Supporting welfare justice with the Alternative Welfare Working Group

Yesterday I attended the Welfare Justice Alternative Welfare Working Group forum at Tātai Hono Marae in Auckland. Over 50 people engaged in an excellent process of discussion on welfare reform on the basis that people mattered. The fora, which are being held in a diverse range of communities, are stimulating a positive vision of welfare without the narrow parameters and punitive agenda of the Government’s official Welfare Working Group.

People from community groups, people currently on benefits, people from churches,  and people from social service agencies were all participants in brainstorming some key principles for alternatives. Under the leadership of Sue Bradford, Associate Professor Mike O’Brien, Bishop Muru Walters, and the Anglican Social Justice Commissioner Anthony Dancer, we discussed the need for a broad culture change which would stop the stigmatisation of people who at times need state financial support.

Longer term strategies such as a Universal Basic Income or at least some universal provision for children were well supported in order to simplify the system and remove the judgmental attitudes often attached to all benefits other than New Zealand Superannuation.

There was a realistic understanding about the costs of change at both the ideological and the practical levels. The visions of a compassionate and respectful agency which supported people to towards meaningful work were supported, alongside a call for immediate changes.

These included extending Working for Families to all families and restoring benefit rates to pre-1991 levels; restoring the discretionary Special Benefit for people who cannot meet their essential financial commitments; and creating some real jobs appropriate for the diversity of people who need them.

Consistency in the application of welfare law across the country and accessible and affordable child care were seen as essentials. Work and Income need to foster a culture of respect towards the diversity of all who need help, and they need the resources to do it well.

Some people had experienced the disempowerment of unemployment in a society which defined work as paid work only. An often stated view was that the Government’s official Welfare Working Group is not engaged in a real dialogue with all parties on the meaning of welfare and well-being, let alone the definition of ‘work’ or of ‘dependency’. Many contributors felt Government is targeting the most vulnerable, and threatening sanctions at a time when jobs are not available for many people who are parents, live with disability, or lack of literacy.

The Welfare Justice Alternative Welfare Working Group were given a clear message that their work is essential to balance the cost cutting agenda and misleading statistics with which the Government is manufacturing a sense of crisis around welfare costs.

The Green Party looks forward to seeing all the findings of the national fora, and to work with both the long term vision and practical suggestions of people who actually understand the welfare system and how to transform it for the good of all.

UPDATE: The Alternative Welfare Working Group are seeking submissions on the principles that you think are important for social welfare, examples of where these principles are or are not being applied, ideas or recommendations for change, and any general comments about welfare change.  You can make your submission here.  The closing date is 30 September.

43 thoughts on “Supporting welfare justice with the Alternative Welfare Working Group

  1. So basically its another whine about needing to live off of others peoples money by the left and entitled…nohing new to see here…move on.

  2. Jimmy-I thought it was recognition of the need to address New Zealand’s huge problems of income disparity, poverty and shocking child health and safety statistics.

    Perhaps you could reflect on why working people have to subsidize polluting industries through the ETS, bail out poorly managed and failing finance companies and accept the ever increasing tax benefits going to high income earners. A little money coming the other way to address those in greatest need appears perfectly reasonable to me!

  3. Jimmy-I thought it was recognition of the need to address New Zealand’s huge problems of income disparity, poverty and shocking child health and safety statistics.

    What… by more welfare dependancy,tax theft and bigger state busybodying? Thats the bloody problem!

    Perhaps you could reflect on why working people have to subsidize polluting industries through the ETS, bail out poorly managed and failing finance companies and accept the ever increasing tax benefits going to high income earners. A little money coming the other way to address those in greatest need appears perfectly reasonable to me!

    But its all the same thing…the failed theory that the resdistribution of other peoples money will make us all better off…it hasn’t worked yet and never will.How about tax free thressholds that leave money with people in the first place therefore not requiring any tax and spend in the first place? How about ending the state backed culture of privilage that always ends up favoring the rich and established against the poor and small start up businesses that would level the playing field and by default spread the wealth about far better?

    Keeping people trapped and addicted to welfare and state dependancy is not the way to go.Reflect on that..

