by Denise Roche
There were no big surprises in yesterday’s Budget Policy Statement. Throughout its first term, National campaigned on an agenda of tax cuts, public sector cuts, and welfare reforms. This budget year, and for the next three years, things will be no different. In fact for the public sector, just as for welfare beneficiaries, things are about to get even worse.
The Budget Policy Statement sets out the government’s vision for what it plans to do this electoral term. In it we are told that the government’s main priorities are:
- responsibly managing its finances;
- building a more productive economy;
- delivering better public services within tight fiscal constraints; and
- rebuilding Christchurch.
Let’s hit the pause button on number 3. It sounds reasonable. But it’s really a dog-whistle for more and deeper public service cuts.
New Zealand’s public services have already taken a substantial hit. According to the Public Service Association, National has over seen the loss of over 5,500 public sector jobs during its watch. It promised to cap public sector job losses at 38,859, but it then let the lid sink further until public sector numbers fell to 36,475, and adopted this as its new ‘cap’. Contrary to popular opinion, when National came into power in 2008, public sector staffing levels were still recovering from the cuts of the 90s – so they were already starting from a low base.
Why should we, the public, care about this?
We all moan at times about the quality of our public services – about the services we don’t get. But New Zealand has some of the best, more trustworthy public services in the world. In fact Transparency International last year ranked New Zealand as having the most transparent public services in the world. Just imagine, for a moment, where we would be without them. We are surrounded and supported 24-7 by public services. They provide us with clean, safe drinking water, they protect our borders and our crops, keep us safe on the roads, provide health and education and so much more.
Public services should be there when we need them. The principle of universal provision ensures they serve us all. But they also help to make New Zealand a fairer place, by redistributing our taxes to those who need the most support. When public service jobs are cut, we inevitably lose public services. This affects the poorest the most – and with the Salvation Army’s State of the Nation scorecard out today reporting no noticeable improvement in child poverty, we should be worrying about this.
And, they’re there for us when disasters strike. Not many people know that when the February 22 earthquake occurred, the Palmerston North local council’s call centre became, in effect, Christchurch City Council. Public services provide a safety net – one we can’t always see, but one that, despite its faults, serves us well.
The logic for these ongoing public sector cuts doesn’t even stack up. Sacking public service workers won’t help us address our ballooning private debt problem. It will simply push more public sector workers onto the dole queues. The experience in Greece and the UK has shown us that mindless cuts just serve to further contract the economy – at a time when investment in jobs is needed.
Technological fixes won’t help either. What exactly would a ‘virtual’ public service look like anyway? We have all become more technologically savvy. Even me! But many public service users still do not have access to a decent internet connection, let alone a smartphone. Many public services deal with complex, cross-cutting issues that can’t be solved by calling an 0800 number.
In a few weeks the government’s Better Public Service advisory group will report back. The Prime Minister has signalled that it will involve sweeping reforms of the public service. Not all of these will necessarily be bad – more joined up services that cross across departments would be a welcome thing. The Green Party has long campaigned for less competition and greater cooperation between departments. But public sector reform should be driven by genuine need, not merely used as a covert means of cutting further into the services we all need.
Published in Economy, Work, & Welfare by Denise Roche on Fri, February 17th, 2012
Tags: Budget 2012, public service cuts, public services
More posts by Denise Roche | more about Denise Roche
on the trolls and those who are unable to keep on topic
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Why imagine? Go back to the 1960′s, say, when our government was much smaller. Back then we also had affordable housing, almost no real poverty, and only dad had to work.
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That’s not right.
It is true that taxpayer wealth is redistributed, but that is quite different to “redistributing our taxes”
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Are you serious?
You use Greece as an example, when the it was Greek over-spending on an over-inflated public sector and social serices that got it into so much debt in the first place.
If you don’t continually look at the most efficient use of taxpayer money – whether you are in govt or opposition – you should not be in parliament.
Most of us effectively spend four months of every year working solely to pay tax to the govt. If you’re not continually looking at ways to be more effient with that hard earned money, then you should move aside for someone who does.
