In this episode, Islay Aitchison talks to ACT leader David Seymour about his party's proposed tax cuts, public debt and cutting red tape.

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

The following is an op-ed by Taxpayers' Union Analyst Neil Miller.

James Shaw did not just defy a core Green Party policy since 1997 to personally advocate for special funding to a tiny private school… he did it twice.

To their credit, the Government resisted the Green Minister’s persistent and determined attempts to get $13 million for the Green School in Taranaki.

He did, reluctantly, apologise for trying to extort $11.7 million for the provisionally registered school by threatening to block every other shovel ready project until his demand was met.

He did not reveal that the Green School had already been turned down by the Provincial Growth Fund for $1 million a year earlier.

It must be embarrassing to have Shane Jones say that the school’s business case did not add up given the dubious value of projects his slush fund has poured money into. Jones said “James got his nose out of joint and fought for it to be restored through the shovel-ready money.”

When you cannot meet the high moral and fiscal standards of Shane Jones, then you are in serious trouble.

The Taxpayers’ Union suspects that what did not add up was that the Green School is in Taranaki, not Northland. If it were in Shane Jones’ electorate, Jones’ famous nephews would probably be off the couch and already be building the principal a gold-plated office up a mighty Kauri tree.

The Greens consider themselves a principled political party – just ask them. Actually, you do not have to ask. Like a vegan at a barbeque, they will tell you whether you want to hear it or not.

When a political party holds itself to be so much more moral than everyone else, they need to be held to account for the co-Leader’s active defiance of cornerstone Green Party principles and repeated attempts at disinformation when that defiance was revealed.

We still do not even know why he did it. Why was this 50-student school in the regions so important to James Shaw that he would put his political career and possibly his party’s future in Parliament in jeopardy?

We contacted James Shaw’s ministerial office for an explanation. They referred us to Shaw’s initial press release as Associate Minister of Finance, and stressed that this was a shovel-ready job creation project, not an education project.

Still, of all the shovel-ready projects, why did he select a private school and then go so hard in personally lobbying for it given the Greens’ long-established policy? The question remains and it appears unlikely he will answer it clearly.

James Shaw’s colleagues who still believe in Green Party policy should sack him as co-leader before the election.

Dear Supporter,

Creative NZ goes into damage control

We've spent the last week on social media releasing examples of bizarre art projects given taxpayer money by Creative NZ as part of a $16 million COVID-19 response (I've linked to my favourites at the bottom this email).

Talkback hosts Mike Hosking (clip here) and Sean Plunket (clip here) seized on the issue, and their callers are spitting tacks.

Last night, the agency finally cracked under pressure. But instead of defending the bizarre grants, it attacked us for what it called a "low blow"!

Here's their full public statement:

Creative New Zealand is proud to tautoko dedicated, hard-working artists, bolstering a sector knocked to its knees by the impact of COVID-19.

We work to encourage, promote, support and advocate for the arts for the benefit of all New Zealanders — from Bluff to Cape Reinga and beyond, through projects of all shapes and sizes, communities and cultures, glitter and all.

We’re really shocked and disappointed at recent low blow targeting of artists we’ve funded – we stand by them and our decisions. We don’t condone attacks on the arts whānau, or anyone for that matter. To the arts community and supporters: We’re with you, and we value your mahi.

They just don't get it. We're not targeting artists – we're targeting the out-of-touch bureaucrats who waste taxpayer money on weird pet projects.

Creative NZ's attempt to defend themselves is going badly. Take a look at the comments slamming the agency on their own Facebook post.

I joined Magic Talk again today to discuss the drama – and this time, the CEO of Creative NZ fronted up to make his case.

In the interview, the CEO admits that artists don't even need to live in New Zealand in order to be eligible for taxpayer funds. Indeed, a number of the grants we looked into were for artists based overseas.

The CEO also admits he doesn't know what an 'indigenised hypno-soundscape' is – despite spending $50,000 on one.

Listen to the second half of this clip to hear the trainwreck interview.

