NZ Green Party
AGM update: political position, Kiwibank, tackling child poverty

Political positioning, a call to boost Kiwibank, a plan to cut child poverty in NZ plus candidate and campaign training.

The Green Party’s AGM in Auckland has had it all over the long weekend.

Political positioning was confirmed yesterday and summed up by Metiria thus:

We’re more likely to support Labour on confidence and supply, and think it is highly unlikely that we could support a National Government on confidence and supply, but it is on the table … It’s more likely we could work project-by-project with National like we do now on home insulation, tourism infrastructure and toxic site management

The Greens position has at least two features:  it’s constructive and it’s honest ie. willing to talk with either of the big Parties, realistic that support for a National-led Government is improbable.

Russel Norman led off with a speech outlining five steps for a cleaner, greener economy. It featured a call to give Kiwibank the Government’s master banking contract.

The Green Party is serious about fixing our banking system so that we are no longer mortgage slaves to the Aussie banks….Our Government’s banking should be done by our New Zealand bank.

Moving the Government’s accounts to Kiwibank would require a careful transition over several years, he noted. And the short term step would be to tender the Government’s master banking contract and to break up the current Westpac monopoly.

As well as announcing the Party’s political position, Metiria talked about how the Greens would tackle poverty in NZ.  In addition to steps like raising the minimum wage and giving more Kiwis access to the Training Incentive Allowance, she noted perversity in the way the In Work Tax Credit operates:.

Imagine Jane, with a husband who has a job, Jane works 20 hours a week at a primary school in Westmere. She qualifies for the $60 per week In Work Tax Credit. Sarah, a single mum, works 20 hours a week at a school in Grey Lynn, but she is also on the DBP. Sarah is disqualified from receiving the In Work Tax Credit because she gets a benefit. It leaves her and her kids struggling with $60 a week less.

The easiest way to correct this inequity was to extend the same tax support to all children whether their parents were in or out of work, she said.

The conference, spread over the Queen’s Birthday Weekend (happy birthday to all queens out there), also saw a bunch of candidate training and branch development sessions.  Everything from how to use social media more effectively to accounting practices for hard working local treasurers.

Aussie Greens leader Senator Bob Brown offered some inspiration as guest speaker on Monday, sending delegates home with a burst of enthusiasm.

So, six months out from the election, the Party has a talented crop of candidates, a clear sense of urgency, ambition and direction….bring on November.

99 thoughts on “AGM update: political position, Kiwibank, tackling child poverty

  1. You can receive an in-work tax credit as long as you’re normally in paid work for at least:

    30 hours each week as a couple, eg one person works 5 hours and the other works 25 hours, or
    20 hours each week as a single parent.

    Sarah can’t get an IWTC and the DPB. If she is opting to stay on a part DPB it is because it leaves her financially better off.

    The IWTC is an incentive to work. If it is given to all DPB beneficiaries where then is the incentive?

    Like or Dislike: Thumb up 5 Thumb down 4 (+1)

  2. Is it even legal under our commitment to CER, to favour one company not because of it’s performance – but solely because of who owns it?

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  3. While I understand the reasons for Kiwibank becoming the “Government Bank”, I would raise a number of concerns. Firstly, because Kiwibank branches are inside Post Offices, a lot of bank transactions with Kiwibank take forever to process because of the Post Office queue. I once had to wait 40 minutes in a Post Office queue just to pay a $200 bill – I would hate to have to wait 40 minutes in a queue just to pay my taxes, or my fines, or whatever. Secondly, Kiwibank branches aren’t really geared up like proper banks – the branch inside Sylvia Park, for instance, is inside a Paper Plus store.

    Another issue with Kiwibank is that, unlike the other banks, I cannot simply hop in and ask for let us say, $500 in $2 coins. That discourages smaller retail businesses from using Kiwibank as their bank, as they still need coinage in order to give to customers (larger places tend to utilise security companies).

    Like or Dislike: Thumb up 3 Thumb down 0 (+3)

  4. john-ston – had a similar experience last Friday. 20 min in a Kiwibank que just to bank a single cheque – what a waste of time.

    I would never open an account there if I needed to access it any more often than very occasionally.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  5. @photonz1 3:26 PM

    Note Article 18 of the Protocol on Trade in Services to the Australia New Zealand Closer Economic Relations Trade Agreement:

    Article 18
    Exceptions
    Provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other Member State or as a disguised restriction on trade in services, nothing in this Protocol shall preclude the adoption by either Member State of measures necessary: …

    (f) to secure compliance with laws and regulations relating to customs enforcement, to tax avoidance or evasion, or to foreign exchange control.

    Given the extent of the tax avoidance by Westpac and the other big Aussie banks – they settled for $2.2 billion, so the real figure would have been considerably more – I think there is a very good case under that Article for the Government to say they can only trust a bank they own.

    Like or Dislike: Thumb up 3 Thumb down 1 (+2)

  6. toad – the reason Russell gave for not using the other banks was because they’re Australian.

    Which is exactly what can’t be done, as per the clause you quote –

    “Provided that such measures are not used as a means of arbitrary or unjustified discrimination “

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  7. @photonz1 6:05 PM

    I think it can be done. Sure, a competitive tender is required, but if all but one of those who tender are overseas owned banks that have a substantial record of tax avoidance it would be legitimate under CER to accept the tender from the one bank the NZ Government owns because the Government can, through its appointed Directors, ensure it does not adopt the same tax avoidance practices that Westpac has.

    Like or Dislike: Thumb up 4 Thumb down 3 (+1)

  8. @Lindsay 2:24 PM

    The IWTC is an incentive to work. If it is given to all DPB beneficiaries where then is the incentive?

    But that is the problem, not the solution. WFF has been designed as a measure to shunt beneficiaries into jobs stacking shelves at Countdown for $13 an hour. It presupposes beneficiaries are bludgers who don’t want to work, when the cast majority do if their personal circumstances allow and work pays enough to meet their financial needs.

    Increasing the minimum wage to $15 an hour would be a much more effective measure than the discriminatory In Work Tax Credit to encourage beneficiaries into work.

    The In Work Tax Credit just consigns those families who do not have an adult able to enter the paid workforce to perpetual poverty.

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  9. It would be advantageous to use some of the same methods as those being practiced against many viable ideas on how to rectify poverty. A sort of name and shame campaign whereby examples of impoverishment are highlighted to show where the system is completely failing the poor.

    I would also note that much of the public does not comprehend that our banking system is broken, as exhibited in the first line of this article. Educating people that our banking system does indeed need to be “fixed” is a good move.

    I presume that the Greens have been advised by Kiwibank that they can undertake the task being promoted?

    photonz1

    20 min in a Kiwibank que just to bank a single cheque – what a waste of time.

    You can drop cheques in less time than it takes to fill in a deposit slip.

    The reason Russell gave for not using the other banks was because they’re Australian.

    Being that Russel was born in Australia, I doubt that a patriotic reason for wanting Kiwibank to undertake the Governments banking requirements is likely. It is far more probable that the tax avoidance practices used by Westpac is a far greater motivator.

    Like or Dislike: Thumb up 2 Thumb down 3 (-1)

  10. Toad said, “WFF has been designed as a measure to shunt beneficiaries into jobs stacking shelves at Countdown for $13 an hour. It presupposes beneficiaries are bludgers who don’t want to work, when the cast majority do if their personal circumstances allow and work pays enough to meet their financial needs.”

    None of us knows what the vast majority of DPB beneficiaries wants.

