Taxpayer Update: Co-governance sham | Advertising bonanza | More bizarre grants

April 01, 2022 Louis Houlbrooke

Dear Supporter,

Before I dive into the rest of the newsletter: the ute tax comes into effect today, meaning anyone buying (for example) a Toyota Hilux will have to pay an extra $5,000 to subsidise someone buying a Tesla or Prius.

If there's a change of Government, we could see the tax repealed – but only if we keep this fight on the agenda.

Click here to get a bumper sticker and show your opposition to the ute tax.

Co-governance "consultation" looks a lot like a sham

Ardern Mahuta

After a year of dodging questions on He Puapua, the Prime Minister has now confirmed that her Government will begin consultation on the wider implementation of co-governance in New Zealand.

But it's hard to see the consultation as anything but a sham while the Government presses ahead with its co-governed Three Waters scheme.

As our Executive Director Jordan Williams put it:

One of the key flaws in the proposed Three Waters model is the total lack of safeguards against rent seeking by tangata whenua. Indeed, it appears that the scheme is being set up to allow expensive water royalties and other financial ‘support’ to iwi groups – something the Minister would not deny when I asked her about this on our Taxpayer Talk podcast.

Co-governance is a recipe for rent seeking and new taxes, and decouples those imposing the costs from democratic accountability.

If the Prime Minister wants a genuine discussion on co-governance, then she shouldn't let the consultation be a sham. Cabinet needs to hit the brakes on Three Waters until New Zealanders have had their say.

Our petition to stop Three Waters has now received 88,000 signatures.

The advertising agency that's making millions off taxpayers

Clemenger campaigns

1 News reports that the Government has spent $35 million in the last year alone on COVID-19 advertising.

We understand the need to communicate complex information about alert levels, vaccine eligibility, and isolation rules, but the quantity and quality of advertisements deserves scrutiny.

Clemenger BBDO has been a major beneficiary of this Government, winning most major ad contracts and spewing out multi-million dollar, cinematic campaigns. Browse their portfolio for yourself.

It's not just COVID ads. Clemenger's 'Safer Limits' ad for Waka Kotahi cost $2.4 million. And that's just the production; another $195 million is budgeted for the wider 'Road to Zero' campaign.

EECA's 'Gen Less' ads cost taxpayers $8 million, largely spent with Clemenger. The company also won contracts with the Human Rights Commission, Oranga Tamariki, MPI, the Teaching Council, Health Promotion Agency, Fire and Emergency, and more.

Not every ad needs to be big budget. Anyone remember the Auckland Glass ads? "0800, 804, 804". Cheap as chips, and memorable. There are countless agile new producers that can pump out ads on a low budget. The Government needs to review its procurement arrangements.

The bizarre COVID grants keep on coming

We've previously commented on the Ministry for Culture and Heritage's $60 million COVID "Innovation Fund", and it's time for an update.

The fund has now granted 105 projects a total of $15.9 million, and many of the spending decisions are truly bizarre:

$700,000 on a "digital storytelling experience" about the Manawatū River
$321,740 to tell the story of the Grey River using virtual reality
$20,000 on a business plan for Tongan mat-weaving
$250,000 on an online children's game about an albatross
$900,000 on an arts strategy for Christchurch
$20,000 on a children's book that requires the reader to install an app
$248,460 on traditional Māori painting

You can find a longer list of examples on our website here.

Common themes in the funded initiatives include virtual reality, storytelling, digital installations beside rivers, and bespoke IT projects.

Needless to say, none of these projects have any relevance to COVID-19, despite the money coming from Grant Robertson's rapidly-dwindling "pandemic fund". The spending decisions are almost funny until you remember that every dollar could have been spent bolstering our health system, or returned to a struggling taxpayer.

Incredibly, there is still another $44 million to be spent from the fund, and it is clear to see that the Ministry has run out of worthwhile projects to bankroll. It's only a matter of time before taxpayers are literally funding underwater basket weaving.

High inflation leads to $637 million debt write-off for uni graduates

We're blowing the whistle on a debt write-off for university graduates that's costing taxpayers hundreds of millions of dollars per year.

While it is well-known that student loan balances do not accrue interest, it is often forgotten that balances are not even adjusted for inflation. This means student loan balances shrink in real terms every year in line with the inflation rate – effectively a taxpayer-funded debt write-off.