  4. I agree that Aotearoa has a ‘issue’ with the level of beneficiaries, but we have more of a problem of wage disparity. Its easy for people on >$100k to sit on their high horse & get the biggest tax cuts & THEN say lets put the boot into the ‘bludgers’ at the bottom.. but is it really helping ? “NO”.
    Methinks this Govt. is doing this because they know that beneficiaries & low-end workers will likely never vote for them.. so they dont care about how it affects this part of society..
    Why are so many kiwis crossing the ditch ? because they get a fairer deal & a bigger share of the wealth (been there). Time to “WAKE-UP”… Kia-ora

  5. Jimmy: we have a prime minister who has made millions off other people’s money! It’s called capitalism, I think! So it’s O.K. for the rich to do it, but not the poor? Perhaps you could come up with some sensible ideas about how we can collectively address the issues raised here by Catherine and Sprout.

  6. “How about ending the state backed culture of privilage that always ends up favoring the rich and established against the poor and small start up businesses that would level the playing field and by default spread the wealth about far better?”
    Indeed – but this group is looking at the immediate needs of those who, for one reason or another, haven’t got paid work. Note that Catherine does mention supporting people looking for meaningful work – that is the ideal, not continued dependency.
    It also depends on how you define ‘work’ – caring for children, the elderly or the disabled apparently only counts if you are being paid by an agency to do it, yet many thousands of people do this every day for their own and it is not called work.
    ‘Work’ that contributes to the destruction of our society (tobacco, gambling etc) is not what we want to see either – yet the people in these industries are generally far wealthier than those who care for the next generation.

    It just is not as cut-and-dried as you seem to think.

  7. Jimmy: we have a prime minister who has made millions off other people’s money! It’s called capitalism, I think!

    Yes…and so what? He made it by knowing how to get the best return from resources and putting buyers in touch with sellers…thats what he did and was good at it…so good he made a lot of people a lot of money,thats why he made millions,it is the reward he deserves for doing so.He only got payed a fraction of the total wealth he created…as all business people do.

    Most of the wealth went to others whom he served.And his is a majorly important job.Putting resources into the most efficient hands makes us all better off as it saves on wastage and improves our standard of living.

    So it’s O.K. for the rich to do it, but not the poor?

    Perfectly ok by me…having more rich people and less poor people is great for everyone.Nothing stopping the poor from getting rich…but themselves,(and a lot of State created obstacles)Key himself rose from a state house background.He didn’t start rich…most successful people don’t…they just make more effort and don’t quit as easily as many of those who remain poor.Its caused the law of cause and effect.

    You seem to be unaware that wealth needs to be created…theres no natural wealth pie that everyone is entitled to an equal slice of AS OF right.People bake their own pies by their own efforts.

    We need to free and incentivise people to do so…thats the issue.

  8. Janine: Indeed – but this group is looking at the immediate needs of those who, for one reason or another, haven’t got paid work. Note that Catherine does mention supporting people looking for meaningful work – that is the ideal, not continued dependency.

    No issue with that….excellent.but the same failed tax and redistrubte lines will be trotted out as solutions to a situation that was caused by previous tax and redistribute solutions offered by pollies now long dead and gone.

    We need to start doing things differently if we want to get a different result.

    It also depends on how you define ‘work’ – caring for children, the elderly or the disabled apparently only counts if you are being paid by an agency to do it, yet many thousands of people do this every day for their own and it is not called work.

    Its work…but not work that is valued except by a select few on the reciving end of it.People choose to raise kids and look after people….it is up to them to sort out their situations re income.Working partners etc is how many people do this.It would help a lot if they could keep more of their money in the first place instead of having it taken for causes that others think more worthy.

    Work’ that contributes to the destruction of our society (tobacco, gambling etc) is not what we want to see either – yet the people in these industries are generally far wealthier than those who care for the next generation.

    But these people are also creating wealth that helps out the poor by supplying a product or service people want.We all value subjectivly …things that we want may not appeal to others….a free market allows all of our wants to be met without preventing anyone else froom doing the same.The reason Dan Carter gets paid what he does is that more people value his abilities over those of many others and are prepared to pay for the privilege of enjoying him use them…we all vote and some get more votes tahn others…thats life.

  9. Jimmy-you don’t seem to realize how many New Zealanders are in full time work but struggle on minimum incomes, or those that genuinely need support during a temporary phase in their lives. The constant focus on the small percentage who choose to be dependent on the state when they could be self sufficient and then deny the many thousands who are deserving is heartless in the extreme. The fact that this government blatantly throws money at groups who plainly don’t need support (35 million to private schools) then refuses others who do deserve support (Early Childhood Education) makes their intent clear.