    In 2002 research was commissioned into whether people on the DPB were interested in looking for work. An external research company phoned 1,233 people on the DPB and asked about their level of interest and found;

    Very interested 32%
    Fairly interested 29%
    Not that interested 19%
    Not interested at all 17%
    Unsure 3%

    Couple of caveats. “Looking for work” is not the same as accepting a job. And the shortcomings of self-reporting are well-known.

    Anyway, why are you so down on stacking shelves at Countdown? I’d do it if it was the difference between earning an income or living off my neighbour.

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  11. I think Toad was against the low wages being paid for such employment Lindsay.

    I watched a Maori girl walking past my house the other, she had no shoes, was dressed in rags that were dirty and it was cold and raining. She looked very unhappy and was probably around ten years old. It upset me as there was nothing I could do to help her. It’s not up to communities alone to ensure that such poverty does not continue. Neither is it just the responsibility of the unemployed to become employed.

    Would you perhaps know how the “external” research company knew the phone numbers of all those DPB recipients Lindsay? I would have thought that their details would be confidential.

    Like or Dislike: Thumb up 3 Thumb down 3 (0)

  12. Jackal, The sample was drawn from the Ministry of Social Development’s administrative databases and the results published as part of an evaluation report. “External” is how MSD describes the company that conducted the survey.

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  13. toad says”WFF has been designed as a measure to shunt beneficiaries into jobs stacking shelves at Countdown for $13 an hour.”

    Wrong. Working for families was designed as a measure to entrap middle class people into being beneficiaries so they had to keep Labour in power to keep up those benefits.

    Like or Dislike: Thumb up 3 Thumb down 5 (-2)

  14. Anyone else having difficulty using the link to Norman’s speech on the 5 steps to a clean green economy?

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  15. WFF was designed to

    1. target tax cuts to families – thus families received more help than was possible by an across the board tax cut.

    2. target tax cuts in the form of tax credits so an amount was paid to the mother of the children

    3. target tax cuts in the form of tax credits so that those on lower incomes got as much if not more than those on higher incomes

    4. improve return from work (note this as proposed in 2005 when the minimum wage was still only $9 an hour – it went to $10/$11/$12 in the following three years only because NZF and the Greens had this in their 2005 manifesto’s).

    I support Labour’s idea of passing on a zero tax threshold tax cut to those on benefits.

    There is a risk that if we extend the In Work payment of WFF to beneficiaries we strengthen resistance to WFF (it and continuing CPI adjustment of it is vital to the well-being of many working families). The In Work payment tax credit to families is a well thought out balance to the tax system reform trend of lowering of rates that favour the few over the many.

    While it is true that poverty is now centred around beneficiary families and extending the In Work payment to them therefore has appeal, there are a range of other options that also can be taken.

    bjchip and sapient have in the past argued for measures to directly support children (beyond the scope of the existing benefit payment system to parents) – they can include such as healthy food vouchers and schemes for goods and services distributed to beneficiary children.

    Frankly if beneficiary parents are required to have their children in Well Child and to use access to special support programme placements for their children this might be preferable in some/many cases.

    This and easier access to emergency financial support, TIA and easier abatement when working might be the way to build broad cross party support for doing something – whereas extending the In Work payment to beneficiaries might not and yet undermine support for the WFF tax reform concept itself.

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  16. so an amount was paid to the mother of the children

    Hey, there’s some of us fathers out here too!

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  17. When you have a system that ties someone into a benefit even though they are earning $110,000 or more per year – there’s something very wrong.

    It is pretty obvious that it was an attempt by labour to tie people into having to vote for them to keep their benefit.

    Like or Dislike: Thumb up 1 Thumb down 2 (-1)

  18. Its great that Greens have announced their position.. beware of media manipulation ! kia-ora

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  19. This talk of poverty in NZ is flawed, simply because we donthave poverty in NZ: NZ has poor people, but no povery.

    Those arguing for ‘poverty in NZ’ do so on the flawed assumption that some arbitary percentage of median or mean income is ‘poverty’, when that is patently false. Such a metric means people with (subsidised) food, (subsidised, first-world) shelter and free comprehensive health care are in ‘poverty’. To argue that as ‘poverty in NZ’ advocates do is offensive to the starving millions who live in real poverty and squalor.

    Further, with such a definition of ‘poverty’ (namely some arbitary percentage of median or mean income), then ‘poverty’ will always exist. Even if you magicially created an extra $500/wk to give to those in ‘poverty’, you’donly move the mean/median point, and you’d still have a portion who were now able to afford a playstation each, but still meet this definition of poverty.

    There is only one way to rid the country of ‘poverty’ when you use a metric like some arbitary percentage of median or mean income: make sure everybody is only allowed to receive the same income, therefore having no variance and nobody under some some arbitary percentage of median or mean income.

    NZ has poor people, but no (real) poverty.

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  20. photonz – the idea that tax cuts in the form of a tax credit is a political inducement to favour a political party and a top rate tax cut is not (even though delivering larger amounts to those on higher incomes) is partisan nonsense.

    Tax credits deliver more to the poor and tax cuts deliver more to the rich – but when families are involved the intent is to favour poorer families and so obviously the tax credit system is preferable.

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  21. MC, the definition of poverty used is an international one, not local.

    Income and wealth inequality within nations has consequences for economic performance and social well-being – according to recent research (whether the term poverty or underclass poor is used). The impact of a continuing underclass in a society is a negative one, it speaks to the lack of equal opportunity that the society provides, and in the modern global market economy results in entrenched unemployment and benefit dependency (and relative poverty for the poor underclass).

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  22. SPC – says “tax cuts deliver more to the rich”

    Which comes from the flawed thinking that the govt already “owns” everyones earnings – and are giving it back to them.

    Tax cuts take less – they can’t deliver money, when the money isn’t the govts in the first place.

    And you can only take less from those who actually pay tax. With the likes of WFF 40% of people effectively don’t contribute any income tax at all.

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  23. Tax cuts also have impact on the government budget and yet deliver less to poorer families, so no one looking to improve the situation of families – based on their need for support would choose any other option.

    It’s such an efficient option that National cannot improve on it and has promised to retain it.

    Those who don’t like it should also be supporting an increase in the minimum wage – so poorer families have better paid employment and less dependence on tax credits.

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  24. SPC the comedian “It’s such an efficient option”

    So having a government department that takes money from people, where the employers have to work out an exact amount each week, then send that to the govt, then have another department responsible for giving some back again, is….”efficient”.

    Very funny.

    The reason WFF can’t be revoked is because the bribe was so wide it turned the majority of all NZ families into beneficiaries – including many earning well over $100,000 – removing it would be political suicide.

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  25. Frog, Bob Brown also made a speech. Can we have that posted somewhere as well please.

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  26. photonz

    If the goal of the policy is to deliver help to families – tax credits are the most cost efficient means to government of doing so.

    If there was an alternative that did so with less cost National would have looked for it and found one – that no one has proposed any alternative that would achieve as much for families for the same cost speaks volumes.

    A scheme that offered as much help to families for less money would be even more popular with voters. As it is National is reduced to increasing the rate of abatement (to reduce support at higher incomes – something contrary to their philosopy on incentives in the tax system).

    It’s the help to families that is popular with voters, that no other scheme does this as effectively as this one is why it is the most cost efficient one.

    To state the blindingly obvious to any impartial observer – the cost of the management of the system is less than gain from targeting via tax credits over blunter tax cut and universal benefit payments per child (the best alternative that those arguing for an alternative could find).