We're proud of our efforts to shed light on how taxpayer-funded agencies spend our hard-earned money. With the Debt Monster forecast to grow to $150,000 per Kiwi household in 2034, our job is more important than ever.

Thank you for your support.

Louis Houlbrooke Campaigns Manager New Zealand Taxpayers' Union

Facebook links to share Creative NZ grants:

To research and write the first draft of a novel about male affection in hypermasculine spaces.
AWARDED: $13,000

Towards the composition, recording and production of music inspired by the psychogeography of the West Coast.
AWARDED: $34,900

To support the personnel costs and post-production editing for an art documentary based on Papua New Guinea tattoo practice and revival.
AWARDED: $27,500

Towards one phase of illustrating a biography of Leonardo da Vinci.
AWARDED: $21,080

Towards writing a children's picture book (text only) about sustainable community activist Helen Dew.
AWARDED: $3,200

To create and develop an online publication, arts learning resources and musical content based on children's drag theatre show, The Glitter Garden.
AWARDED: $18,000

To create a new series of collaborative quilts with my mother, textile artist Cynthia Johnson.
AWARDED: $17,850

Towards the composition and instrumental arrangement of 10 songs for children, from ideas given by children.
AWARDED: $24,600

Towards a live event watch party and livechat with fans online.
AWARDED: $24,153

Towards writing poetry that explores indigeneity and love in the time of climate change.
AWARDED: $17,798

Towards writing a novel about the collapse of democracy in an association of alpaca breeders.
AWARDED: $26,000

Towards a dance concept video showcasing the impact Coronavirus has had on the New Zealand Chinese community.
AWARDED: $24,500

Towards the development of a first draft of a play that explores the menstrual cycle.
AWARDED: $16,766

To record and livestream a performance from Fat Freddy's Drop.
AWARDED: $44,007

Towards an Indigenised Hypno-soundscape to take you to the imagined worlds of our Kōrero Pūrākau.
AWARDED: $49,999

Towards development of a movement technique that guides and empowers the participants in becoming specialists in their own body.
AWARDED: $4,530

Towards 3 x hour-long live-streamed electronic music performances with live visual animations, from a kitchen in Paekakariki.
AWARDED: $47,703

Towards composing and recording ten original compositions inspired by emotions felt during the Covid-19 lockdown.
AWARDED: $8,885

The New Zealand Taxpayers’ Union is questioning the value of the Arts Continuity Grant, a COVID-19 response fund which has so far paid out $16 million in grants to a variety of questionable short-term arts projects.

Since March, Creative NZ has offered grants of up to $50,000 for ‘a short-term arts project, or the stage of a project, that can be delivered within a changed and evolving environment as a result of COVID-19.’

Many of the descriptions of these projects are, frankly, incomprehensible. It’s hard to see how bureaucrats in Creative NZ can make an objective judgment on which projects are worthy of funding, and which aren’t.

The resulting handouts speak for themselves. Creative NZ is fighting COVID-19 by spending taxpayer money on plays about menstrual cycles, Māori ‘healing theatre’, and ‘Indigenised Hypno-soundscapes’. That’s madness and it reflects terribly on the Minister of Arts Culture and Heritage – who happens to be Jacinda Ardern.

These grants are massively unfair to taxpayers, with the benefits skewed toward politically-connected Wellington weirdos. Handouts for fringe interest groups mean less money is available for tax relief that would reward productive work.

637 projects have received taxpayer funding under the Arts Continuity Grant, including the following:

Eamonn Marra
To research and write the first draft of a novel about male affection in hypermasculine spaces.
AWARDED: $13,000

Fireplace Arts & Media
Towards the composition, recording and production of music inspired by the psychogeography of the West Coast.
AWARDED: $34,900

Julia Gray
To support the personnel costs and post-production editing for an art documentary based on Papua New Guinea tattoo practice and revival.
AWARDED: $27,500

Donovan Bixley
Towards one phase of illustrating a biography of Leonardo da Vinci.
AWARDED: $21,080