    It is not about an artificial redistribution of wealth but valuing people, paying them realistic wages and having useful support where it’s needed.

  10. Sprout,

    Then surely a prerequisite for the Alternative Welfare Group agenda should be looking at where the welfare funding is to be derived from.

    Your reasoning that plenty of benfits are encrued by rich (over $60,000 per annum gross??) and not by poor is not substancuiated by facts.

    If one was to take out ALL state employees earning over the $60,000 mark there are not many tradeable sector workers over the $60,000 mark.

    Now if we could get those state employee workers’ earnings from the non tradeable (non tax paying) sector into the (tax paying) tradable sector, New Zealand can then cetainly afford to pay much more and have higher volumes of resources available for benficiaries being hard done by when in between tradeable sector jobs.

    Wonder if the agenda includes economic measures to ensure SUSTAINABLE funding for welfare.

  11. I think Govt spending is all about priorities and targeting highest need and long term value. Investing $90,000 a year to keep people in prisons without effective rehabilitation and reduce support to struggling families is nonsensical. What you invest in children today will be a saving in later years. If you invest money in a young single mother in the form of childcare support and education it will mean children who are functioning well at school and a mother who has the qualifications and skills to support herself and her child in the near future, and won’t be an ongoing burden to the state.

    There will always be Govt funds that go into education, welfare, health, defense, justice and large sporting events and any decision should involve humanitarian concerns and the fact that if you don’t invest it it now it will cost the earth later!

  12. Catherine says “These included extending Working for Families to all families and restoring benefit rates to pre-1991 levels; restoring the discretionary Special Benefit….. ”

    And

    “There was a realistic understanding about the costs of change…”

    Two questions –
    – You’ve said there is a realistic understanding of the costs – what are they?

    – Where will you take this money from?

  13. Photonz1-NZ taxes are actually lower than many OECD countries and much lower than Australia where higher incomes are taxed more heavily. I am more than happy to pay more tax if I get an improvement in services and can see those in real need supported properly.

  14. sprout – how much of a pay cut are you happy to take?

    How much more would you pay per week?

    And if you really and truely feel that way, are you actually taking that amount off your wage now and giving it to good causes.

    Because there’s nothing to stop you doing that now.

  15. Sprout,

    The task undertaken by the group is to

    Alternative Welfare Working Group were given a clear message that their work is essential to balance the cost cutting agenda and misleading statistics with which the Government is manufacturing a sense of crisis around welfare costs.

    As the primary function is to “balance the cost” surely the first item on the agenda is a funding issue.

    Agenda Item 1

    How much money does it require to fund ALL the welfare programmes

    Agenda Item 2

    Where will the money come from.

    You are suggesting increased taxation, setting all prisoners free and not paying subsidies to privately funded schools.

    I’m suggesting cutting taxes to leave people have more of their own money in the pocket (to donate like photo suggest to charity) PLUS a substancial reduction in non tax paying (except GST) state servants and turning those civil servants into a tax paying tradeable sector workers.

    You will get a larger increase in taxation by dismantelling the state apparatus back to 15% of the economy (currently close to 45%).

    Just imagine a 30% increase in tax payers and the double whammy effect of not paying their salaries PLUS increasing the tax take.

    Now you are gettting serious money into the treasury for providing a safety net (not a hammock) welfare system.

  16. Here is my own personal take on the matter.

    First of all, we need to do something to simplify and reduce the scale of the welfare system. As it stands, we have a massive number of benefits that people who potentially need the money cannot understand at all – and simply adds more work to those administring the scheme. Not only that, but it has become very costly, with social welfare (not including NZ Super) accounting for 20% of government expenditure, or around 8% of GDP. When you include NZ Super, those figures both double. Is it truly sustainable to have a situation where for every dollar that this country earns, 16 cents has to go on some form of welfare?

    Of course this doesn’t take into account the perverse incentives that exist. If one looks at Working for Families, for instance, at some income levels, you end up with effective marginal tax rates at around the 70% mark because not only are you being taxed highly, but you are also losing your Working for Families benefit.

    I do like the Universal Basic Income concept, provided that it is used in a manner that can eliminate all other forms of social welfare. If we had a Universal Basic Income of let us say, $10,000 per person (and I am including children here), then in a worst case scenario, the government would need to pay $40 billion – which is not much higher than what is currently paid in welfare. Obviously, we will not have the situation where every single person refuses to work.