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  27. PS When National has to concede its position those who continue to fight the losing battle are on the wrong side of history. To continue with the old failed campaign is pathetic partisanship and misguided loyalty to tribalism that undermines and embarrasses it’s former sponsor.

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  28. SPC says “It’s the help to families that is popular with voters”

    Of course a scheme that hands out cash is popular with those who receive it.

    And because it was such a bribe that well over half of all NZ families receive it, it would be political suicide to remove it.

    I would have loved to have had a larger family, but am penalised for doing the responsible thing and stopping at the number I can afford.

    But now I have to pay for more children anyway – those of people who couldn’t afford more children, but had them anyway.

    It encourages all the wrong behaviour – and now costs 300% more than when it was brought in.

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  29. Tax credits deliver more to the poor and tax cuts deliver more to the rich

    SPC, tax cuts only deliver more to the rich when they are geared that way. If a zero tax threshold formed the sole basis of a tax cut, then it would equally deliver to rich and poor.

    WFF was designed to

    SPC, Working for Families was also designed as a way of deflecting attention from the fact that the Labour Government had not given tax cuts in spite of huge surpluses at a time when the National Party were making huge political gains due to that. The problem is that it is unsustainable, gives the wrong incentives and uses up funds that could otherwise be utilised in tax cuts for business which would actually help the economy grow and create jobs.

    bjchip and sapient have in the past argued for measures to directly support children (beyond the scope of the existing benefit payment system to parents) – they can include such as healthy food vouchers and schemes for goods and services distributed to beneficiary children.

    I would go one step further and replace the benefit with a series of vouchers which beneficiaries could use to get their food, get basic medical care and so on, with other bills such as rent and electricity paid for directly.

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  30. The range of options for reducing “child poverty amongst the poor underclass on benefits” are

    1. moving to universal child benefits and tax cuts in place of WFF (this improves the relative position of those on benefits but at the cost of the less tax credit support to low and middle income working parent families and greater overall cost to government (because tax cuts also go to singles and couples without children).

    2. extending the WFF tax credits to families with parents on benefits (as is proposed here).

    3. expanding on the WWG’s own targeting ideas of requirements for beneficiary families to have their children in Well Child programmes and also (subsidised places in) pre school and after school care – with some incentives such as healthy food vouchers, free meals and the provision of donated goods and donated services (computer, sports equipment, clothes, healthy food, books, activity programme places etc).

    This and easier access to emergency financial support, TIA and easier abatement when working might be the way to build broad cross party support for doing something – whereas extending the In Work payment to beneficiaries might not and yet undermine support for the WFF tax reform concept itself.

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  31. john-ston

    WFF tax credits also delivered more to the poor family than even a low income tax threshold would (and why not both).

    Generally most advocates for tax cuts prefer to flatten the tax scales or focus on business tax cuts – the two are synonomous – given people cite a need for us to have top income tax rates close to the trust and company tax rates (despite this practice not being common overseas – in Oz the top rate is well above their company tax rate).

    Whether government dispersed a budget surplus in the form of WFF tax credits to reduce child poverty in working parent families or in even more expensive across the board tax cuts (that did not reduce child poverty to such an extent) made little difference as to economic performance impact. Each option was as sustainable as the other, if anything the one chosen made society cohesion more sustainable.

    As to tax cuts to business, the existence of WFF instead of across the board tax cuts made little difference to the subsequent decisions by either Labour or National over the affordability of business tax cuts (there is nothing particularly astute about handing tax cut money to the Oz banks anyway – more selective help to business in the forms of R and D tax credits, worker training and such programmes as Fast Forward is more effective).

    There is little evidence that the cut in tax rate for business from 33 to 30 cents created any jobs.

    Those who suggest paying benefits in vouchers – why not WFF tax credits and Super as well … or wages … . The cost involved is not worth it. More targeted options such as healthy food vouchers or free meals at pre school in low decile areas are more cost efficient.

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  32. WFF tax credits also delivered more to the poor family than even a low income tax threshold would (and why not both).

    That was at a much greater cost though. As mentioned earlier, it also provided the wrong set of incentives – for instance, families where the earner earning a reasonably high level of income not only faced a high marginal tax rate when that person got an increase in pay, but also faced the loss of their Working for Families benefits – there were some instances where the effective “tax” rates were in the vicinity of 60%, or more.

    Generally most advocates for tax cuts prefer to flatten the tax scales or focus on business tax cuts – the two are synonomous – given people cite a need for us to have top income tax rates close to the trust and company tax rates (despite this practice not being common overseas – in Oz the top rate is well above their company tax rate).

    I am personally a fan of a flattish structure – but with a 0% bracket; so you could potentially have a flat rate of let us say 35%, but only after let us say the first $30,000 or whatever was tax free. In terms of income tax needing to be close to company tax and trust tax, the only pair that need to be close to each other is trust and income tax – the only people that could switch from personal to company are those people that are sole traders/partnerships, and there are already a lot of benefits to the corporate form that those people miss out on.

    Whether government dispersed a budget surplus in the form of WFF tax credits to reduce child poverty in working parent families or in even more expensive across the board tax cuts (that did not reduce child poverty to such an extent) made little difference as to economic performance impact. Each option was as sustainable as the other, if anything the one chosen made society cohesion more sustainable.

    The problem is that such a scheme is unsustainable. It encourages people to work for less as they can enjoy Working for Families tax credits, and it also encourages them to have more children, so they can enjoy the Working for Families tax credits. Not only that, but because you are taxing these families (in some instances at the highest tax rate) and then giving their money straight back to them, you are adding to the bureaucratic burden. A much simpler solution would be to create an economic environment where companies can and are encouraged to pay their workers higher wages – surely, if we had Australian wage levels, then we would not need Working for Families.

    As to tax cuts to business, the existence of WFF instead of across the board tax cuts made little difference to the subsequent decisions by either Labour or National over the affordability of business tax cuts (there is nothing particularly astute about handing tax cut money to the Oz banks anyway – more selective help to business in the forms of R and D tax credits, worker training and such programmes as Fast Forward is more effective).

    The problem is that all the Tiger economies, whether they are Singapore, Hong Kong, or even Ireland pre-2008, had low corporate tax rates. All these tax credits are not going to encourage businesses to set up shop in New Zealand when they could set up shop in Singapore where the corporate tax rate is around 16%. That is why firms flocked to Ireland prior to the Global Financial Crisis.

    There is little evidence that the cut in tax rate for business from 33 to 30 cents created any jobs.

    It did stop the loss in jobs though.

    Those who suggest paying benefits in vouchers – why not WFF tax credits and Super as well … or wages … . The cost involved is not worth it. More targeted options such as healthy food vouchers or free meals at pre school in low decile areas are more cost efficient.

    I am personally a fan of getting rid of Working for Families altogether, and New Zealand Super is also unsustainable and at least needs to be tightened up quite a bit so that it doesn’t become a heavy burden (making Kiwi Saver complusory would help). In terms of the latter solutions, I see no reason why they could not be implemented – the idea is to eliminate the risk of your money and my money being spent on activities that are not going to be beneficial to the beneficiary or their families.

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  33. john-ston

    So you believe in incentives in the tax system – that require less support to families and low competitive company tax rates – meaning a heavily foreign owned economy loses even more money offshore in dividend payouts. This would only worsen income disparity and even more professionals such as dentists/docters would structure their pay through companies and others would place their cash investments in companies to receive their interest income (depending on parallel PIE developments or more radical tax changes proposed in this area to encourage saving).