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From one of my finance boards I got this…. the original source was apparently French… not able to link.
* 98% of new construction–even today 2 years after the crisis began–takes place without a construction permit, without registering the property with authorities. Thus, no property tax.
* Wide swaths of business work in an all-cash economy, paying no VAT.
* High income and connected people simply pay bribes to friends instead of paying their income tax.
“… what it implies is something more than a lack of budget balance. It implies a non-functioning state, unable to collect taxes on the books.”
++++++++++++++++++++++++++++++
So nobody on either side should be comparing NZ to Greece in any sort of way in this argument. Ain’t even remotely useful as a standard.
Argue away, but any notion that the Greek problems come from either of “mindless cuts” or “over-inflated public sector” or anything else that remotely resembles anything other than utter anarchy.
… without taking sides here, dragging the Greek experience into it is only going to prove confusing. They didn’t do anything wrong… they’ve done EVERY thing wrong that they could… and the rest of Europe has helped them do the wrong things with much greater effectiveness than they could have managed on their own.
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The problem in Greece was a lack of functional government, not too much of it.
And given a country with a decline in the economy, has to either cut spending or face worsening deficits, this is the real problem.
For a country with an existing debt problem, economic decline diminishes the capacity to pay the money back. As debt grows relative to the declining economy.
Greece stuck in the Euro zone cannot do what an independent economy would usually choose. So they suffer the terms for European assistance. Whereby they can only show they are worthy of help if they consent to hardship. Continuing decline in the economy relative to historic debt and without reducing the annual budget is punishment, not a recovery plan.
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Andrew was government really smaller in size in the 1960′s?
Was it not larger relative to GDP than now?
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a bit of a heads up for you..ms. roche…
1)..when speaking to an audience..don’t tell them that actually you would rather be somewhere else…
..no matter how much you may feel it..
..you are almost guaranteed to alienate/antagonise that audience..eh..?
(and don’t moan to that audience that you ‘are there at the end of a long week in parliament’..eh..?
y’know..!..you are being paid handsomely for the privilege of yr position..
..don’t moan to people earning far less than you..how ‘tough’ it is..
..once again..guaranteed alienation..)
2)..know who you are talking to..and prepare..
your audience this evening was a bunch of political activists..there to hear how the green party was going to lean in/help with a campaign of direct action..
..they know why asset sales are bad..and you weren’t talking to a rotary club..
..you gave them a tired rendition of opposing asset sales 101..
..everyone there already knows all that..eh..?
..they don’t need their time wasted by you telling them how to suck eggs..
..you should know that you pretty much underwhelmed your audience..
..and there was more than a touch of the judith tizard about you..(if you don’t know what that means..ask someone…)
..and you had better watch out for that one..the tizard-syndrome..
i watched yr maiden speech today..and walked into that meeting tonight feeling positive about hearing from you on this..
..you totally underwhelmed..
..and as a mark out of ten i would give you 2.5…
..there you go…thousands of dollars worth of advice…for free..
..phil@whoar.
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Andrew Atkin, I think you will find that in the 1960s there were many more public servants per head of population than there are now… I don’t have data for the sixties but certainly in 1985 there was one public servant for every 38 New Zealanders; now there’s only one for every 94.
As far as the Greece comparison is concerned, the difference between NZ and Greece was that the Greeks had a very large public debt as well as private debt.. NZ’s overseas debt is overwhelmingly (about 80-90%) private.. even if the comparison is a little spurious, it’s surely true that massive public sector cuts haven’t alleviated the problem in Greece – nor will they here.
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Andrew Atkin, I think you will find that in the 1960s there were many more public servants per head of population than there are now… I don’t have data for the sixties but certainly in 1985 there was one public servant for every 38 New Zealanders; now there’s only one for every 94.
As far as the Greece comparison is concerned, the difference between NZ and Greece was that the Greeks had a very large public debt as well as private debt.. NZ’s overseas debt is overwhelmingly (about 80-90%) private.. even if the comparison is a little spurious, it’s surely true that massive public sector cuts haven’t alleviated the problem in Greece – nor will they here.
