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When phones go down, Dyson knows who to call

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

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

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

Margaret Thatcher Conference on Liberty: Live streaming

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

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

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

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

Greater Wellington loses $43million on one building

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

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

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

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

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

Notes:

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

 Letter from GWRC to NZTU 23 May 2014

 Attachment 1 to OIA 2014 065 - Telfer Young Market Valuation

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

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

 

Ratepayers' Report

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

 

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

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

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

Some highlights: 

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

Leaked report shows efforts LGNZ making to protect poor performing councils

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

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

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

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

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

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

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

Grant Thornton Report_Local Government a Financial Snapshot

Herald covers Taxpayers' Union outrage taxpayer funding joke party

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

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


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

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

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

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

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

Click here to read more.

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

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

GST and Bodies Corporate

What is proposed?

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

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

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

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

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

Comments

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

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

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

The Proposals are Not Fair

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

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

It Results in Inconsistent Tax Treatment

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

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

The Proposal Will Increase Compliance Costs

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

Legislation By Press Statement Is a Mess

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

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

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

Waste watch: Auckland Council funds conference on polyamory

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

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

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

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

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

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

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

Happy Tax Freedom Day

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

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

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

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

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

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

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

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


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