    I prefer growing local companies with R and D tax credits, worker training support subsidy and Fast Forward initiatives to lowering company tax rates. We can never compete with the lower general rate of other countries and it’s counter-productive to try.

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  34. I prefer growing local companies with R and D tax credits, worker training support subsidy and Fast Forward initiatives to lowering company tax rates.

    Don’t forget SPC that for many a business, they are not exactly going to have the time to apply for these things, and are probably not going to have the funds to ask their tax accountant to look into such options either. A lower corporate tax rate will benefit them immediately.

    We can never compete with the lower general rate of other countries and it’s counter-productive to try.

    Who says we cannot? A 10% or 15% corporate tax rate would not result in a huge loss of tax revenue, and would be countered both by the increased economic growth that would result, and would also make the state coffers less vulnerable to economic swings (remember, the government provides tax rebates to companies that have made a loss).

    So you believe in incentives in the tax system – that require less support to families and low competitive company tax rates – meaning a heavily foreign owned economy loses even more money offshore in dividend payouts.

    Except that such an environment would also encourage local business in New Zealand. It would also encourage New Zealand businesses to remain here in New Zealand instead of shifting to Australia.

    This would only worsen income disparity and even more professionals such as dentists/docters would structure their pay through companies and others would place their cash investments in companies to receive their interest income (depending on parallel PIE developments or more radical tax changes proposed in this area to encourage saving).

    Economic growth would address the income disparity issue (especially given that New Zealand has a pretty low unemployment rate compared with other countries, even now). In terms of professionals structuring their businesses as companies, I see no harm in them doing that – in fact, I would be stunned to see a professional not having a company which enables them to limit their personal liability. In terms of the savings issue, that is something that would need to be addressed.

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  35. john-ston

    WFF is no more unsustainable than the (even more expensive) tax cut alternative proposed at that time.

    The so called economic burden of the bureacratic management of it creates paid work – and this work is vital for the targeted support to families that makes WFF more affordbale than any alternative (so this work is high productivity in its net impact).

    I see no evidence that people are working less because of WFF or having more children – around the world the evidence is that as peoples economic circumstance improves they have less children. And as they age they improve their economic circumstance (people like to progress their career and did so even in the days of our 66% tax rates pre 1984) and this happens regardless of incentives in the tax system.

    As to it would better to have Australian wage levels than WFF, well if we did then we could afford WFF quite easily and more besides. No one has designed a better way to encourage employers to pay higher wages than increasing the minimum wage (employers pay a premium above it to attract a higher candidate quality).

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  36. john-ston

    R and D tax credits do not involve application to government – the government scheme does but this is in place of R and D tax credits.

    I could not favour taxing Oz banks 15% on their profits or professionals on their pay through companies.

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  37. One option for company tax change is to use the progressive system used in the USA – where larger companies pay tax at a higher rate than smaller ones (so banks did not benefit from tax cuts) and where professional service companies had a tax floor. So local companies that
    genuinely employed workers and produced goods and services were advantaged as intended without the unintended consequences in terms of lower tax revenues and outfow of dividends offshore. But most of that is achievable by R abnd D tax credits, worker training subsidy and inititiaves like Fast Forward and related other industry programmes (inluding the base investment in core research and applied research being lifted).

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  38. SPC says “WFF is only increased by the CPI each year.”

    So how do you explain why it’s cost to taxpayers has skyrocketed to nearly $3 billion per year? (from around $1b when it started)

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  39. The so called economic burden of the bureacratic management of it creates paid work – and this work is vital for the targeted support to families that makes WFF more affordbale than any alternative (so this work is high productivity in its net impact).

    SPC, not all paid work is productive work, and this is especially the case with bureaucrats whose sole job is to collect money from the population only to give it back to them (especially the same people).

    Also, the best way of helping these people is to increase wages – and we are going to need economic growth for that to be sustainable in the long term. Furthermore, a good way of helping these people is not to give them incentives to have more children which they may or may not be able to afford.

    I see no evidence that people are working less because of WFF or having more children – around the world the evidence is that as peoples economic circumstance improves they have less children.

    I know a person whose wife does not work because if she were to work, her income would effectively get taxed at something like 70%, and then there are the costs of childcare and so on. Undoubtedly there would be more people out there that would look at work in a similar way.

    About families not having more children, I sadly disagree there. If you look at the graph of births in New Zealand on the Statistics website, you notice that after a decade of slow decline in the number of births, there was a massive surge after 2006. I grant that the downward trend had reversed in 2003, but the level of change between 2003 and 2006 was not as significant as the surge between 2006 and 2009. Even now, the number of births in New Zealand is near record proportions.

    If you don’t wish to look at births, then perhaps look at the fertility rate. It dropped to 1.9 in 2003, was around 1.97 in 2006 and hit 2.17 in 2009 – a figure that had not been seen since the early 1990s.

    And as they age they improve their economic circumstance (people like to progress their career and did so even in the days of our 66% tax rates pre 1984) and this happens regardless of incentives in the tax system.

    Back then though, you had a large number of deductions that could be exploited, and back in the 1980s, around half the population were effectively paying no tax, whilst those who were being taxed at 66% were either unable to exploit those deductions or were willing to be fleeced.

    As to it would better to have Australian wage levels than WFF, well if we did then we could afford WFF quite easily and more besides. No one has designed a better way to encourage employers to pay higher wages than increasing the minimum wage (employers pay a premium above it to attract a higher candidate quality).

    And to support a higher minimum wage, you need a strong economy.

    I could not favour taxing Oz banks 15% on their profits or professionals on their pay through companies.

    I could, because it would mean that the likes of Fletcher Building would actually be encouraged to stay in New Zealand, and because instead of overseas companies setting up their Asia-Pacific offices in places such as Singapore, they might consider places such as Auckland as an alternative.

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  40. Simple photonz – and I am sure you know this already, because it was introduced in stages (like tax cut packages introduced over 3 years for example).

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  41. SPC says “I see no evidence that people are working less because of WFF”

    A report into WFF found “The result is that Working for Families will likely encourage some two-earner households to become one-earner households.”

    For example take a typical family with one parent on $40,000 and a second parent on part time work – 20 hrs /w week at $15/hr. They can give up the part time job – and STILL get the same in their pocket at the end of the week – courtesy of someone else working to pay tax.

    Why bother working when you can get the same money for not working?

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  42. john-ston – you oh so believe in trickle down (wait for a wage increase to afford children and this does not come do not have any etc), I just see the philosophy behind incentives as ideological speculation – so why not merge the TAB and Treasury, at least then we might get some odds to go with the the forecasts.

    Birth levels at the moment as high as they were in the early 90′s – just shows that people have children when unemployment goes up. The rate will go down with unemployment, regardless of the continuance of WFF.

    And on the WFF bureazcrats you are so wrong. If I could find a way to pay a few bureacrats to run a system that delivered the same cost advantages to government of WFF over acrss the board tax cuts I would have hundreds of millions of dollars each year for productivity investment that would do this country some good.

    I have one by the way – take 4% out of all workers pay and 4% from employers and place half in a dedicated contribution to the Cullen Fund each year and the other half into Kiwi Saver. It creates a bit more bureacracy too but saves $1B a year in Kiwi Saver costs.

    I have a second, means test Super where the person over 65 is still working – exclude asset millionaires with work income over $100,000(accountants, lawyers etc). A few more bureacratic jobs but they pay their way too.

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  43. photonz

    If some people choose to be full-time parents, if they can afford to be, then they free up jobs for others. This reduces unemployment welfare costs (and also frees up places in pre school child care for others).

