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Campaign launched: Public sector pay cuts for COVID-19 relief

Today we have launched a new campaign to temporarily reduce the remuneration of politicians, senior bureaucrats, and council bosses to match those voluntary and involuntary efforts in the private sector where pay is being slashed.

We’re asking the public sector to fairly share the burden of the economic crunch by cancelling all pay hikes until the economy has recovered. We’re also asking elected officials, public sector CEOs*, and their leadership teams** to take a 12-month twenty percent pay cut.

A temporary salary reduction for those paid the most in the public sector would be a prudent and compassionate response to the pressures faced by households and businesses across New Zealand. Business leaders predict unemployment to rise to around ten percent in the coming months, and private sector bosses are taking financial haircuts to limit the impact on lower earners.

The average public sector salary is around a third higher than that of the private sector. They also have the luxury of far higher job security. A twenty percent pay cut is a small sacrifice in these extraordinary times when so many New Zealanders are losing their jobs.

A petition for taxpayers to support the campaign can be signed at www.paycut.nz

>> Click here to add your name in support <<

The Taxpayers' Union is also drafting a Parliamentary amendment bill:

  1. instructing the Remuneration Authority not to increase any remuneration until real GDP is at or above the Q4-2019 level; and
  2. confirming in the law that those whose remuneration is determined by the Remuneration Authority can voluntarily forgo all or some of their pay.

* includes CEOs of SOEs and Crown Companies.
** defined as second-level managers who report to CEOs.

Taxpayer Talk: Economic relief spending: is it worth the cost?

Spending of taxpayer money has gone through the roof as the Government helps businesses through the COVID-19 crisis. How concerned should New Zealanders be? And how does our response compare to other countries? Louis interviews local Economist Joe Ascroft and Daniel Bunn of the Tax Foundation (based in Washington DC) – who is leading their project Tracking Economic Relief Plans Around the World during the Coronavirus Outbreak.

You can subscribe to Taxpayer Talk via Apple PodcastsSpotify, Google Podcasts, iHeart Radio and all good podcast apps.

Statement on COVID-19 Wage Subsidy

As confirmed by the Government today, the New Zealand Taxpayers' Union is one of the many employers that have accepted the COVID-19 Wage Subsidy. This decision was made on the basis of our ethical obligations to staff during the government-mandated economic shutdown.

The decision to accept this subsidy was not as simple for us as for most organisations. Prior to COVID-19, we have stated on the record that we would never accept taxpayer funding. That commitment was, of course, made in a time few New Zealanders could possibly have anticipated COVID-19 and the ensuing economic situation.

After brief deliberation, the Taxpayers' Union board determined the welfare of our employees to be a more pressing immediate concern than ideological purity.

Moreover, we support the Government's strategy helping employers through the current crisis and we have not criticised any employer for taking this subsidy. It is important to distinguish between targeted corporate welfare, which we oppose, and across-the-board compensation for the effects of a government-mandated economic shutdown.

We stand with all employers affected by the lockdown and urge the Government to urgently advance an 'exit plan' that will create the conditions for all businesses to return to self-sufficiency.

Taxpayer Talk: Should local councils freeze rates?

Despite the national health and financial emergency, most councils are still planning to hike rates - some up to nine or ten percent. Louis interviews Hutt City Councillor Chris Milne & Christchurch City Councillor Sam MacDonald on their response to our campaign calling for a nationwide rates freeze and ways councils can save money.

You can support our campaign calling for a naitonwide rates freeze at www.ratesfreeze.nz. The dashboard referred to in the podcast is available at www.taxpayers.org.nz/rates_dashboard

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

Where does your council stand on a rates freeze?

rateCouncils across the country are scheduled to increase rates by as much as 10% in the coming months, despite the hardships faced by households in the wake of the COVID-19 lockdown.

> Click here to sign the petition calling for a nationwide rates freeze <

Find out where your local (and regional) council stands on rates freezes in the table below.

Green means a council has signaled a rates freeze.
Orange means a council has signaled a reduction in planned rate hikes.
Red means a council has not signaled any reduction in planned rate hikes.