    What I would then suggest is simplifying the tax system at the same time. A zero tax threshold up to $20,000; a 20% threshold from $20,000 through $50,000; a 30% threshold from $50,000 through $70,000 and a 40% threshold from $70,000 and upwards. Obviously the trust rate would need to increase to 40% as well.

    Such a system would mean that people earning less than $30,000 would not be paying a cent in tax. Not only that, but we would have also gotten rid of the vast majority of other forms of welfare. I would suggest that Sickness, Invalids and Veterans Benefits not be touched, although the Universal Basic Income would not apply to them.

  17. “And if you really and truely feel that way, are you actually taking that amount off your wage now and giving it to good causes.”

    Photonz1-I agree and I do. There are few charities I don’t support and, although I can’t put a figure or percentage on it, a considerable part of our household income goes to charities and NGOs. My whole family are also fully involved in voluntary service as well. It also well known that the less affluent are more prepared to support charities and those in need than the most affluent and when I have helped with charity collections this has been in evidence.

    Denmark has amongst the highest levels of taxation but high levels of social services and appears to function very well. It is also one of the most equitable societies in the world and suffers none of the issues around poverty that New Zealand does.

    http://en.wikipedia.org/wiki/Economy_of_Denmark

  18. It would really inform this discussion if we could compare % of GDP spent on welfare in New Zealand compared to other countries. If we are concerned at increases in funding, what is it related to? The Government cut funding to Early Childhood education for example because of the huge increases it had received in recent years, yet this represented a much needed catch up and the .6% of GDP spent on EC education is considerably less than the 1% OECD average. Where does our expenditure on welfare sit in reality or are we dealing with smoke and mirrors?

  19. Gosh, UBI, and EMTR…. Changing from the system of welfare benefits to UBI at $10K/annum would be a start, but we would need to look at the cost of rentals so that there is sufficient income to buy food/clothing as urban rents can be well over $100/week/person…..
    As for EMTR, assume a young person (under 25) on the UB with rent of $125… The EMTR is 92% after $80 until the UB runs out….. so perverse incentives do exist my brothers/sisters…
    Assuming current benefit rates to be fair (as opposed to being reasonable) then I suspect we pay because we do not want folk in abject poverty… but then again, I might be wrong….
    As for comparing the spend on welfare, tax rates and so forth including levels of overall poverty and child poverty several reports available via the UN, OECD, IMF, World Bank….

  20. sprout – Denmark has some high levels of social support, like unemployment benefit ……

    ….IF…

    …..you have unemployment insurance (which stops after 4 years)

    Otherwise the unemployemnt benefit it pretty small (and you have compulsory inverviews every 12 weeks, and compulsory work programmes)

    To get these “high” levels of social support they pay a marginal rate of 70% tax AND 25% gst.

    OECD has warned that Denmark’s ultra high tax is resulting in it becomeing LESS productive and LESS competitive.

  21. It’s not possible to return to 1991 benefit levels as the cuts coincided with the introduction of the accomodation supplement which was compensation for those renting.

    The problem with a universal level of income support per child – our low level of tax revenue does not allow us to afford this at a level which provides adequately for families where parents are on low incomes. It is not easily compatible with the targeting approach used by WFF.

    More likely is a move to inflation proof (back index) the existing universal child benefits (which have fallen in real terms) which will address some of the poverty issues again emerging.

    As for a guaranteed minimum level of income (for an individual) – there are too many problems – such as regimes to work test beneficiaries, different rates of benefit based on age, reduced rates for couples and established preference for GMFI.

    A level of income free of tax (does not help beneficiaries as their amount is tax adjusted) supports those living off savings and those in part-time work etc.

    One option is to reduce GST on necessities such as food, power and rates (say to 10% and increase GST on other discretionary items to 20%. Few countries have a universal rate GST as we do. They either exempt things such as food entirely or have a lower rate. This reduces tax on those with little spare income for discretionary income and increases it on those with discretionary income and who choose to spend it rather than invest it.