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  44. john-ston – you oh so believe in trickle down (wait for a wage increase to afford children and this does not come do not have any etc), I just see the philosophy behind incentives as ideological speculation – so why not merge the TAB and Treasury, at least then we might get some odds to go with the the forecasts.

    SPC, the philosophy behind incentives is definitely not ideological speculation; for instance, prior to 1999, there was no spike of incomes around the $60,000 mark. Nine years later, there was a massive spike of incomes just before the $60,000 mark before plunging off – why was that? The incentives were in place for people to minimise their income and thus avoid the top personal tax rate.

    In terms of people waiting until they can afford to have children – I definitely agree; the worst thing to do is to have children when you cannot afford to have then.

    Birth levels at the moment as high as they were in the early 90′s – just shows that people have children when unemployment goes up. The rate will go down with unemployment, regardless of the continuance of WFF.

    SPC, there is a flaw in your argument. Look at birth rates some 30 years prior to the early 1990s, and you will see birth rates at record levels. All those children would have grown up and had children of their own, at around the early 1990s, resulting in a spike in birth rates. There is not supposed to be a spike in births for another ten years, so there is something clearly wrong – and it has everything to do with incentives.

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  45. SPC says “If some people choose to be full-time parents, if they can afford to be, ..”

    But that’s the problem – it’s not people who can afford to have a stay at home parent.

    We’re talking about the people who can’t afford to do that, but get to do it because someone else (probably two parents who both have to work) are paying tax that allows them to stop work but still get paid.

    And how does paying $200-$300 dollars a week extra in WFF, and the govt losing income tax, save the govt money?

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  46. john-ston

    why would a tax rate of 39 cets encourage someone to forgo an extra $ of income (they were paying 33 cents in the $ up to $60,000), it probably did not, they just changed their “arrangements”.

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  47. photonz

    WFF is part of a social insurance scheme where people are supported earlier in their career when they have family and mortgage costs that they do not have later. The option to cope on one income is available to all parents/couples.

    The higher WFF tax credit to a one income family has to be balanced against the saving in child care subsidy and transfer of someone from a benefit into a job. Sometimes there is a net saving.

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  48. SPC’s suggestion that “the definition of poverty used is an international one, not local” is a poor claim to credibilty, and reminds me of what my grandmother used to say: just because everybody is jumping off a bridge, does that mean you should too?

    Just because somebody else has created this (emotive, and flawed) definition is no reason to adopt it.

    I reiterate what I said: As soon as you say people with (subsidised) food, (subsidised, first world) shelter and free comrehensive medical care are living in ‘poverty’ you demean those starving millions who are, and alientate the thinking classes who see the flaw in claims of ‘poverty in NZ’

    SPC’s further claim on “wealth inequality within nations” is simply not ans issue: some people willbe poor, and some people will be rich. Tryingto engineer a society where that does not exist is to deny humanity. Indeed, these attenpts to engineer an absoute income equality (which is a requistite for removing ‘poverty’ using SPC’s flawed internation definition) accentautes the “entrenched unemployment and benefit dependency” that SPC later talks of.

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  49. SPC suggeestion that “tax credits are the most cost efficient means to government of doing so. If there was an alternative that did so with less cost National would have looked for it and found one” is flawed,

    There is a simplier, more cost efficnet way of reducing the tax burden on families, and it has been found and flagged.

    It is called a flat tax rate. Where every person is treated equally and not discrimiated against according to income. It is considered offensive by many to discrimiate on the gounds of race, sex, marital status, and some lefties have even tried legal challenges on discriminating on income when it comes to paying for things, but alas many people still seem to think that discrimianting on income for the purposes of taxation is fair when it is patently not so.

    With a flat tax rate, you’d have almost no evasion through trusts and LAQCs, etc. A falt income rate is equitiable.

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  50. SPCs promotion of Labours R+D tax policy appears to overlook the obvious flaws in this policy and why it was (rightly) canned by the incoming government.

    The main beneficiaries of such a policy are the accounting consulantacies who imported a whole lot of tax specialists from Austrailia, put them up in CBD hotels, and charged the lot to their clienst plus $300.00 and hour for their advice.

    The secondary beneficiaries of Labour’s R+D scheme was the likes of the property development company in the news recently for an employmenst case dispute with their “R+D manager”. Simply put, all and sundry were defined as R+D for tax purposes (and quite what R+D a propertin investor does is beyond me), including office staff slaries.

    Such a policy is fundmantially flawed, and got the bullet it so rightly deserved

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  51. “discrimianting on income for the purposes of taxation is fair when it is patently not so.”
    Yes it is not fair that those who benefit the most from our society often pay the least tax. “Half of the wealthiest people in New Zealand pay little or no tax”. http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10724090

    The beneficiaries of the massive transfer of wealth from the producers to the owners of monetary capital.
    http://kjt-kt.blogspot.com/2011/06/kia-ora-who-really-benefits-from-neo.html and http://kjt-kt.blogspot.com/2011/06/and-this-is-one-of-reasons-why.html

    Don’t give me the rubbish that the wealthy have earned it through effort or value to society. Financial services destroy 7 times more wealth than they produce.

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  52. Curmudgeon.. what form of money would you levy the flat tax on. Income? Capital gain? Transaction tax maybe?
    Would you include a universal tax free $xx to cover the lower income?

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  53. Kerry says “Don’t give me the rubbish that the wealthy have earned it ..”

    All the people I know who are well off have one thing in common which is different to the most of the poor people I know – they work very hard.

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  54. Most of the wealthy I know do not work at all.

    They are too busy spending Daddy’s money and pontificating, like you, about the lazy poor.

    Or. They are in high paying management jobs which are way beyound their capabilities, But they went to Kings “you know!”.

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  55. Kerry’s quote of “Half of the wealthiest people in New Zealand pay little or no tax” is a result of the discrimitory taxation regeime we have at present, where (non-PAYE) taxation can be mimimised through the trusts and LAQC’s I mentioned.

    If NZ had a flat tax rate (which by definition treated everyone fairly) then the mechanisam which allow what what Kerry objects to would cease to exist, and a fairer society would exist.

    It is the promotion of discriminatory taxation regeimes (like those advanced by Labour and The Greens and sondoned by almost every government NZ has had for decades now) that facilitate this.

    A flat tax rate would make NZ a more equitable society by treating everyon equally.

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  56. I know people doing cleaning jobs too – it’s to fund their degree so they graduate without a loan.

    So where are all these wealthy people who do not work. I don’t know anyone like that.

    You’re hatred of the right has put you in a fantasy world.

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  57. samiam’s question on “what form of money would you levy the flat tax on. Income? Capital gain? Transaction tax maybe?” is a sound and valid one.

    When discussing taxation, one needs to understand and accept the punative nature pf taxation: indeed this is the very nature behind pollution tax and cigarette taxes, to tax the undesirable.

    Therefore, taxing productivity, growth, personal development and enterprise are unwise, and this is exactly what discriminotory taxation policies (like the Greens and Labour advocate more of, and National still condone) do.

    Therefore, income tax and company profits sould be taxed a slow as possible, with the taxation burden on polluters and the like. The Greens seem to have grasped the latter, but the Watermeolons just cant let go of punative taxation for redistribution.

    samiam’s also asked “Would you include a universal tax free $xx to cover the lower income?”, to which I answer “No” for the very reasons that stratafied taxation systems encourage tax minimisation and increase compliance costs.