The total value of unpaid student debt sits at around $10.8 billion, listed as an asset in the Government books. But the real value of this debt is rapidly being eroded by high inflation – with an inflation rate of 5.9%, the Government has effectively written off $637 million in student debt in just 12 months. That's almost as much as the Government was planning to spend on the Waitemata Harbour "SkyPath" bike bridge.

The incentive problem is obvious: savvy students will repay their loans as slowly as possible, maximising costs to taxpayers in terms of both the inflation write-off and the interest write-off.

This is a regressive wealth transfer from working New Zealanders to the privileged – people with university degrees earn significantly more than those without. Even under Australia’s interest-free student loan scheme, recognised as one of the world’s most generous, loan balances are still indexed for inflation.

Spanish taxpayers have done us a $99 million favour

This week we're thanking the taxpayers of Barcelona and Catalonia for taking the $99 million America’s Cup defence off Kiwi taxpayers’ hands.

Funding for a millionaires’ boat race was never a good use of taxpayers’ money when we are facing a generational debt monster and painful inflation.

The success of the Spanish bid means $99 million is freed up for the Government and Auckland Council to pay down debt or to be returned to taxpayers and ratepayers. And we won't have to endure another $900,000 Rod Stewart singalong:

Revealed: DIA's furniture blowout

Furniture graphic

We've exposed how the Department of Internal Affairs spent $2 million on furniture during a period in which much of their staff were working from home.

Some staff members were even given adjustable footrests to install in their home offices!

Click here to read the details.

The polling that explains the Govt’s fuel tax cut

A month ago, the Finance Minister was blaming fuel costs on international conditions and warning that fuel tax relief would impact road funding. But then the Government changed tack, and rustled up money from the COVID slush fund to cover the revenue loss.

Perhaps the Government's internal polling showed something like this:

That's a scientific Curia poll we commissioned just before the Government announced the temporary reduction in petrol excise tax.

In fact, 80% of Labour voters supported tax relief. In the most deprived areas of New Zealand, support for tax relief was 88%. Click here to see the in-depth data.

The lesson from the fuel tax cut is that regardless of our Government’s ideological bent, it can be forced to listen to people-power, strong campaigns, and public opinion.

The problem the Government faced was that New Zealanders had already made the mental link between high fuel costs and high government taxes. This didn’t happen out of the blue: the Taxpayers’ Union worked hard to ensure that New Zealanders knew around half of their petrol bill was made up of taxes and levies.

Click here to see Newshub's coverage of our 'Fuel Tax Honesty Day' event.

The Government's preferred candidate for UK High Commissioner is under investigation for corruption

Goff

According to the NZ Herald, Cabinet is set to sign off on appointing outgoing Auckland Mayor Phil Goff as High Commissioner to the United Kingdom.

But there's a problem. Has everyone forgotten that Goff is currently being investigated for electoral curruption over an alleged failure to declare election donations apparently linked to the CCP?

It beggars belief that Cabinet would even consider the London gig while the stench of Chinese electoral fraud is still hanging over Goff’s head.

We contacted the Minister of Foreign Affair's office and asked whether anyone has ever been appointed as an ambassador or high commissioner while being investigated for a criminal offence. They couldn't find a single instance.

New Zealand currently has a good reputation within the international diplomatic community. That reputation is vital to achieving high-quality trade deals and security arrangements. Let’s not put it at risk.

Taxpayer Talk: RNZ/TVNZ merger + Wellington's allergy to economists

The Government has confirmed plans to merge RNZ and TVNZ into a single publicly-owned media monolith. I sat down remotely with National Party Broadcasting spokesperson Melissa Lee to find out exactly what problem the Government thinks it's solving, and how this move will impact New Zealanders' trust in the independence of the media. Listen here.

The Treasury recently advertised for a senior economic analyst with "no economics background required". Professor Robert MacCulloch says this is just the tip of the iceberg and in fact reflects a wider agenda in the public service to turn away from orthodox economic rigor. I sat down with Rob to discuss the disturbing consequences for New Zealand's economic stability and quality of life. Listen here.

You can find all of our Taxpayer Talk episodes on Apple Podcasts, Spotify, Google Podcasts, or iHeart Radio.

Have a great weekend,