  22. SPC, and others – it is entirely possible to restore the 1991 benefit cuts – it simply takes a government willing to do it. As it happens in prior to the cuts there was second tier accommodation assistance called the Accommodation Benefit. Its formula was not too dissimilar to the current one. Restoring the benefits would mean much reduced need for the third tier of assistance (Temporary Additional Support or those still grand-parented to the Special benefit) which would mean reduced administration for both W&I and the beneficiary.
    As for GMWI or UBI, it is just that, a rate per adult, with a rate per child. Work-testing per se is not required.

  23. Graham Howell

    Is the UI proposed to go to all adults regardless of other income – or just those not working, or not receiving a benefit or not entitled to super – that is those not entitled to get a benefit or super, because they are under 65 and have a working partner, or are not seeking work?

    (We could simply make access to the dole available to non working partners seeking work, or for women with children under 6 without a work test as with the DPB – with an equivalent subsidy for child care for those working).

    Why do the reasons we have different rates of benefit dependent on peoples age not apply to a UI?

    On the issue of the 1991 rates of benefit, comparisons between the benefit level then + CPI adjustments to the lower level it is now are certainly useful in explaining child poverty rates. But the first campaign has to be to lift the per child benefits which are universal fully inflation adjusted (backdated). The error of the campaign so far has been to propose making the WFF In Work payments universal – defending the WFF programme to support the working poor (including inflation proofing these per child payments) is a separate fight, as is the $15 an hour minimum wage campaign.

  24. Universal Income or Citizens Income in theory is designed to go all citizens/residents regardless of market income/age etc although models I have seen discount for children. Market income is taxed at a flat rate. In effect, total income has a marginal tax rate. There is a huge interest in Europe on the issue. It is simple in construct and has its fans and opponents on the right and left with some very eminant economists in favour. Debate centres as much as how the UI/CI affects labour market participation as it does the real source of market incomes (personal effort or a construct of the market). Another major issue is setting the rate that is livable, and in NZ in particular the cost of accommodation is significant – far more so than in Europe.
    Making the benefits available to non-earning partners might be a version of it, as is income sharing (Peter Dunne’s idea).
    How those with additional needs are assisted is not strictly speaking an issue for proponents of UI/CI to solve…. but if they are health related the solution is through funding/providing health services etc, is educational needs via education funding.

  25. Restoring the 91 benefit rates… Two issues, the core benefit rates, and child assistance.
    One of the biggest losers with the 91 benefit cuts were actually single people under 25 as for some reason the govt thought these peopl could survuce of 5/6th of their 25+ counterparts. This gap needs addressing.
    Child assistance should be universal…the trick is at what what rates. If the household has no market income (that is they are on a benefit only) the the FTC alone is insufficient if living in an urban area. hence the call to universalise the In Work Tax Credit. The issue is then, is the FTC+IWTC universal -that is, not income tested or not. Comes down to affordability. I support it being non-income tested.

  26. Speaking to the practicalitities (favoured more affordable options) – as to the under 25 rate benefit – I would focus on increasing the student allowance to the age 25 dole rate, this rewards those under 25 in education and training etc (and covers some of their extra costs and reduces pressure to work part-time while studying freeing up jobs for others) – this improves the likelihood of the poor student being able to successfully complete their studies.

    A campaign to increase the per child credits available to those on benefits (backdated inflation proofing) while also campaigning to maintain the real value of the In Work credit is the most affordable option that delivers results.

    Of course an investment in public housing – improved standard (affordbale heating) and an extra 10,000 homes (65 to 75,000) is also necessary. Here I support selling the 5000 market rent homes and also surplus 3 bedroom homes (buying up 4 bedroom and 1-2 bedroom properties with the money raised by the sales to cater to need/demand).

    I see these as the priority areas (along with $15 an hour minimum wage).

  27. One option is to reduce GST on necessities such as food, power and rates (say to 10% and increase GST on other discretionary items to 20%. Few countries have a universal rate GST as we do. They either exempt things such as food entirely or have a lower rate. This reduces tax on those with little spare income for discretionary income and increases it on those with discretionary income and who choose to spend it rather than invest it.

    SPC, the question is though, what does one define as a necessity and what does one define as a luxury? A British court had to determine whether or not a Jafa cake was a biscuit (and thus charged no VAT) or a cake (and thus charged VAT). Do we really want companies going to court?

    In an ideal world, you would want such a split system, but it would be riddled with administrative nightmares. Furthermore, would it really result in a decrease in prices, or would it just line the pockets of business?