    As soon as you (with all good intent) introduice a (say) $5000pa tax free bracket, you’ll see tax-minimisers with the ability start employing their kids on $4999pa, and having xx-trusts and companies all yeilding disbusrments and dividends of $4999 while accruing costs. This immediately undermines the very goal being worked towards for ideological and silly reasons. It is pure madness (and idscriminatory) to stratafy a taxation system with different bands.

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  58. So on that basis would not a transaction tax that taxes the flow of all money be the one? Profit becomes irrelevant, just the sloshing around of money in all it’s forms get swept up in the net?
    You see I agree that the current tax system seems incredibly cumbersome, unwieldy, blunt and, ultimately. leaks like a sieve.

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  59. MC. I agree about the undesirability of taxing productivity.

    Adam Smith advocated taxing the owners of capital only. Landowners and those with monetary wealth. He believed, logically, that taxing productive labour and business prevented the best use of resources.
    Neither is it fair that most of the tax burden falls on middle income PAYE earners as high earners and capital gains earners have the means to avoid tax.

    Where i disagree is the idea that progressive taxation is unfair. The wealthiest people in society are the ones who benefit most from that society so it is fair that they pay the most tax. That is not discriminatory.

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  60. The wealthiest people in society are the ones who benefit most from that society

    You could argue that the other way round too.

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  61. Really.
    So a family with barely enough to buy food and housing despite working three part time minimum wage jobs is benefiting more than a person who swans around the world using the wealth produced by those people?

    A person who has no job because it is beneficial for big offshore employers to have a pool of unemployed to keep wages down benefits more than said employer?

    I don’t think so!

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  62. Without debating the issues you raise (which we’ve already agreed upon, and upon which you’ve declared me to be a left winger), that situation doesn’t apply to the majority of people. And one hopes that in a welfare state that there is state assistance to such people, though obviously the quality and quantity of such assiatance varies by government.

    However, the assistance for these people comes from the taxes on middle income earners. Most middle income earners have jobs because someone want to be rich, and has the gumption to get off his/her/their arse and realise that to become rich, you have to have not have a job, but to create some business that adds some value somewhere.

    Thus society as a whole benefits from the efforts of those who aspire to make themselves rich.

    Without such people there would be no jobs (for that is where all jobs except state sector come from), many people on welfare, and no way to raise the revenue necessary.

    Like I said, your statement works both ways. Society benefits from people who are (or who are trying to become) wealthy, and the wealthiest people in society are the ones who benefit most from that society are both true statements; it is a symbiotic relationship.

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  63. DB. If you are talking about entrepreneurs, innovators and the people who start and run small business I agree with you. Those people are necessary. With a small business I knew my success depended on my staff and customers.
    Most of these people are not extremely wealthy and the ones that are tend to give back.

    One of my beefs is that it is very difficult in New Zealand for these people to start unless they already have a lot of capital.

    The person who brings to market a 50% more efficient wind generator, for example, will have earned all of his millions honestly from a grateful world.

    I do not think that entrenched wealth which makes their money by clipping the ticket are a net benefit to society. Taxing them heavily would have no effect on job creation or productivity.
    What or who did Key 50 millions improve in the world. In fact the most authoritative research shows that the financial gambling industry destroys more wealth than it creates.
    Many of the wealthy are receiving benefits way in excess of any contribution. 16 million in benefit fraud. 5billion in tax avoidance. More than 2 billion in tax evasion. (And that is just the ones who got caught.
    Private debt only effects New Zealand’s credit rating because of the expectation that Government will bail out the private banks..

    I would agree the tax system needs to impact less on middle income small business and PAYE payers and more on financiers and unproductive speculation.

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  64. I would agree the tax system needs to impact less on middle income small business and PAYE payers and more on financiers and unproductive speculation.

    Yep, agree, but I don’t think the way to do that is to shift or attempt to shift the taxation onto specific social groups directly; In my opinion the tax system should target activities rather than people, so the Tobin transaction tax I find an attractive idea, as is my own personal hobby horse of the loan repayment tax.

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  65. I support a 1% “surcharge” on home mortgages enabling a lower OCR (resulting in a lower value dollar) – it would raise over $1Bpa for the government budget as well.

    It and an earthquake levy, a CGT (paid in the form of a 1% land tax for income earning enterrpises and this payment deducted from any CGT liability when the property is sold), Tobin tax, water and carbon charging are the revenue raising options.

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  66. SPC says “I support a 1% “surcharge” on home mortgages enabling a lower OCR (resulting in a lower value dollar)”

    In 2000 the OCR was two and a half times higher (6.5%) than it currently is, but the NZ dollar was less than half (39 cents) it’s current value against the US$.

    The OCR is currently at historical lows, and the exchange rate at historical highs.

    Just two examples of the relationship between the OCR and exchange rate working in the opposite way.

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  67. photonz – a higher or lower OCR does take the dollar up or down, you are not seriously denying that are you?

    If it was 1.5% now not 2.5% todays dollar would be lower, if it was still 2.5% later this year rather than 3.5% as it might well be, the impact would be downward on the dollar value.

    PS When our OCR is 2.5% and the rate of the US Fed is lower, why is our currency strong against their’s – similalry for the pound. As for the Oz dollar, for the first time in years their OCR is higher than ours and where is our dollar (it’s been over 90 cents Oz for years – now its well under 80)?

    But sure do a Key and compare apples and oranges – like 2% on benefits in 1970 and 13% now – the average for the past 20 years has been 14%.

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  68. SPC says “photonz – a higher or lower OCR does take the dollar up or down, you are not seriously denying that are you?”

    It is one factor that sometimes has an effect, and sometimes doesn’t.

    We currently have record low OCR, and record high dollar. In 2000 we had record low dollar, despite a very high OCR. Both of which completely contradict your theory.

    The exchange rate is largely determined by how many people want to sell NZ$ and how many want to buy. So that depends on how many overseas products we are importing, and how many people want to buy our exports like dairy, and invest here.

    So it’s no surprise that with current record dairy exports we have record exchange rates.

    At times, even when our interest rates were high, few people were investing money into NZ (there was more money to be made in equity markets), so high interest rates had little effect.

    SPC says “like 2% on benefits in 1970 ” after complaining about comparing apples and oranges.

    To get this figure ans say it’s comparable – first you have to ignore the existance of women in NZ – particualrly housewives.

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  69. It’s a factor that always has an impact. End of story. Stop weaseling.

    And we don’t have a record high trade weighted exchange rate, just a low pound and a low US dollar in comparison ot our currency.

    The average on benefits from 1990-2010 was 14%, its 13% at the moment. That’s lower than the 16% it was in 1998-1999 when National was last in office.

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  70. SPC says “It’s a factor that always has an impact. End of story. Stop weaseling”

    Well you’d better go tell the reserve bank, bacause they say changes in the OCR seldom have the prediced effect on exchange rates.

    They give the excmaple of 2000 when the relationship was totally contrary to what you are saying – as it is now.

    Also contrary – the OCR has dropped since the start of the year, but the dollar has gone up 10%.

    You list benefit rates between 13 and 16% and try to blame National for this – not realising the lowest rate you’ve given is under the current govt.

    SPC – never let facts get in the way of your blinkers.

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  71. photonz – go tell the RB what – it was the Reserve Bank Governor Bollard who asked for a surcharge on mortgages to mitigate the need for a higher OCR to counter inflationary pressures – and this because the increases in the OCR were causing an upward impact on the dollar and hurting exporters. Clearly you don’t want to remember that because it was Bill English who killed off the idea – talking about how courageous anyone would have to be to consider it.

