Taxpayer Update: Luxon embraces higher taxes 💔 | MBIE's $35m cover-up 😳 | Councils' $1.1b art stash 🎨

Hi,

The big political story in the last 24 hours has been Christopher Luxon ruling out TOP.

But there's a more important story this morning that's been largely missed – Luxon appears to be no longer ruling out increasing your taxes!

Our new report out today also exposes local councils for sitting on a fortune! (Of art, that is.) And, worse still, only a measly one third of it is even on display.

Let's jump in.

Luxon embraces the inflation tax 💔

Christopher Luxon spent his years in Opposition warning that inflation was silently dragging hard-working Kiwis into higher income tax brackets. Stopping this 'bracket creep' was even part of his 2023 election pledge.

But now Luxon is Prime Minister, the policy has been quietly dropped. And this morning, he declared it was "not on our radar".

Funny how quickly a politician's "radar" changes once they're the tax collector.

In January we found that, on average, Kiwis have lost $238 each to bracket creep since the 2024 thresholds were introduced. That is a bill most of us cannot afford to pay – and it will keep growing if the Government does nothing.

Here is how the inflation tax works:

A worker gets a pay rise to keep up with rising prices. They are not actually any better off in real terms, but more of their income is pushed into a higher tax bracket.

The Government collects more tax without announcing a tax rise, passing a law, or having to defend the decision.

It's sneaky, nasty, tax increases by stealth. Failing to deal with it makes a mockery of National's claim to be the party of 'lower taxes'.

"No taxation without indexation!" 🪧

National cannot credibly claim to be the party of lower taxes while relying on inflation to hike them.

And indexation of income tax thresholds is not some radical new tax cut.

It simply stops the Government from collecting a larger share of someone's income when their wages have only risen to keep pace with inflation.

Super, benefits, and Working for Families are all adjusted to reflect rising prices. We say taxpayers are entitled to the same protection.

National made the case for tax indexation in Opposition. Now they ought to deliver it in Government.

EXPOSED: MBIE officials waste $35m on botched IT project – then lied to Ministers to cover it up! 😳

MBIE have been caught red-handed running amok, lying misleading successive Governments and Ministers about an immigration IT project failing and blowing through $35 million of taxpayers' money to get nothing. 

In short, officials withheld information from Ministers, deliberately avoided Cabinet scrutiny, and kept pouring taxpayer money into a project that was doomed and eventually abandoned.

Radio NZ captured the omnishambles here:

Senior Immigration New Zealand officials repeatedly ignored requests from the minister's office and progressed work on a project the minister hadn't agreed to extra funding for, according to new documents released to RNZ.

The hundreds of pages of correspondence paint a picture of the processes the Ministry of Business, Innovation, and Employment (MBIE), which the Immigration department sits within, used to pursue a now abandoned IT upgrade.

Public Service Commissioner Sir Brian Roche has appointed Michael Heron KC to investigate "integrity concerns" after Immigration Minister Erica Stanford revealed last month her officials "deliberately withheld" information from both her and the previous government.

That and accusations of "creative accounting" were laid out in a damning review into the department's handling of the project.

At least $35 million of taxpayers' money was wasted after the biometric capability upgrade (BCU) was ultimately stopped in 2025 after years of red flags, delays, and missed milestones.

In an unusual move Stanford has released documents to RNZ she would normally withhold under the "free and frank" provision, given the "significant public interest considerations and the fact that my recollections of the conversations are consistent with what is noted in the timeframe".

One of those documents, a timeline developed by her specialist ministerial advisor, Kara Isaac, clearly lays out the many emails, conversations, and meetings between the minister's office and her ministry officials, including the chief executive, between 21 February and 30 April 2024.

The Government has agreed to hand Golden Bay Cement up to $60 million to keep a cement plant operating in Whangārei.

Fletcher Building had been considering shutting down local clinker production and switching to imported cement as operating costs rose.

What's driving those costs, you ask? Well, Nicola Willis needs to save Golden Bay Cement from Nicola Willis's policies.

The Government is imposing carbon costs that make New Zealand industry uncompetitive, so is now taking money from taxpayers to stop the uncompetitive industry from closing.

Take with one hand, give back with the other - and send taxpayers the bill for both.

As we said when the deal was announced, the ETS should reduce emissions without sacrificing local industry at the altar of net zero — only for taxpayers to fund the rescue.

Golden Bay Cement competes against overseas producers facing different carbon costs.

