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NZ’s biggest companies received over $7 million of taxpayer money for power bills

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:

Mr Taxman not picking up the phone

on-hold-call.jpgUp 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.

Green’s Utopia: The fastest way to achieving equality is to make everybody poorer

download-4.pngThe 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.


HRC 'anti-racist' campaign funded by levy based on race

Screen_Shot_2017-07-17_at_3.46.54_PM.pngThe 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.

Don't claw the cats

download.jpgThe 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.

Cost of Winston Peters’ ‘Carpet Policy’ $120 million

images-6.jpgNZ 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.

• 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

Sugar Tax Response

Mac_Mckenna_web.jpgIn 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.

Socialism for the Rich

Unknown-13.pngToday 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.

Chatham Islands treaty settlement travel costs skyrocket

website_010.jpgThe 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.
waitangi_the_main_town_on_the_chatham_islands_phot_1431883473.JPGThe 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: 



Lifetime Tax (post budget update)

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

Lifetime_Tax_(post_budget_update)_cover.pngThe 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)


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