    Taking other comments, about the impact of the OCR on the currency value amongst a range of other influences, out of context is just more weaseling.

    John Key claimed as evidence, that the welfare cost was not sustainable, the increase in numbers on benefits from 2% in 1970 to 13% today.

    When the average since 1990 has been 14% and the number in 1998-1999 under the last National government was 16%, this is no evidence whatsover.

    I mentioned the figures to show that Key’s evidence did not stack up – so don’t attribute some fallacious meaning to what I wrote and why I wrote it to divert attention from the fact that the evidence shows that what Key said is less than honest.

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  72. spc – last year we collected $25 billion in income tax, and spent $21 billion (equal to 84% of all income tax) on benefits.

    How much more to you suggest we spend on benefits?

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  73. Let’s guess you’re including WFF and Super in this figure … and calling tax credits and super payments benefits.

    And it just goes to show that with such low wages it’s hard to raise much revenue off income tax.

    Just as well we have GST and company tax revenues, but a mortgage surchare, Tobin tax, CGT, and water and carbon charging would come in useful.

    As to how much more we can spend on benefits … I’ve suggested we look at healthy food vouchers and provision of goods and service directly to children with parents on benefits as extras we should look at – that and emergency payments and the TIA being an alterantive to simply increasing payments to lift children on benefits out of poverty.

    An indirect way would be to make it compulsory for landlords to insulate their rentals – not all are taking up the incentives offers and children are going cold in homes as a result. It also saves money on incentives making it compuslory – let the ones who took it up get the benefit and those that did not pay for it all themselves.

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  74. That $21 bn includes $9.58bn in superannuation.

    http://wheresmytaxes.co.nz/

    Sickness benefit is $0.78 bn, unemployment $1.03 bn, DPB was $1.89 bn.

    It is extremely misleading to say “benefits were $21bn” without breaking it down a bit.

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  75. SPC says ” I’ve suggested we look at healthy food vouchers and provision of goods and service directly to children with parents on benefits as extras we should look at –”

    I agree completely. In disfunctional families the children’s needs are neglected as money always goes on the wrong things.

    SPC says “An indirect way would be to make it compulsory for landlords to insulate their rentals ”

    Wow – full agreement again. Gareth Hughes was pushing this. I think it’s a really good idea. And he had a realisitic time period for landlords to comply.

    There’s lots of benefits in this idea – power savings, cost savings, health benefits – landlords can even get the subsidy to help with costs, overall cost is not prohibitive, and a warmer (drier) house will be cheaper to maintain in the long run.

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  76. rimu says “It is extremely misleading to say “benefits were $21bn” without breaking it down a bit”

    Good link rimu.

    The reason it’s misleading to say we spend $21 billion on benefits is because it’s now gone up to $22 billion.

    And there’s also several billion more that could be considered benefits that I didn’t add in, like – in work tax credits, working for families, child support debt write off, parental leave, child support payments, etc.

    So if you don’t count super as a benefit, there’s still $12b in other benefits, and another $4 billion in WFF etc as listed above.

    So we’re still talking the equivalent of 64% of all income tax that’s spent on benefits (excluding superannuation, and excluding payments to kiwisaver – so if you count those then the equivalent of more than 100% of all income tax goes on social welfare).

    And a total government spend of $18,000 for every woman, man and child in NZ.

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  77. Why do you just talk about income tax? http://wheresmytaxes.co.nz/?income=true shows that, yes, “Source deductions” is roughly $22 bn as you say, but that is only 30% of government revenue.

    It seems to me that you have cherry picked your numbers to make income look roughly the same size in comparison to welfare spending.

    Dishonest.

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  78. rimu – I thought you’d be intelligent enough to know there are company taxes, and gst, and tax on petrol and alcohol and cigarettes and interest and dividends etc.

    It’s pretty common knowledge.

    That’s how the total social welfare spend is more than 100% of income tax.

    There’s also more spending than just social welfare – did you realise that? We have health spending, and education, and other things as well.

    I was merely pointing out that social welfare spending is so high that it takes most of the total income tax to cover it.

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  79. The interesting comparison would be income tax take compared to total welfare (all transfer payments including WFF and Super) over the past 20 years.

    As I have noted we had 14% on benefits on average over that time (+ others on WFF and Super) and now its below that average at 13%.

    Is not the problem the cumulative impact act of low rate of gross wage growth over 20 years and attempts to compensate this – whether in WFF tax credits or income tax cuts to improve the after tax wage? The government likes to state the improved after tax wage position – but then forget to spell out the consequences for the government budget of this.

    This is why things like the earthquake levy, Tobin tax, CGT, a mortgage surcharge and water and carbon charging are increasingly important.

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  80. SPC – the problem is more tax = less jobs.

    Here’s some rough figures.

    The govt spends 35% of gdp, or around $75 billion, and employs 35,000 people.

    The private sector spends 64% of gdp, or around $150 billion, and employs around 2,000,000 people.

    So for every $75,000 spent in the private sector, there is one job.

    And for every $2,000,000+ spend by the govt, there is one job.

    Obviously the govt also has to build roads, hospiitals schools etc, but the point is dollar for dollar, money spent in the private sector generates more jobs than money spent by the govt.

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  81. Kerry’s claim that “The wealthiest people in society are the ones who benefit most from that society so it is fair that they pay the most tax. That is not discriminatory” is patently untrue and couched in the belif that wealthy people somehow ‘abuse’ society to gain their wealth.

    Given that the wealthy pay for the hospitals that the poor use, pay for the roads that the poor drive on, and pay for the education system that schools the poor’s children (while in two of those three they also pay agai as they choose to ‘go private’), to claim that they benefits more than the poor is patently absurd.

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  82. Rimu’s observations that nigh on half the benefit spend is superannuation is interesting, for it reinforces that unfairness of a manatory superannuation from taxation.

    The average taxpayer will contribute to this fund to the tune of about $6000pa for their entire working life (say 45 years?). Should they die at 64, they and their loved ones get nothing. Zip. That is not fair.

    Should they earn twice the averag wage, and not keel over from a heart attack, the get the same as somebody who has contributed nothing. That is not fair.

    A much fairer solution would allow taxpayers to opt out of super, and keep their own $6000pa (and leave it to their family should they keel over at 64). Those who dont want to opt out can stay with the default we have currently: work and pay, and if you live that long take whatever the government decides you should get.

    That would be choice. That would be fair.

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  83. Given that the non-wealthy build and staff the hospitals, build the roads, educate the children and then the wealthy get the resulting profit way in excess of that justified by their own efforts. Yes the wealthy are abusing society.
    Jobs and infrastructure are not a “gift” paid for by the wealthy. they are goods and services produced by working people. Who produced the wealth in the first place?

    If all the wealthy disappeared tomorrow we would all be better off by their absence.
    Try getting rid of all the builders, teachers, market gardeners or doctors and see how well the wealthy survive.

    Also given that most of the tax is not paid by “the wealthy” but by middle income PAYE payers and small business and the “wealthy try as much as possible to pay no taxes it is obvious who are the parasitic beneficiaries in our society.

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  84. Kerry’s suggestion that “the non-wealthy build and staff the hospitals, build the roads, educate the children and then the wealthy get the resulting profit way in excess of that justified by their own efforts” appears to suggest that these noble and self-less ‘non-wealthy’ did all of this out the goodness of their own hearts and with no profit motive whatsoever. Quite how that implication reconciles with the paying of wages and contractor fees to these people is not stated by Kerry, for it would seem that only the ‘wealthy’ worry about profit, especially as Kerry later says “Jobs and infrastructure are not a “gift””.

    kerry also askes “Who produced the wealth in the first place?” Wealth is produced by somene who provides a good or a service to somebody who is preaparted to pay for it. This is quite a simple concept.