Alison Foster, Catherine Cooper
Towards writing a children's picture book (text only) about sustainable community activist Helen Dew.
AWARDED: $3,200

Glitter Garden
To create and develop an online publication, arts learning resources and musical content based on children's drag theatre show, The Glitter Garden.
AWARDED: $18,000

Jess Johnson
To create a new series of collaborative quilts with my mother, textile artist Cynthia Johnson.
AWARDED: $17,850

Kate Newby
Towards intensive artistic research and development.
AWARDED: $49,368

Kath Bee
Towards the composition and instrumental arrangement of 10 songs for children, from ideas given by children.
AWARDED: $24,600

Tamara Neilson-Tetzlaf
Towards a live event watch party and livechat with fans online.
AWARDED: $24,153

Tayi Tibble
Towards writing poetry that explores indigeneity and love in the time of climate change.
AWARDED: $17,798

Duncan Sarkies
Towards writing a novel about the collapse of democracy in an association of alpaca breeders.
AWARDED: $26,000

Kimberley Young
Towards a dance concept video showcasing the impact Coronavirus has had on the New Zealand Chinese community.
AWARDED: $24,500

Rosemarie Kirkup
Towards the development of a first draft of a play that explores the menstrual cycle.
AWARDED: $16,766

Nicole Duckworth
To record and livestream a performance from Fat Freddy's Drop.
AWARDED: $44,007

Khali Philip-Barbara, Te Kahureremoa Taumata
Towards an Indigenised Hypno-soundscape to take you to the imagined worlds of our Kōrero Pūrākau.
AWARDED: $49,999

Connor Masseurs
Towards development of a movement technique that guides and empowers the participants in becoming specialists in their own body.
AWARDED: $4,530

Iain Gordon
Towards 3 x hour-long live-streamed electronic music performances with live visual animations, from a kitchen in Paekakariki.
AWARDED: $47,703

Mad Ave
Towards a wananga for Maori healing theatre practitioners.
AWARDED: $50,000

New Zealand Comedy Trust
To examine what changes need to be made to better support a more diverse and sustainable comedy industry in Aotearoa.
AWARDED: $49,780

Benedict Fernandez
Towards composing and recording ten original compositions inspired by emotions felt during the Covid-19 lockdown.
AWARDED: $8,885

Imogen Taylor
Towards development of a new body of work exploring modernism, feminism & queerness, with specific reference to the Otago region.
AWARDED: $30,089

Claire O'Loughlin
Towards revision and editing of a sailing memoir.
AWARDED: $7,200

Jared Kane
Towards a Māori, queer, young adult novel adaptation of Hamlet based on my innovative unproduced screenplay ‘Hamarete’.
AWARDED: $21,000

Indigenous Design and Innovation Aotearoa
Towards designing new Māori typefaces for print and digital.
AWARDED: $22,110

Peter Daubé
Towards the writing, arranging and preproduction of music that forms a song-cycle from the suburban labyrinth.
AWARDED: $21,800

Update: Taxpayers' Union Campaigns Manager Louis Houlbrooke joined Sean Plunket on Magic Talk to discuss these grants. You can listen to the clip here.

In this episode of Taxpayer Talk, Taxpayers' Union Research Officer Islay Aitchison interviews Tauranga City Councillor Kelvin Clout on dysfunctional Council culture and recall elections. They discuss the COVID-19 Government assistance Tauranga Council is hoping to receive for future infrastructure projects.

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

The following is an op-ed from Taxpayers' Union Campaigns Manager Louis Houlbrooke.

Phil Twyford says he will build light rail in Auckland if Labour wins the next election.
 
Of course, he promised exactly the same thing at the last election and, after spending two and a half years in discussions and $5 million of taxpayers’ money commissioning reports, nothing has been decided, far less built.
 
A Minister reaches a low point when he goes for re-election solemnly vowing to implement an old flagship policy ‘for real’ this time around. It was promised previously, it was not delivered. But perhaps it’s for the best: Twyford’s record of expensive policy failures suggests a tram down Dominion Road would terminate in hell.
 