  28. In relation to simplicity and GST with a political decision to exempt certain items, it seems to me to the questions is: the item being sold meant for human consumption? If so, exempt.

  29. It would be better to keep GST simple and help those on low incomes with a guaranteed minimum income, for all adults and children, administered through IRD. This also simplifies the tax and benefit system.

  30. I agree Kerry, and in fact I sugegsted this in my submissions to both the Rebstock Welfare Working Group and the Welfare Justice one. IRD gather wage income details on a regular basis thus can adjust the state income taking into account wages from part-time/casual work etc.
    I also suggested Civics education – essentially rights and responsibilities of citizenship – in the hope attacking those on benefits might reduce….hint, hint Paula B and others – along with several other thoughts and ponderings.

  31. Graham Howell says “the item being sold meant for human consumption? If so, exempt.”

    And what about the gst on the packaging it comes in?

    And what about the gst on the transport and fuel used to get it there?

    And what about the gst on electricity used to produce it?

    And the gst on fertilizer used to grow it?

    And gst on rates on the land where it grew? And the tractor, and fuel for the tractor?

    Whatever way you look at it, the vast majority of gst on producing food and bringing it to market will still have to be paid one way or the other.

    You can take gst off food but it won’t actually make any differecne to the price.

    All the other gst paid in bringing food to market will STILL have to be paid.

    And that money has to come from the total price of the food – and if that’s not from the gst portion, then the base price will have to increase by virtually the same amount.

    Bringing in variable rates of gst for different products is a really stupid idea.

  32. Interesting questions Phutunz… Srictly speaking should be for a GST forum, but I will answer…
    Essentially GST is paid for if registered the GST paid is reimbursed. GST is due on the revenue from the sold item. As far the retailer goes, the GST liability on for example a frozen dinner would be zero rated for the entire product. The supplier of the frozen meal to the retailer may well be able to differentiate between ther food and the other costs (not zero-rated) but the retailer cannot,
    But as this thread/blog is about welfare justice further discussion on GST is reseved for a Tax Accounting lecture, and my charge out rate is $100/hour plus GST.

  33. Graham – so the retailer still has to pay all the gst on the product as it’s made it’s way to market, but cannot charge the end consumer.

    As the retailer has the same costs as they do now, they will need to charge the same total cost for the item as they do now.

    As they have not charged gst to the customer, they cannot claim back the gst they have paid to suppliers.

    Taking gst off food would massively complicate accounting for gst, without making any real difference to prices.

    So where is the benefit?

  34. Phutunz1, the clock is running at $100/hr, send me an address for the invoice…
    If the item is zero rated the retailer has no liability to the IRD for GST. If part of the costs the retailer paid her supplier has GST on it the retailer can claim this from IRD, hence not out of pocket as far as GST is concerned. Any mark-up should be on the price without GST….Cost thus far $20 plus GST. Do you wish to continue Tax Accounting lessons… If so, off-line and an address for invoice.
    Following comments relate to welfare justice thread … the issue is one of priorities for government. Does it want to forgo tax revenue from not having GST on food, or does it want to spend the equivalent through a “welfare-social-justice” programme such as universalising the IWTC, or back-dating the annual CPI adjustment it makes to benefits each 1 April (which would be very complicated), or removing the “gap-cap” that exists for the Temporary Additional Support? My preference is the last, then the second but I know the bene basher Paula B is unlikely to do any of the three as each would alleviate hardship.

  35. Graham,

    I dont think you are correct. Are you saying that if an item is zero rated then anyone in the chain from manufacture to distribution to warehousing to retail does not pay GST on their transactions?

    I think photonz was trying to say that each transaction BAR the last one is GST liable and that GST cost will be included in the price that the retailer purchases the goods for.

    All GST free at the end of the transaction does is shift the payment from the consumer to the retailer.

    The retailer will add that cost into the consumers retail price to cover their overheads.

    Wish it did work like you said, we do a lot of export zero rated GST stuff but pay GST on ALL raw materials, tooling, electricity, etc. sourced in New Zealand.