    When Kerry says “If all the wealthy disappeared tomorrow we would all be better off by their absence” I ask him/her to ponder nations or ciommunities where this has occured, and what has then what has happened in that nation and community. I suggest that the fanciful ideal held so dearly by Kerry does not match the reality

    Regarding Kerry’s observation that most of the tax is not paid by “the wealthy” but by middle income PAYE payers and small business” depnds on how you define these groups and tax: IRD data shows half the income tax is paid by the top ~10% of PAYE-liable people. Quite how that is fair is uncertain.

    However, I do agree with Kerry’s inference that graduated and punative taxation which discriminates on income levles is unjust. The sooner people see beyond the ‘soak the rich’ values espoused by Dr Cullen, the better.

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  85. Photo. “the problem is more tax = less jobs”.
    Actually the evidence shows the opposite.

    Photos showing a specious use of statistics even for him.

    We are not graciously providing jobs for starters.
    Most State sector jobs are ones that need doing. When they are not done by the State they usually have to be replaced through the private sector at much higher cost. (Remember private building inspectors and leaky homes. Or the cost benefit ratio of the US health system compared to ours).
    Someone maintaining generators in a power station does not magically become worth more or more productive if that station is privatised.
    Usually the private sector will sack him and then expect the State to pay to reinstate the run down machinery when it fails.

    Photo prefers to ignore that a lot of the cost of providing private sector jobs falls on the State. Education, health, feeding, transport, roading, rail, regulation. policing and many other costs are not paid directly by the private sector. The statistics he gives ignores the total costs and also the benefits of the job to all of us.

    Who really believes bankers and money market manipulators (Private sector)are worth more than Teachers, doctors, or roading project managers (State sector).

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  86. “However, I do agree with Kerry’s inference that graduated and punative taxation which discriminates on income levles is unjust. The sooner people see beyond the ‘soak the rich’ values espoused by Dr Cullen, the better.”

    I inferred nothing of the sort. We should “soak the rich” of their unearned wealth. Western societies have been at their most prosperous when unearned wealth was taken off the rich and returned back to society. Take the USA. at the time of their greatest prosperity there was 90% tax on excessive wealth.
    Every time they reduce taxes and cut welfare they go further downhill.
    The Western European mixed economies with their high taxes, regulation, high degree of democracy and powerful labour unions are the most successful economies in history.

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  87. MS. The countries which told the wealthy and the bankers to fuck off, Like Argentina, are doing better now than the ones that followed the IMF line. Greece, Ireland.

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  88. Photo. “the problem is more tax = less jobs”.
    Kerry “Actually the evidence shows the opposite.”

    Then show us the evidence.

    All you ever talk about is your hatred for those phantoms – the super rich who don’t work and don’t pay tax.

    Yet you’ve NEVER provided any evidence of
    - what percentage of the population are like this
    - how much they actually earn
    - how much tax they actually pay

    All we ever hear is vague accusations about these phantoms.

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  89. My inference of Kerry’s support the inequity of graduated taxation scales which discriminate on incomed comes from Kerrys observations that observations the middle-income PAYE earners (who are hit by a graduated increase in tax rates) carry the burden of tax: you can’t have this one both ways Kerry!

    Further to your claims that “the USA. at the time of their greatest prosperity there was 90% tax on excessive wealth” is simplistic, and devoid of any supporting data.

    And your selective use of Argentina as a case study fails to address much of the other things taht were going on around the time of the metric-points you draw you conclusions from. Things like coups, and mass killings and the like tend to distort any picture of economic or social wellbeing!

    This ‘soak the rich’ value set is (until you can present some data nd facts) pure, unaldultured envy, and the desire to discrimate against people on the grounds of wealth runs contrary to any notion of fairness and equiity that you might harbour in yourself.

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  90. “Then show us the evidence”

    We have given you plenty of evidence over the last few months. Just that you continue to spout the usual RWNJ bullshit which has been a proven failure..

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  91. Kerry says “We have given you plenty of evidence over the last few months.”

    Vague as ever.

    Obviously you don’t any evidence of
    - what percentage of the population are like this
    - how much they actually earn
    - how much tax they actually pay

    Can you quantify anything about your phantoms?

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  92. Yes. You can easily get that information from statistics NZ.
    The fact that half the wealthiest in NZ do not pay tax is well known and I have never seen it credibly disputed. Neither is the fact that the top 100 of the wealthiest in NZ control more than 40 billion in wealth.

    Taxing some of this to be returned to the productive economy instead of them playing speculative games with it can only benefit NZ.
    Since top tax rate reduction asset sales and welfare reductions in the 80′s and 90′s NZ has gone down the tubes while countries which did not deregulate and cut the State sector are doing fine.
    Even under the rights own measures NZ, Ireland, Uk and USA have done very poorly compared with the countries which did not buy the Neo-liberal line. GDP increased 4% in NZ against an OECD average of 28%. Investment in NZ down to 1/3. Median incomes down. Etc. Etc.

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  93. I think the retirement commissioner Diana Crossan put it fairly well that our Super results has one of the lowest rates of old age poverty in the OECD – given most have a higher GDP per person, that is some achievement.

    So the idea that there is any fairness in abandoning universal cover and placing people at risk of poverty in their old age is specious.

    The welfare problem is the relative failure to prevent poverrty amongst children of beneficiary parents, lack of work capability amongst some beneficiaries and lack of jobs.

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  94. The decline in jobs is going to happen almost no matter WHO pays tax folks. That’s automation at work. The taxation effect Photonz and Kerry are arguing is quite clearly NOT doing what Photonz thinks it does. The evidence in the USA is quite clear. Reducing the taxes on the wealthy does not trickle down to more jobs for the less well off INCLUDING the middle class. All it does is make the society less fair and less well off as a whole and it is one fucking stupid thing to be advocating.

    Our GINI is a horrible indictment of the policies of the past 20 years and there is no excuse for it. Our inability to grow our economy is related to failure to invest and failure to PROTECT our economy. That we are so close to signing up to yet another voluntary gutting of our nation in the form of the TPP, without recourse to actual consultation with/by this government or even any advice as to what it is they plan to sell out on this time, is sinful.

    I would not trust Key and English with my kid’s piggy bank. They are amoral, ideologically driven puppets of the banking sector and the nation would be better off if they were permanently retired at their present salaries and forbidden to dabble in things they don’t understand for the rest of their lives.

    respectfully
    BJ

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  95. Kerry says “We have given you plenty of evidence over the last few months” before saying “you continue to spout the usual RWNJ bullshit”

    It is worth noting that I have been posting in this blog for about a week, so Kerry’s assertion is patently false.

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  96. Kerry says “Since top tax rate reduction asset sales and welfare reductions in the 80′s and 90′s NZ has gone down the tubes” and soing so refuses to address the reasons for the reforms on the early 1980s: ie the country was virtually bankrupt and the creditirs were hovering after a decades of living beyond the countries means.

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  97. bjchip says “Reducing the taxes on the wealthy does not trickle down to more jobs for the less well off INCLUDING the middle class. All it does is make the society less fair”

    How can discriminating (on income) be fair?

    If people were advocating discriminating on race, sexual orientation, martital status or hir colour, most people would be (rightly) outraged. By why do some consider it perfectly fine to dicriminate on income?

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