested the credit card statements of the NZSF from the 1st of March 2020 – 31 May 2020 under the Official Information Act. We found:

$9,782.00 spent on Farro Covid-19 wellbeing parcels on 2 April

$5,174.00 spent on Farro Covid-19 wellbeing parcels on 4 May

$89.50 spent on an individual Covid-19 wellbeing parcel from Baskits on 4 April

$88.58 spent on an individual Covid-19 wellbeing parcel from Baskits on 3 May

Other statements of interest included:

Inspired Accountants team building trip for corporate strategy team for $1359.90 paid for on 6 May – during Level 3 lockdown.

A canoe hire for $794.00 on 9 March.

Hand sanitiser for $568.80 on 6 March.

Renewal of a practicing certificate with the NZ Psychologists Board for $550.85 on 6 March.

A 10-year anniversary gift for a staff member for $515 on 24 April.

Lunch at White & Wongs for $156 on 23 March – the day it was announced New Zealand would enter Level 4 lockdown.

“Motivation morning tea” before working from home for the investments team, for $107.61 on 23 March.

Meals from Farro for a staff member “having difficult time during lockdown” for $94.97 on 2 April.

Taxpayer Update: Bloomfield ad | Recall elections | Burger subsidies

Labour uses Ashley Bloomfield for the election campaign

Bloomfield ad
On Saturday the Labour Party posted a new ad on its Facebook page. The ad was filmed in the Ministry of Health's contact tracing centre and included a number of public servants, including Dr Ashley Bloomfield (see the still image above).

This is disgraceful. Taxpayer-funded civil servants should not be made complicit in the governing party’s political propaganda.

And during an election campaign, it is especially important that the Prime Minister does not use her special access to public servants in a way that advantages her political party. You can read our full comments here.

Shortly after we (and ACT) drew attention to these problems, Labour took down the video for a re-edit. But it's hard to see how this ad can be salvaged.

We've lodged a complaint with the State Services Commission.

Local leadership woes show need for recall elections

Tenby Powell

Two recent stories are sadly typical examples of failed leadership at the local level.

At Tauranga City Council, elected officials are calling for the resignation of Mayor Tenby Powell, who has apparently created a toxic culture, abusing colleagues in front of staff and causing one councillor to claim he hates working at the Council.

Meanwhile, at Canterbury DHB, seven out of 11 executives have resigned, with the chief medical officer blaming the Board's adversarial culture.

Frustratingly, in both cases local voters have to wait two years for the chance to eject those responsible.

We say that's not good enough. In the latest episode of Policy in 60 Seconds, Islay explains how recall elections could be introduced in New Zealand to boot out failed politicians before their term is up:

Click here to watch on Facebook.

Last week we teamed up with the Ratepayers' Alliance and the Rodney-based Northern Action Group to launch a joint campaign for recall elections.

Here's Jordan discussing the idea with Peter Williams on Magic Talk.

You can read the policy proposal paper here, and add your voice to the campaign here.

Burger subsidies? There's got to be a better way

Burgers

The Restaurant Association is campaigning for a taxpayer-funded subsidy on dining out.

Usually, a business group wouldn’t dare ask for such a blatant special favour. But in the age of COVID-19, the floodgates have opened with the Government agreeing to handouts for favoured sectors such as the racing industry, and to fashionable businesses like AJ Hackett Bungy.

Financial assistance should apply fairly to all. A temporary cut to GST, for example, would benefit all struggling businesses by encouraging consumers to bring forward spending, whether that be on eating out or on a new washing machine.

I made the case for a temporary GST cut in this op-ed on Interest.co.nz.

We'd also suggest that instead of handouts, many businesses could benefit from regulatory relief which doesn’t cost taxpayers a cent. In fact, the Restaurant Association was on to a good thing earlier last week when it suggested restaurants should be able to sell alcohol with their deliveries and takeaways.

$8.8 million beautification of council chamber is obscene

WRC office

Ratepayers in the Waikato are forking out $8.8 million for the Regional Council's fit-out of its new office.

The Chairman, Russ Rimmington, complained that before renovation the chamber looked like a badminton hall and had ‘no style’.

Diddums. Self-important regional councillors might think they’re entitled to more extravagant surroundings, but most ratepayers will never see the inside of this building.

The Council doesn’t even own the building, so the $3.1 million spent on building works won’t be reclaimed at sale down the line. From a ratepayer perspective, this money may as well have been tossed in the river.

More Debt Monster sightings

After a brief disappearance during the new COVID-19 outbreak, the Debt Monster is back with a vengeance.

New Zealand First staff were alarmed to see him approaching their campaign bus outside Parliament, and drove away moments after this photo was taken:

DM with bus

Later, he was seen trying out Trevor Mallard's $572,000 slide:

DM on slide

Witnesses report he's a big fan.