When elected in 2017, Phil Twyford promised to build 100,000 KiwiBuild homes in 10 years, with an initial investment of $2 billion. More than two years into that period, KiwiBuild has delivered just 548 houses. At the current rate, Twyford’s promise will be fulfilled in a mere 436 years. He’s been stripped of his KiwiBuild responsibilities and the new Minister in charge, Megan Woods, avoids even uttering the policy’s name.
 
He also promised to build SkyPath – a cycleway across Auckland’s Harbour Bridge – for $67 million. The budget has already blown out to $360 million, with work not yet begun.
 
Then there was his 2017 promise to make “virtually all” of the Government’s 15,000 vehicles electric by 2025. So far, he’s achieved it for less than one percent.
 
Not content with a track record that makes David Clark look like Mr Fix-it, Phil Twyford appears determined to one-up himself. In the last month, he has unleashed a new tranche of disappointment and waste.
 
Twyford said he was a “huge advocate” for a rapid rail, a 60-minute service between Hamilton and Central Auckland, even though it was not a 2020 election pledge. That last part was surprising, considering he had commissioned a business case for his beloved project.

The business case put the cost of rapid rail “between several billion and more than $10 billion.”
The Taxpayers’ Union economist’s reaction was to start sobbing into his well-loved copy of Adam Smith’s ‘The Wealth of Nations’. “What kind of business case is that?” he lamented. “It’s going to be between two billion and more than ten. How do you even start to do a proper cost-benefit analysis when you have no real idea of the cost?”
 
We told our economist to do his job and find the midpoint of several billion and infinity. His head exploded and the Union is currently looking for a new economist.
 
Then there are the ongoing blowouts and delays in the Transmission Gully highway project. But according to Phil Twyford, Phil Twyford is not to blame. Apparently, 2020’s pandemic caused the problems of 2019 and 2018. Bad news, Dr Bloomfield: the virus is time-travelling.
 
Twyford had nine long years in opposition to develop policy, and now three longer years in government to implement it. He has failed at every major hurdle so far and shows no sign of reforming.
 
So, how has the Prime Minister responded to Twyford’s epic series of failures? She’s promoted him. Now at number four on Labour’s list, Twyford trails behind political powerhouse Kelvin Davis, but is ahead of Chris Hipkins, who runs a third of the Government, and Megan Woods – who seems to run the rest.
 
The Honourable Phil Twyford’s record this year won him the award for lifetime achievement in government waste. The previous year’s recipient, Sir Tim Shadbolt, troughed away for 35 years to receive that honour. Twyford got there in three. He’s that good at being bad.

The New Zealand Taxpayers’ Union has released a new paper outlining a suite of proposals to lift economic growth and therefore reduce debt as a proportion of GDP.

On current forecasts, government debt is set to reach $150,000 per New Zealand household. There are two ways to slay this debt monster: cut spending, or grow the economy. While we need to do both, our latest paper hones in on the second approach.

Growing out of it: Five policies to encourage growth and conquer debt makes five recommendations, all funded from the $14 billion set aside in the Government’s COVID-19 Response and Recovery Fund:

• Cut GST from 15% to 10% for the next 12 months
• Permanently cut the $70,000-threshold rate from 33% to 30%
• Permanently cut the $48,000-threshold from 30% to 27%
• 15-month hiring trial periods from October 2020 to end of 2021
• Increase the $100 million overseas investment threshold to $500 million

Targeted tax relief will spur economic activity when we need it most. We propose a temporary GST cut which will incentivise New Zealanders to bring forward planned spending, and we also suggest cuts to marginal income tax rates that will reward productive work.

Traditional tax relief, however, should only be one part of a growth package. Growth can also be encouraged through relief from regulatory taxes. Specifically, we propose temporary but significant relaxation in rules that make employers less willing to hire staff, and foreign businesses less likely to invest in New Zealand.