This dashboard is subject to ongoing updates. Please contact team@taxpayers.org.nz if you have more up to date information.

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Council Notes (click for source)
Ashburton District Council Has replaced a 4.88% rate hike with a 2.5% rate hike
Auckland Council Has raised rates by a 3.5% hike.
Bay of Plenty Regional Council Has decreased rates by 2.8%.
Buller District Council  Council will hike rates by 2-2.5% (higher than the original forecast of 1.1%)
Carterton District Council Council average rates increased by 1.72%. 
Central Hawke's Bay District Council Council signalled a rates increase of 3.68% (1.5% higher than long-term plan).
Central Otago District Council Has replaced a 4.9% rate hike with a 1.1% hike
Chatham Islands Council  
Christchurch City Council Mayor abandons rate freeze promise, with a hike of 3.8%.
Clutha District Council Has reduced a 3.61% rate hike to 1.93%
Dunedin City Council Has reduced rates to 4.1% from the planned 6.5%
Environment Canterbury Will reduce 9.8% rate hike, signalling 4%
Far North District Council  Council reduced rates to 2.23% hike
Gisborne District Council Council increases rates by 3.26.
Gore District Council Council passed its annual plan with increase in rates by 2.84%    
Greater Wellington Regional Council Council agreed on an average 3% rates increase, down from its planned 6.3%.
Grey District Council Has an overall increase of rates to 2.7%
Hamilton City Council Has increased rates to 2.8%, down from the planned 3.8%
Hastings District Council Will replace the 4.4% rate hike with a 1.9% hike
Hauraki District Council Plans to adopt scheduled 5.4% rate hike
Hawke's Bay Regional Council Has increased rates by 1.9%
Horizons Regional Council Has replaced a 5.95% rate hike with a 1% hike
Horowhenua District Council Has decreased rates by 1.83%.
Hurunui District Council Has reduced the 5% rate hike to 3.74
Hutt City Council Has reduced the 7.9% rate hike to 3.8%
Invercargill City Council Has reduced a 3.5% rate hike to 2%
Kaikoura District Council  Has increased rates by 4.6%
Kaipara District Council Has reduced a 5.49% rate hike to 3.97%
Kapiti Coast District Council Has reduced a 5.7% to 2.6%
Kawerau District Council Have kept the rates increase at 3.5%
Mackenzie District Council Have reduced planned rate increase of 8% to 4.8%
Manawatu District Council Has a rates freeze until 2021
Marlborough District Council Has signalled replacing a 4.86% rate hike with a hike less than 2.2%
Masterton District Council Has cut the planned rate from 6% to 2%.
Matamata-Piako District Council Has implemented a rates freeze.
Napier City Council Is reviewing its 4.8% rates hike.
Nelson City Council Has implemented a rates freeze.
New Plymouth District Council Has reduced planned 6.47% rate hike to 3.95%
Northland Regional Council Has replaced an 8.6% rate hike with a 4.5% hike
Opotiki District Council Has replaced a 5.06% rate hike with a 2.92% hike
Otago Regional Council Has implemented a rates freeze.
Otorohanga District Council Mayor says council has not discussed rates relief
Palmerston North City Council Has replaced a 4.4% rate hike with a 1.95% hike
Porirua City Council Council has replaced a 6.75% hike with a 4.98% hike
Queenstown-Lakes District Council Replaced the 6.76% rate hike with a 1.59% rate hike
Rangitikei District Council Has implemented 3.6% rate hike down from 6.27%
Rotorua District Council Has implemented a rates freeze
Ruapehu District Council Has replaced the 4.03% rate hike with a 3.50%
Selwyn District Council Has replaced the 3.5% rate hike with a 1.6%.
South Taranaki District Council Has implemented a rates freeze.
South Waikato District Council Has implemented a rates freeze
South Wairarapa District Council  Plans to reduce a 13.75% rate hike to 2.54%
Southland District Council Replacing a 2.65 % rate hike with a 2.31% hike
Southland Regional Council No reports (on track to proceed with 7.7% rate hike)
Stratford District Council Has reduced a planned 5.72% rate hike to 4.3%
Taranaki Regional Council Has budgeted for a rates freeze
Tararua District Council Has reduced rates hike to 2.5%
Tasman District Council Council has voted to freeze rates
Taupo District Council Has decreased rates by 0.43%
Tauranga City Council Has replaced a 12.6% rate hike with a 7.6% hike
Thames-Coromandel District Council Has lowered rates hike of 9.98% to 4.98%
Timaru District Council Councillors implemented replacing 7% rate hike with a 2% hike
Upper Hutt City Council Has reduced a 4.7% rate hike to 1.5%
Waikato District Council Going ahead with scheduled 3.66% rate hike
Waikato Regional Council Has implemented a rates freeze
Waimakariri District Council Has reduced a 4% rate hike to 1.5%
Waimate District Council Has reduced a 7.7% rate hike to 3.7%
Waipa District Council Has reduced a 2.7% rates hike to 2.4%
Wairoa District Council Has increased rates by 5%
Waitaki District Council Has committed to a rates freeze
Waitomo District Council Has reduced to 1.54% hike
Wellington City Council Planned 9.2% rate hike to be reduced to 5.1%
West Coast Regional Council Has voted to freeze rates
Western Bay of Plenty District Council Has increased rates by 1.98%
Westland District Council Planned 8.5% rate hike will be brought down to 1.67%
Whakatane District Council Has increased rates by 3.5%
Whanganui District Council Has reduced a 3.9% rate hike to 2.3%
Whangarei District Council Has voted to replace a 5.2% rates hike with a 2.2% hike