The Debt Monster even tried to give James Shaw a hug at a business breakfast, but the Green Party co-leader wouldn't face him. 😔

DM with Shaw

Taxpayer Talk podcast going strong

Two more episodes of our Taxpayer Talk podcast are available.

In the first, Islay sits down with former Treasury economist Michael Reddell to discuss what the Reserve Bank's money-printing and interest rate-cutting means for the economy. Listen here.

In the second, I challenge the CEO of Tourism NZ to explain why his agency is spending $10 million on an international tourism campaign while the borders are closed. Listen here.

You can find all our Taxpayer Talk episodes on Apple PodcastsSpotifyGoogle Podcasts, and iHeartRadio.

Have a great week,

Louis circle

A picture containing mirror

Description automatically generated
Louis Houlbrooke
Campaigns Manager
New Zealand Taxpayers' Union

 

Media coverage:

Newshub  ACT's David Seymour says Labour acting like a 'one-party state' after releasing video featuring shot of Ashley Bloomfield

Newstalk ZB  Labour campaign ad featuring Ashley Bloomfield has been taken down

Stuff  Mega polytech has 21 staff with chief executive in their title

Stuff  Restaurants want Government to spend $27m subsidising meals

Northland Age  A pattern of sloppiness

KiwiBlog  Taxpayer Talk: Michael Reddell on Unemployment, Negative Interest Rates and a Temporary Cut to GST

Sunday Star-Times  The price of our vain belief in Covid-19 exceptionalism

Interest.co.nz  If we can't cut the OCR, how about GST?

Stuff  'Don't blame us, we don't decide what we're paid' - the catchcry of mayors and councillors everywhere

NZ Herald  Covid 19 coronavirus lockdown: Auckland Mayor Phil Goff on extension - 'Do not panic buy'

Northland Age  A tale of two speeches

Homepaddock  No indexation = tax increase

Sunday Star-Times  What NZ's economy can learn from the myth of Franklin Roosevelt's New Deal success

Otago Daily Times  Councillor's $100k-plus salary for 30hrs a week

Timaru Herald  Another SCDHB surplus 'sets an example' for others

 

Proposal paper: A recall option for local government

The New Zealand Taxpayers’ Union, its sister group, the Auckland Ratepayers’ Alliance, and Rodney-based ratepayer group Northern Action Group, are today launching a joint campaign and proposal paper calling for the introduction of recall elections across local government, including District Health Boards.

To support this campaign, click here to email the Labour and National Parties calling on them to adopt recall elections into the their 2020 election manifestos.

Louis Houlbrooke a Taxpayers’ Union spokesperson says:

“Recall elections affirm the basic concept of ‘sovereignty of the people’. In a democracy, it is a fundamental right to elect representatives and that should also include the right to remove them from office and replace them at any time. It is also suggested in the report that the term of local government bodies be extended by one year to four years, once the safety mechanism of recall elections is in place.”

Jo Holmes a Ratepayers’ Alliance spokesperson says:

“Ratepayers deserve the right to fire their poorly performing representatives. We’ve had Len Brown, and the pain of having to wait three years to get rid of a lame-duck mayor after the expose of his abuse of office. Now we have a Mayor facing an SFO investigation, with no way to get rid of him should charges be laid.”

William Foster a Northern Action Group spokesperson says:

“A right to elect should mean a right to eject.  Ratepayers deserve the right to fire their poorly performing representatives.  We’re backing this proposal to increase the democratic accountability of elected officials.”

Under the system proposed, a motion to recall a named elected official will need to acquire signatures from 10% of the number of voters who last voted in the constituency. This is called the trigger threshold. If the threshold is reached, there will be a recall poll to determine if the representative should be recalled. If recall is supported by a majority, the official is recalled. There would then be a special election to fill the vacant position. A recalled official would be eligible to stand in that election (unless they are otherwise prohibited by existing law).

Mr Houlbrooke says:

“We are encouraging people to express their support for recall elections and put it on the political agenda for the coming election. To aid this, we have built an email tool which will allow people to email Local Government Minister Hon Nanaia Mahuta and the National Party local government spokesman Lawrence Yule directly. The policy could easily be adopted for the October’s election.”

Recall Elections for Local Government, a joint proposal paper, can be read below.

Taxpayer Talk: Tourism NZ and its new $10m international ad campaign

Despite our closed borders, Tourism NZ is spending $10 million on a new campaign meant to bring overseas travellers to New Zealand. The campaign is supposed to bolster New Zealand’s international brand of “kaitiaki, manaakitanga, and integrity”. In the latest episode of Taxpayer Talk, Louis questions Tourism NZ CEO Stephen England-Hall on whether this will deliver value for taxpayers.

You can subscribe to Taxpayer Talk via Apple PodcastsSpotifyGoogle Podcasts, iHeartRadio and all good podcast apps.