Dear Supporter,

I’m writing to you from the media and analyst “lock-up” where Treasury just presented its Pre-Election Economic and Fiscal Update.

The Update, which the Public Finance Act requires of Treasury just prior to every election, lays bare the Government’s books and include the latest projections on debt, spending, and the economy. This is the first proper update we’ve had from Treasury since the Budget way back in May.

In short, Treasury is projecting at least 15 years of deficits, unemployment to remain elevated for some time, and our economic recovery to be slower than previously expected.

Mood in the room

Understandably, the room was sombre. Journalists targeted the Minister of Finance Grant Robertson with questions on accelerating house prices and inequality, while analysts in the room noted the substantial increase in projected debt over the next decade.

On debt, the Minister was defensive. He tried to argue that he was unwilling to introduce austerity-style cuts to New Zealand, but didn't present a plan for New Zealand to get out of our looming 15 year debt spiral. More explanation will be needed from Labour if they want to remain credible on the economy.

Deficits 

With economic growth expected to be weaker in the next four years than previously forecast, Treasury is now projecting deficits right out until the end of their projection range in 2033/34. This is a change from its forecasts at the May Budget – when Treasury had expected we would return to surplus by 2027/28.

The result for taxpayers: net crown debt is expected to be $269.3 billion – or $149,600 per household – in 2033/34. That’s up from the $132,700 per household forecast at the Budget in May.

Weaker long-term economic recovery

The latest forecasts indicate unemployment is expected to remain persistently high. While unemployment is not expected to spike as aggressively as Treasury forecast in May, peak unemployment (of 7.8%) is now not expected to arrive until March 2022 – so the economic pain for some households may continue to intensify for the next 18 months. Previously unemployment had been expected to be down at 6% by March 2022.  

But worst fears for 2020 avoided 

At the Budget in May, the economy had been expected to contract by 24% (on an annualised basis) in the second quarter of this year, but Treasury now expects the contraction to be smaller at 16%. We will find whether that’s accurate tomorrow when Stats NZ release the official numbers. Treasury are attributing this smaller contraction to the Government’s wide-spread (and expensive) wage subsidy scheme and a faster than expected bounce-back from national lockdown.  

In the near term that is having an impact on deficits, which are generally not as high as Budget forecasts in May. These better-than-expected near-term forecasts are reflected in the labour market – the fear of unemployment reaching 9.8% in the third quarter of this year hasn’t borne out.

Conclusion

With so much deficit spending, the Taxpayers’ Union's message of fiscal prudence and ensuring quality government spending is more important than ever. Today's numbers provide alarming context to the questionable lolly-scramble announcements being made on the election campaign trail.

You can read Louis’ comments to media here: “Decade of deficits” are a national crisis

Thank you for your support,

Joe Ascroft Economist New Zealand Taxpayers' Union

 

New paper reveals how 'job creation' projects destroy jobs

Too often, our politicians fall into the trap of thinking they can create jobs by piling on more and more government taxpayer spending. But if that were true, high-spending countries like Greece and Spain wouldn't be facing a decades-long employment crisis.

The Taxpayers' Union's latest briefing paper reveals how Government spending – including projects intended to create jobs – destroys productivity and employment.

We draw on work from Treasury and New Zealand economists estimating the 'deadweight loss' of our tax system – this is the way taxation motivates people to work less, and spend and invest less, leading to economic distortions. Applying it to some recently announced pet projects is sobering:

Because government spending projects are funded via taxation, we can use what economists call the "deadweight loss" to see how many jobs are killed by handouts such as James Shaw's $11.7 million grant to a "Green School".

Click here to read the paper.

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.

Taxpayers rorted by Labour MP's electorate office deal

The cozy deal between list MP Ginny Anderson (pictured above with the Debt Monster), the Labour Party, and the NZ Professional Firefighters Union is a rort on taxpayers.

As Stuff explains, Labour gets cheap rent on office space off a local union, sublets the rooms to Andersen, and then bills parliament (i.e. taxpayers) at a markup, pocketing the difference.