> Click here to sign the petition calling for a nationwide rates freeze <

Taxpayer Talk: NZ Initiative on COVID-19 - Dr David Law and Dr Eric Crampton

In this episode, Jordan talks to Dr David Law (Research Fellow) and Dr Eric Crampton (Chief Economist) at the New Zealand Initiative thinktank. Dr Law has just published a paper, Policy Point: Short-time work to maintain employment and Dr Crampton a Research Note: Effective Treatment: Public policy prescription for a pandemicBoth join us to discuss their papers, as well as why current calls from leftwing groups for a UBI are misguided.

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

Taxpayers' Union launch podcast: Taxpayer Talk

In response to the speed in which the economic and political environment is changing due to COVID-19, we have brought forward the launch of our podcast.  The first interview was last Thursday and Friday with Damian Grant and Michael Ridell who take opposing views on the extent to which the Government should intervene to keep people in their jobs during the crisis.

You can subscribe to Taxpayer Talk via Spotify here (press "follow" after clicking the link). Apple Podcast approval is still in process.

We welcome your feedback / constructive criticism as we master the art of casting the pod from self-isolation!

 

Pandemic response: Campaign for nationwide rates freeze launched

The Taxpayers’ Union has launched a campaign aiming to force New Zealand’s mayors and regional council chairs to commit to a 12-month rates freeze in light of current economic challenges.

While the Government prioritises economic relief for struggling families and employers, most local councils are still planning significant rate hikes in the coming months. Some have plans to hike rates up to nine or ten percent from 1 July.

In the letter to mayors and chairsTaxpayers’ Union Executive Director Jordan Williams says, “The Government is currently prioritising economic relief for businesses and households facing economic calamity. But rate hikes at this time of economic turmoil will serve to exacerbate immediate financial stresses and undermine the Government’s relief strategy. Any economist will tell you that a recession is the most damaging time to hike taxes.”

The letter advises councils to cater for the reduction in expected revenue with cuts to lowest-value spending, rather than borrowing. “Households and businesses are cutting costs and it is only fair that your council does the same — we must all cut our cloth to fit the new economic reality.”

A public petition has also been launched at www.RatesFreeze.nz.

Exclusive: Ministry of Health hasn't asked where staff have traveled

The Ministry of Health has not been asking staff returning from overseas where they traveled, the New Zealand Taxpayers' Union has learned.