  36. Long time since I have tutored accountancy. Addresses please for invoice! If a person/business is GST registered they complete a GST return. They claim the GST on the purchases/out-goings that had GST on them but some out-goingsd like wages, salary and bank fees are zero-rated, that is they do not have GST on them and similarly some of the thnigs they “sell” may be zero-rated… The GST regsitered entity claims the GST paid from IRD AND they owe GST to the IRD on the the GST rated stuff they sell. If some items are zero rated then the GST return by the retailer-wholesaler-farmer-tax accountant shows this… both in terms of outgoing and incomings.
    Now back to welfare justice…. Any comments on priorities on welfare reform….
    I also recommended nationalising all residnetal property that was not occupied by the owner. The state would pay NPV for the property and rent to exisitng tenants at income realted rates. I allowed for an ability for rent-to-buy. Moneys received by former owner could be converted into “savings” into retirement funds or be availav\ble for the individuals own investment into more productive sources.

  37. Graham,

    See as a cabbage grower I run a set of accounts on behalf of the IRD.

    I collect GST from my customers and off set this with the GST content of my expenses. Every couple of months I send a cheque to the IRD for the difference.

    So now as a cabbage grower I still pay GST for my expenses but can no longer claim that back as the retailer does not pay me any GST?

    As a superior accountant you will no doubt tell me how to negate my GST payment I owe for my expenses that I can no longer offset against my sales GST collections.

    So while the consumer may no longer pay the GST, it will still be added to the end price as I (or anyone else in the chain that pays GST on expenses) need extra income to cover the GST content of my expenses.

    Income I can no longer claim from the sale of my cabbages.

    Pity any retailer that sells food and non food, they would need to have two sets of accounts. Or can they claim GST content of the whole of the business expenses against the non food GST collected?

  38. Graham –

    So farmers should pay gst to the govt gst, via their suppliers, on all the things they use to grow their products – tractors, equipment, fertilizer, fuel etc.

    Then they should claim it all back because they are selling a zero rated product.

    Then the wholesalers should pay gst on all the things they use to wholesale the products – trucks, fuel, rates etc.

    Then they should claim it all back because they are selling a zero rated product.

    Then retailers should pay gst on all the things they use to sell the products – advertising, rates, electricity, signage etc.

    Then they should claim it all back because they are selling a zero rated product.

    So we have masses of accounting, money being paid via thousands of companies to the government – then every cent claimed back.

    And you think this is a good system. Masses of work, accounting, payments, a giant money go round – all for a final gst payments of ……..zip, nada, nothing, zero.

    And you want $100 and hour for your advice – I wouldn’t pay 5 cents an hour for someone who thinks this is a good idea.

  39. Heavens phutunz et al, If my out-goings (purchases) include items that have GST rated items I claim that GST back. At the place I am chairperson of, our out-goings are supplies, rent and wages. The supplies have GST on them and we claim this back. The wages are zero-rated, thus have nothing to claim back as far as that expense goes. Our income is membership subscriptions, Payment for services received, grants and donations. The first three are GST rated, thus 1/9 goes to the IRD. Donations are zero-rated. Whether we pay IRD or they pay us is a result of the sums of GST coming and going for the two-month period. This is the case for every GST regu\istered entitty. The fact an additional set of goods may be zero-rated if this is what happens to food simply affects the coding of the outgoings/ingoings.
    And rather attack me; look towards Sir Roger. While he did not invent it, he certainly imposed the methodology on us. Claiming back is part of it as opposed to Sales Tax. I guess by now the fee is well over $100….

  40. Frog says “GST is off topic. Please continue this conversation in the latest general debate thread if you wish.”

    The last general debate thread is so old it’s link has dissappeared of the recent posts list.

  41. Thanks Frog for the moderation!
    A further recommendation I made to both Welfare Working Groups (Rebstocks and the Welfare Justice) was around “associative democracy”. In particular I spoke of the need to remove the barriers to community particpation. Community participation was an essentail element of both the Royal Commisions in social welfare/social policy in the 70s and 80s. Associative democracy assumes all have a legimate role/right and indeed responsibility to be involved in communities of action to whatever level desired BUT that finance sometimes is a real barrier. It is about removing/reducing these barriers.
    Attitude is also a barrier – leading to or cayused by beneficiary bashing (or for example highlighting the small number of seriously dysfunactional families as opposed to the serious impacts of insufficient income after accommodation costs many on benefits/min wage face) hence my recommendation about civics. Here, hopefully our children are taught to regard each other as fellow citizens irrespective of employment status…. and this may influence the b’crats of the future not to look down on those not in paid work….
    Lets debate welfare justice….

Comments are closed.