If the result of New Zealand’s settings is to shut an efficient local plant, import the same cement from overseas, and export the jobs and emissions from our own ledger, that is not serious climate or fiscal policy.

Lack of transparency: What did taxpayers buy? 🤔

Then there is the matter of the agreement itself. As yet, the full terms of the corporate welfare "deal" have not been released.

We say that if taxpayers are footing the bill, they should know what they're getting. We've called for Willis to publicly release the deal.

Failure to deal with the problem: Why have an ETS when other countries aren't pricing emissions? 🏭

Jordan joined Duncan Garner's Editor-in-Chief and let rip.

As Jordan said, taking carbon charges from a company with one hand, then handing it a taxpayer-funded rescue package with the other, is a false economy.

The Government cannot fix every company made uncompetitive by its own policies with an individual taxpayer-funded rescue package. A cheque for Golden Bay (i.e. Fletcher Building) politically papers over the much larger crack.

The question politicians should really be asking is whether the Emissions Trading Scheme is still fit for purpose given that it was based on the assumption our trading partners would soon follow and price emissions (which is clearly not happening).

>> Watch the interview on YouTube here 📺  <<

Ratepayers’ billion-dollar art collection 🎨💸

It turns out ratepayers have unknowingly become the owners of New Zealand’s largest art collection.

Our new report, The Art of the State, reveals that councils collectively own more than $1.12 billion worth of art — but almost two-thirds of it is hidden away in storage, offices, or other places the public cannot access.

And we are not talking about a few dusty prints hanging in the town hall.

Auckland owns a Salvador Dalí. Dunedin owns a Claude Monet. Wellington owns a Pablo Picasso.

And as exposed on Newstalk ZB's Mike Hosking Breakfast this morning, even Rotorua Council owns some Goldies!

Auckland displays less than 2 percent of its collection, while Hamilton manages just 2.5 percent. Thirteen councils reported having none of their collections on public display at all.

Quite the public collection... if you are lucky enough to work in the storeroom.

To find out what your council owns, what it is worth, and how much of it you are actually allowed to see, click here to read the report over on our website.

Generation Screwed: asking young workers to pay twice? 👶💸

Last month, National announced plans to make KiwiSaver compulsory for everyone in work from 2028, automatically enrol every newborn, and steadily increase contribution rates.

Meanwhile, Chris Hipkins has ruled out reforming NZ Super - just two months after claiming Labour was open to a bipartisan conversation about it.

So young New Zealanders are being told to save more for their own retirement while continuing to fund an increasingly expensive universal pension for everyone ahead of them.

Our campus youth group, Generation Screwed felt, well... well and truly screwed.

There is a reasonable argument for encouraging people to save more for retirement.

But you cannot call it retirement reform while refusing to reform the taxpayer-funded pension young workers will also be expected to pay for.

Our Gen Screwed spokesperson Tyler Groenewald argued in The Post that KiwiSaver reform and superannuation reform cannot be treated as separate conversations.

Kicking the NZ Super can down the road might be politically convenient in an election year, but it does not make the cost disappear.

It simply hands a bigger bill to young New Zealanders already dealing with high rents, student debt, and a tax system tilted towards funding promises made long before they entered the workforce.

When Super was set up, there was one recipient for every seven workers. By 2060, when our Gen Screwed kids will be looking to their imminent retirement, that ratio will be just two workers to every recipient.

It’s not unreasonable to expect them to be concerned about what, exactly, will be waiting for them.

Tyler then took the argument to RNZ’s The Panel, explaining why politicians cannot force young people to save more while pretending the looming superannuation crunch does not exist.

Delightfully, one of the Radio NZ guest panellists is none other than a former Taxpayers' Union intern! Hi Eve 👋

Taxpayer Talk: Is compulsory KiwiSaver a trap? 🎙️

The same question is at the heart of this week’s episode of Taxpayer Talk.

Peter Williams is joined by our Board Chair and former Finance Minister Ruth Richardson, alongside Eric Crampton from the New Zealand Initiative, to unpack National’s compulsory KiwiSaver proposal and New Zealand’s looming superannuation crunch.

Is forcing New Zealanders to save more really the answer?

Or is it simply a way for politicians to avoid the much harder argument about whether universal NZ Super can continue in its current form?

Watch Peter Williams, Ruth Richardson, and Eric Crampton unpack the KiwiSaver trap in this week’s episode of Taxpayer Talk.

That’s all for today. Have a great week!