An information response from the Director-General's office confirms that "The Ministry has not actively recorded or captured personal travel of staff and Ministry staff have not been required to inform the Ministry of their plans when they take annual leave."

As a result, the Ministry was unable to inform the Taxpayers' Union whether any of its staff had traveled to or via China in the period leading up to 4 March.

We requested this information after receiving a tip-off that a staff member at the Ministry had recently returned from China and attended a social event with colleagues.

Requiring staff to report on their international movements costs nothing. It's a basic precaution that countless businesses up and down New Zealand are taking.

We fund the Ministry of Health to provide leadership for the entire health system. If this is the example being set by our top health bureaucrats, how do they expect other employers to be prudent?

COVID-19 - Government's package a mixed bag

The team have spent yesterday afternoon working through the Government’s COVID-19 response package. A couple of the staff are in self-isolation, so we’ve well and truly rehearsed using the virtual technology in preparing this note and our media commentary.

In summary, the package is not as comprehensive as many economists were expecting. On the eight measures we have been lobbying for, the Government has picked up some of the ideas but left many out. Grant Robertson has signalled more is to come on Budget Day (14 May) or even before then.

Overall, yesterday's package is not as focused on protecting jobs as we were expecting. For example, the wage subsidies to employers are effectively limited to organisations with 20 or fewer staff.

The Government also appears to have used COVID-19 to make some permanent policy changes. For example, while temporary boosts to income for beneficiaries and those most vulnerable are justified, the Government has increased benefits by $25 per week on a permanent basis (that is in addition to the normal annual adjustment for wage inflation). 

The Winter Energy Payment (paid to all on any non-student benefit or NZ Super) is also being doubled to $40.91/week for singles and $63.64/week for couples. But in this case, just for this year.

Summary of Government's response package:

  • $500 million boost for health (the cost is equal to $278/household)

  • $5.1 billion in wage subsidies for affected businesses in all sectors and regions, available from today ($2,833/household)

  • $126 million in COVID-19 leave and self-isolation support ($70/household)

  • $2.8 billion income support package for our most vulnerable, including a permanent $25 per week benefit increase and a doubling of the Winter Energy Payment for 2020 ($1,556/household in the first year)

  • $100 million redeployment package ($56/household)

  • $2.8 billion in business tax changes to free up cashflow including a provisional tax threshold lift, the reinstatement of building depreciation, and writing off interest on the late payment of tax ($1,556/household)

  • $600 million initial aviation support package ($333/household).

Our take:

The New Zealand Taxpayers' Union is welcoming the temporary measures to ease pressure on employers contained in yesterday's economic relief package.

Yesterday's relief package is a vindication of the long-term fiscal prudence by a generation of finance ministers. Measures like temporary wage subsidies are extremely costly, but can be afforded thanks to successive governments' commitment to low public debt.

We're pleased to see the waiving of interest for late tax payments, and the increase to Winter Energy Payments which will help keep vulnerable older New Zealanders at home. We recommended these changes in our briefing paper released Monday. The lift in the threshold for provisional tax will also be a welcome relief to small businesses.

We’re open to increasing benefits for the duration of the pandemic, but COVID-19 is not an excuse for locking it in. For context, the cost of the benefit hike is around $2.3 billion — almost five times as much as the boost to the health system. Every extra dollar spent here means one fewer for the productive sector and frontline health services.

There are also policy measures such as the changes to depreciation treatments which, although we support them, seem totally unrelated to the immediate threats to business cashflow and New Zealand jobs. It suggests this was very much policy designed to be seen to be doing something, rather than policy targeted at the specific challenges we face now.

Elephant in the room: 1 April minimum wage hike

The big hole in this package is supporting businesses faced with higher costs due to the minimum wage going up on 1 April. The people who get slammed most will be the working poor, earning the minimum wage or close to it, who work for a large employer that doesn't qualify for the wage subsidy package or will only receive limited assistance. 

The obvious measure is to pause the minimum wage hike until economic conditions allow.

More information:

For convenience, we have copied links to the Government’s announcements and factsheets below.

Government's media releases:

Minister's speech to Parliament

Policy factsheets:


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