Barrie Saunders: COVID revisited – brickbats and suggestions

A few months back I gave the government a seven out of ten for its handling of COVID.  That assessment has plummeted in over the last week, as revelations about its management of at risk border workers has shown astonishing gaps.  There has been a breakdown in the MoH-Ministerial relationship in respect of expectations and communication, and now the panicked dictate to the port sector.

It is clear that a majority of staff working to protect us all from high-risk arrivals to New Zealand have not been given the tests that Minister Hipkins had assured the public were happening.  Rather than being grumpy about this failure of the Ministry/DHBs to perform as expected he, and the public, should be outraged.  We are all entitled to know exactly how the Minister’s expectations were communicated to officials and see their explanation for what actually happened.

It is quite likely this failure to meet Ministerial and public expectations will result in thousands of people losing their jobs and businesses failing, as Auckland endures at least two weeks at level three.  This is not a simple oversight – it's a major public policy failure.  It fits a pattern of sloppiness, which started when then-Police head Mike Bush told Simon Bridges’ Select Committee that the Police were not following up on all people in self-isolation, as had been stated to be Government policy.

It reinforces the importance of a quality, efficient inquiry into how we have handled COVID from the beginning.

Having failed in the last 100 plus days to protect at risk workers, the public and the economy from the arrivals, last Friday the MoH issues an order to seaports:  “We now require everyone who works at the maritime border to get a test for COVID-19 over the next three days.”

This was presumably driven by the remote possibility that the Aucklander, who worked at a cool store, may have picked up COVID-19 from an imported product, that could have come via a seaport.

We have 13 ports that handle international vessels but it is very unlikely that any port, other than POAL or Port of Tauranga (POT), could have sent product to that cool store.  So why did such a blanket order go to all ports and why was the requirement the tests be done within three days when such a sloppy attitude was taken for months to the at risk workers, mostly at the airports and quarantine facilities?

Its understood after some pushback from the port sector the order was limited to the two major import ports.  It covers anyone who visited the port between July 21 and August 17.  Clearly those making the policy don’t understand how ports work.   Many businesses operate at the ports and when you cover everyone who has visited the two ports we could be looking at around 12,000 people altogether, who are widely dispersed in Auckland and Tauranga.

Did MoH check the local DHBs could actually do this testing within the timetable, or did they think this would happen within three days from the Friday decree by simply waving a wand?

In addition to the two above failures, it's apparent MoH has done zip since the first round to refine policy settings.  We still have the absurd nonsense of butchers, greengrocers and bakeries being banned from opening at the higher COVID levels thereby channelling all food business to the supermarket duopoly.  It's about safe practices not the product range.  Surely MBIE, which must have some understanding of business, could educate MoH and Ministers.

I sincerely hope we get on top of this latest outbreak very soon and we don’t end up like the state of Victoria.  However, as a matter of urgency whoever is in Government after the election will need to overhaul both the policies and operation of our pandemic system, because it has been found wanting far too many times.

There are two ways I think the pandemic could be better managed.  First equip pharmacies to do the testing.  Second have a mobile unit in at least Auckland to go to likely sites where people have COVID instead of sending them off to join some long queue.  We will get more outbreaks and pandemics and need an enduring system.

Barrie Saunders is the Chairman of the New Zealand Taxpayers' Union and a former Chair of the NZ Port CEOs Group. This piece was originally published on his personal blog at https://barriesaunders.wordpress.com.

Briefing paper: Cut GST for COVID-19 economic stimulus

GST paperA new briefing paper released by the New Zealand Taxpayers’ Union makes the case for a temporary cut in the rate of the Goods and Services Tax (GST) from 15 percent to 10 percent, mimicking what the United Kingdom Government did with VAT immediately following the Global Financial Crisis.

Policymakers are currently grappling with the question of how to spur spending in the economy as we face a recession. This question will become urgent as the wage subsidy scheme ends in September and we see the real effects of COVID-19 on our economy.

With the official cash rate already close to zero, monetary policy has become increasingly ineffective as a stimulus tool. This has seen politicians propose fiscal interventions, such as the Government’s interest-free business loan scheme, but these interventions are often poorly targeted and create perverse incentives.

Fortunately, our tax system already provides a sound, indiscriminate mechanism to encourage spending. A temporary cut to GST during the height of recession would encourage New Zealanders to bring forward consumption – similar to a cut in the official cash rate.

This spending would breathe life into revenue-starved businesses, ensuring they can continue to employ New Zealanders and keep supply chains unbroken.

We suggest a sunset clause kicking in after a year to avoid long-term deficit effects or politicians replacing the lost revenue with increases to more economically damaging taxes.

On a yearly basis, the fiscal impact of this cut would be a $7.36 billion reduction in reduction in revenue for the Government. However, this impact could be reduced implementing the policy for a shorter period of time.


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