Taxpayer Update: Luxon grows a backbone 💪 | NEW Poll 🚨 | Palmy Mayor forced to close booze lounge 🥂
Hi,
Look, I'll be first to admit the Taxpayers' Union can be a little critical of the current Government, but in today's Taxpayer Update, it's nothing but kudos for Nicola Willis, Winston Peters, and Christopher Bishop. 🥰
This month's Taxpayers' Union-Curia Poll is out, an update on the ratbagu-turning regional councillors in the Waikato, and the biggest change to Palmerston North's Alcohol ("Councillor lounge") Rules in a generation...
Oh, and local council amalgamation – we ask the question: Is bigger necessarily better? 🤔
Fiscal Reality bites: Luxon gets serious about upping the retirement age 👵🏼
Regular readers will know that thanks to the aging population, the second fastest area of government spending is NZ Superannuation (the fastest growing spend is [checks notes] interest on government debt). This path we are on is not sustainable, the fiscal reckoning is coming – the more we delay, the harder the hangover.
So Christopher Luxon's grasping of the fiscal mettle and announcement that the National Party will go into this year's election on a policy of raising the Superannuation age is refreshing.
NZ Super: some facts 🆘
Universal Superannuation currently costs about five percent of the total economy – more than the cost of education, justice, and defence combined – and is projected to hit eight percent by 2065.
But the real story is illustrated by the dependency ratio: in the 1980s, there were seven workers to every Super recipient. It's 4:1 now – and forecast to be just 2:1 by 2060.
Even Labour acknowledge that's not a sustainable trend and is mooting the idea of means testing*.
Make no mistake, no credible economic analysis sees the superannuation settings staying the same if the Government is to remain solvent. It's a question of when to make changes, not if.
But until now, both Labour and National have been pretty half hearted in leading the discussion while in Government (both have been far more willing to have the honest conversation with voters while in Opposition)
But, thanks to Christopher Luxon, the National Party is acknowledging the elephant in the room.
Even small changes make a big difference: A raise in the recipient age, from 65 to 68 (in line with the UK) and the pinning of increases to inflation only (rather than the average wage) would make a hugedifference, keeping Super costs to roughly the current percent of GDP.
The earlier we settle this debate, the better those who are not yet of retirement age have certainty and can plan. We say well done to Mr Luxon.
* A quick note on means testing: Reasonable minds can differ, and while an option to lower the cost, it's not one we favour. One of the economic advantages New Zealand has is a very high workforce participation rate for our over 65s. Means testing would likely see that fall away, as well as creating an incentive for people not to save for retirement, which is what we need to encourage.
Fees Free-free Budget? Costly Ardern policy on scrapheap 🗑️
And in a sign that the Luxon Government is getting serious about cutting back on unaffordable hangovers from the Ardern-era – Winston Peters has u-turned on one of the signature Policies of his Ardern-led Government when he let slip on Friday that the Fees Free programme faces the chop in this month's Budget.
Better late than never.
Your humble Taxpayers’ Union was warning about this policy from day one. Literally. We published Robin Hood Reversed back in August 2017, just hours after Ardern launched her policy (and just a few months before NZ First put Labour into office).
In the Briefing Paper, we made the simple point: Fees Free was never going to be a serious solution to educational disadvantage and we pointed out that the same policy in Scotland had resulted in fewertertiary students and more inequality in who was accessing universities.
And, well, we told you so!
The Government's own boffins now admit that Labour's 'Fees Free' policy had “no impact on [...] learner participation and access"; "no noticeable effect on general participation in tertiary study"; and even concluded that "learner behaviour is not generally influenced by tuition fees”.
Coming from the university sector's own bureaucracy, it's damning.
Fees Free is an expensive middle-class handout, paid for by blue collar and low-income taxpayers. Taxpayers are already subsidising more than 80 percent of the costs of a tertiary education. By definition, those at varsity are likely to be the high income earners of tomorrow.
Our on-campus group, Generation Screwed, put it well in their comments to media:
"Support should be targeted toward students who genuinely need it most, rather than expensive universal programmes that leave future taxpayers footing the bill. Young New Zealanders deserve a future they can actually afford, not empty promises that that stick them with costly debt later down the road.”