Taxpayer funding for offices is meant to cover the costs of being an MP and servicing constituents. Here, Ginny Anderson has abused that trust to line the pockets of her political party.

This sort of union backhander is what we’d expect to see in the corrupt unions of Australia. Here in New Zealand, we expect such favours to be disclosed as donations, so why weren't they?

With the discounted rent not being disclosed as a political donation, we've referred the matter to the Electoral Commission. We're also writing to every other MP to ensure they're not funneling their office funding to political mates or their business interests.

"Green School" handout shows dangerous trend of horse-trading over funds

It's been revealed that James Shaw put billions of dollars in infrastructure funding on the line in order to negotiate his $11.7 million handout for a private "Green School".

This is a perfect example of a worrying trend in the way the Government makes funding decisions. Here's what Jordan had to say:

The spectacle of politicians horse-trading individual funding decisions is something we expect to see in smoke-filled rooms of yesteryear, not a modern day New Zealand with a reputation of being corruption-free.

The Provincial Growth Fund, and now the COVID ‘shovel ready’ fund, are normalising a process of decision making that rewards companies which are politically connected. It is a dangerous path.

Steven Joyce reintroduced the sort of corporate welfare largess not seen in New Zealand since the Muldoon Government. But instead of fixing the problem, the current Government has doubled down and we have now returned to politicians making funding decisions for individual projects and pet causes.

Enough is enough. Now we are seeing the warts and all flaws in the process, New Zealand should return to a transparent process of the politician’s job being limited to setting criteria and objectives, and leaving it to officials to make the individual grant decisions.

State Services Commissioner responds to our complaint regarding the Ardern-Bloomfield ad

Remember the Labour Party's ad featuring Dr Ashley Bloomfield and other public servants? We complained to the State Services Commissioner that it was an improper use of taxpayer-funded staff.

Now, the Commissioner has responded:

The Commissioner isn't taking further action (the video has already been removed) but at least he's has sent the message to bureaucrats that it is totally inappropriate for public servants to feature in a party political advert. Taxpayers pay public servants to do their jobs, not to aid their political masters in re-election campaigns.

The Commissioner also said, “I understand that none of the public servants involved were aware that the footage would be used in the way that it was.”

Based on this, it appears there has been a clear breach of the Cabinet Manual, which states ‘Ministers must uphold the political neutrality of the public service and not ask officials to act in any way which would conflict with their obligation of neutrality.’ But enforcement of the integrity of the Manual is ultimately up to the Prime Minister. Some would say that’s a case of the fox guarding the henhouse!

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

Our research team recently revealed that the NZ Super Fund spent over $15,000 on “COVID-19 well-being parcels” from designer supermarket Farro Fresh for its highly-paid staff over lockdown.

According to NZSF, the parcels included ‘sundry goods’ such as coffee and hot cross buns.

Forty-five of the Super Fund's staff are paid more than $300,000. Pretty much everyone else is paid more than $100,000.  As I told the Herald, these people do not need care packages paid for by taxpayers who are going without during COVID-19 lockdown.

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. In addition to the goodie bags, other interesting payments included:

• Inspired Accountants team building trip for corporate strategy team for $1359.90 paid for during Level 3 lockdown.

• A canoe hire for $794.00.

• Hand sanitiser for $568.80.

• Renewal of a practicing certificate with the NZ Psychologists Board for $550.85.

• A 10-year anniversary gift for a staff member for $515.

• Lunch at White & Wongs for $156 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.

Have a great week,

Louis Houlbrooke Campaigns Manager New Zealand Taxpayers' Union

The New Zealand Taxpayers’ Union has laid a complaint with the Broadcasting Standards Authority regarding the Labour Party’s first television advertisement for the 2020 election campaign.

In the advertisement, Jacinda Ardern misleadingly claims that her Party will “make apprenticeships free”. In reality, these apprenticeships are not free – they are paid for by taxpayers.

Spreading the myth that there is such a thing as a free lunch – or a free apprenticeship – is wrong. That’s why we’re holding the politicians to account.