“While ‘free’ policies sound appealing, young people ultimately end up paying through debt, higher taxes, or weaker economic opportunities,”
The best thing a government can do for future generations is to have no debt. If money saved from scrapping Fees Free sees the deficit reduced, our kids and grandkids are better off.
NEW POLL: Centre-right remain ahead, Luxon returns to preferred PM top-spot 🔵🥇
There’s good news for Mr Luxon in this month’s Taxpayers’ Union-Curiapoll, which sees the current Coalition Government still ahead (although down a little) to 62 seats. The combined seats for the 'Opposition Parties' bloc is up 3 to 58 seats.
Compared to last month, National are up 0.2 points to 30.0 percent, while Labour are down 1.5 points to 31.9 percent. New Zealand First drop 1.9 points to 11.7 percent, while the Greens gain 1.9 points to 9.7 percent.
ACT drops 2.5 points to 6.5 percent, while Te Pāti Māori gains 1.5 points to 4.1%.
In the Preferred Prime Minister ranking, Luxon gains 1.0 point to 21.5 percent. Hipkins drops 2.7 points to 19.0 percent. Peters drops 0.5 points to 11.6 percent, Swarbrick drops 2.0 points to 5.4 percent, and Seymour drops 0.7 points to 3.9%.
For more information, head over to our website.
Have taxpayers been taken for a ride already on Auckland's CBD Rail Link? 🚇
A lot of taxpayer victories come after hard-fought campaigns, long stretches of public pressure or social media shenanigans. This one was surprisingly quick.
Last week, former boss of the Auckland Rail Link, Sean Sweeney, hit the headlines for declaring the project could have been “half the cost” - and at an estimated $2,663.83 per household, that’s not small change.
Remember, this was the project that was originally a CBD Rail Loop, then just a two-way Link – and now we're told we paid twice what we should have.
Someone needs to ask: "WTF?"
This is why we can't have nice things! 😭 😭 😭
Contrary to the cries of local government about needing more of your money, according to the OECD data, New Zealand actually spends more than most developed countries on infrastructure. We're in the top ten percent of spenders, but the lowest ten percent for 'value for money'!
The issue isn't that we're spending too little, it's that we're not getting bang for buck.
So when we saw this example, James set into motion and immediately – writing to Transport Minister Chris Bishop and publicly demanding a Ministerial inquiry to understand not just whether but why our largest infrastructure project has been so poorly delivered.
If we are to fix the problem, we first have to understand it.
As James put it:
If Dr Sweeney’s claims are accurate, taxpayers deserve clear answers as to why this project cost them
twice what it needed to. With Treasury estimating an infrastructure deficit of $210 billion, there is no
chance of closing the gap without far better cost control.
He called on the Minister to commission a Ministerial Inquiry, and suggested terms of reference.
Well, it's good to know there is at least one Taxpayer Hero in the Beehive because blow me down, with a few hours, James managed to get Minister Bishop to answer the call!
Nice one Bish.
Local government amalgamation is coming... careful what you wish for?
One place Minister Bishop – and Local Government Minister Simon Watts – may have fallen short this week is their apparent faith that 'bigger is better' when it comes to local government.
All the signals point to amalgamation coming for local councils (and not just regional councils), whether communities like it or not...
In the words of Minister Bishop, councils must centralise or “[they] will do it for you.”
Look, we're hardly cheerleaders for the muppets who run too many of New Zealand's town halls (we leave that to others), but when it comes to amalgamations, the data is far from clear-cut.
Just ask Aucklanders whether the so-called "Super City" has been that grand? The promised savings never eventuated, the post-implementation review still hasn't happened, and good luck getting hold of anyone other than a 'customer service' (ironic) rep on the telephone.
And as shown by our Ratepayers Report league tables last week, some of New Zealand's most efficient councils are actually the smaller ones.
And at least at the smaller councils, you can actually know who is responsible for what, rather than fight with a bureaucracy just to get a hold of someone on the phone.
Over the weekend, Rhys had a thoughtful piece published by The Post, which is well worth a read (either here on The Post if you have a subscription, or on our website here).
So is amalgamation the value-for-money panacea? Well, the evidence is lacking. As Rhys summarised:
The Infrastructure Commission (in 2022) examined whether larger councils deliver key services more cheaply [...] it found council size means nothing when it comes to cost efficiency. Performance was basically the same on average.
TDB Advisory’s reports make these same points. Wellington super-city analysis found a case for sharing some costly services, like roading and water. For the other local government functions, sitting at around two-thirds of expenditure, there was little or no evidence of economies of scale.
Their overall conclusion was blunt: “bigger is not necessarily better”.
Better than amalgamation would be tackling the root causes of out-of-control local government: removing the power of general competence would be a start. That would mean going back to the law as it stood before 2002 when councils were only permitted to undertake activities they were charged with (i.e. to focus on the basics) rather than determine for themselves what activities they involve themselves in.
Or perhaps, Watts could bring his rates cap now to bring council spending under control, rather than waiting until the end of the decade (and letting councils hike in the meantime).
And reforms to improve the quality of governance, oversight, and transparency (more to come on that in the coming days)...
Instead, bigger councils – with their bigger bureaucracies and oversized budgets – are like using a wrecking ball to hit a nail when there’s a perfectly good hammer in the toolbox.
Win for transparency: MBIE share more info on fuel shipments 🚢⛽️
After weeks of lobbying, letters, calling out MBIE and even a meeting between the Taxpayers' Union and MBIE's CEO, a win this week in MBIE finally providing the names of the ships carrying fuel to New Zealand as part of their twice-weekly 'fuel supply updates'.
Linking with real-time marine tracking tools, this change means that FuelClock.nz is even more accurate.
MBIE didn't want to release this data. For six weeks, MBIE have claimed the information is 'commercially sensitive' – which was always nonsense. The fact is that we can now know - immediately - should a fuel ship turn around on the water (rather than having the information 'managed' – i.e. delayed and spun – by the Beehive.
Keep an eye on the ships at FuelClock.nz ⛽️
Update on Waikato Regional Council 'turncoats' 👋
Finally, this week, an update on the two Waikato Regional Councillors who broke their Rates Control Team 'Pledge' to exit the Council from the anti-ratepayer sock-puppet lobby group Local Government New Zealand.
First, there was some confusion following Jordan's update - not all the members of the "Rates Control Group" broke their Pledge. The voting breakdown was:
The local media have been pretty brutal (and rightly so).
Update on Sir Les Paterson (Palmerston North Mayoral edition) 
In last week's Taxpayer Update Jordan highlighted the errr, generous, entertainment spending of Palmerston North Mayor Grant Smith.
To recap, the Mayor was (to put it in the words of our source) "f*&ken furious" that a fellow councillor had exposed the Mayor for sucking back a grand a month of ratepayer-funded booze, plus much more coded as "Mayoral hospitality" on the expense card.
Before your humble Taxpayers' Union took to it, the Mayor was claiming it was all badly needed for the Council's "international relations" and "diplomacy" (yes, seriously!).
How attitude can change with a little bit of publicity...
This week, we spotted a very interesting agenda item – a motion put onto the Agenda by non-other than Mayor Smith: to call closing time on the Councillor's [drinking] Lounge.
We now have the Minutes, and the Mayor's motion passed unanimously (and Mayor Smith is now claiming virtue from teetotallers).
But things don't go unnoticed by your humble Taxpayers' Union...
We went back and had a look at the last time the Palmerston North City Council voted on its (very) "local" alcohol policy...
Back in November 2022, a vote on a motion to stop the Council from reimbursing staff and elected officials for booze was defeated by one vote!
The deciding vote against? One Mayor Smith...
Cheers to transparency! 🥂
Decision to terminate Taxpayers' Union membership - a note from the Chair 🗳️
While this sort of missive is normally reserved for members only, given the wider interest from supporters, we have published on our website our Chair's email to Members on the Board's decision here.
If you are not a member of the Taxpayers' Union (this email goes to our full 'supporter' list), you can join up here. Membership allows you to attend our AGM, other gatherings, and provide feedback to guide the work of our union.
➡️ Join the Taxpayers' Union ✊
Thank you for your support, and enjoy the rest of your week.
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