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Had a wee smile about that one.
Except for the GST consumption tax, MPs dont pay any other taxes.
OUR taxes? (presuming the “our” is not like the royal “we”)
No No No!!!
Tradeable sector workers taxes only are available for “wealth” distribution.
Non tax paying public servant average wage is $33 per hour.
Tax paying tradeable sector worker average wage is $24 per hour.
So the trimming of state sector workers is fully inline with wealth distribution increases. Less taxes to spend on overpriced state servants, more taxes available for “wealth” distribution.
And with the axed state sector (tax leeching) workers joining the tradeable sector tax payers, the more taxes available for “wealth” distribution.
Simple and effective.
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You’re right. Seventy people in a small department like Treasury who earn over $150,000 each before bonuses just isn’t enough.
In fact Treasury seems to have more people on salaries over $150,000, than under $50,000.
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What sort of Treasury workers would earn under $50,000 – back up staff? People whose back up jobs are probably being merged within another department? By the way exp/top rate exec assistants get $50,000.
As for workload in Treasury, what work would you cut (given every new idea floated by political parties in any area of gobvernment has to be worked through). Do you think getting these workers to do this on a consultancy basis will reduce the market charge out price. It would be like hiring private sector doctors as locums, we’d get burned.
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photonz/dunne..
my understanding is that treasury advice to cut govt depts never includes treasury in that cull.
(and just going on their accurate-prediction-record..
..they should be pilloried in the town square..)
..seventy people on over 150 grand…?
..and look at the useless drivel they produce..?
..someone is having a laugh here…
phil@whoar.
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The Key-Party showing its true colour (Blue) again.. Privatise, Privatise & again Privatise.. seems obvious that Aotearoa is headed on a ‘jump to the right’ slash & burn : Unions, Govt. agencies etc. Everything to go.. users pays.. support for the ‘haves’ over the ‘have nots’
OH DEAR.. kia-ora koutou
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Gerrit, the only way to compare whether public sector workers are overpriced is to compare the pay in the private sector for like work. More public sector workers are graduates etc.
In practice overcutting the public sector results in hiring consultants who charge more.
Many public sector workers would get more in the private sector and of those who would not many have institutional knowledge of productive value in their workplace.
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and just before this last election..
..treasury did for nact like they did last time..
..whipping up a little pre-election souffle..
..that rubber-stamps the bullshit promises from nact..
..(with of course..their ‘greatest hit’ being the pre-08 prediction that all of nationals’ bullshit promises were ok..
..’cos the great financial collapse would be all over/recovered from in early ’09…
..these clowns get paid bucketloads of money..
..and they have two consistancies..
..one is that their predictions are always wrong..(you’d think they’d fluke it once in a while..eh..?..)
..the other is that they talk utter rightwing/neo-lib-shite…
phil@whoar.
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You missed the point again, the elephant in the room. It does not matter that the state servants gets paid more, or the solo mum is on $43K per year.
What matters is the ability of the private sector tax paying workers ablity, to pay the taxes to enable the tax recipient state worker or solo mum to receive their income.
That was the message I was trying to get through.
You can have ALL the qualifications for the $150K treasury job, ANY number of kids to get the $43K DPB.
BUT BUT BUT
If you dont have the tax flow from the tradeable sector, you dont have the cash flow to pay graduates in treasury or the DPB.
Why did Greece get into trouble?
CASHFLOW.
Why is New Zelaand in trouble?
CASHFLOW
Not enough cash flows from the $24/hr average tradeable sector worker to enable the $33/hr non tradeble tax recipient or the $43K DPB mum.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10786108
It is simply not SUSTAINABLE.
Have said it before, we dont have enough Cullen type “rich pricks” in New Zealand to pay the taxes to enable the Clark/Cullen 50% inflated state sector to continue SUSTAINABLY.
Nor are there enough “rich pricks” paying taxes to enable a solo mum to live on $43K per year.
Talk about a Greek tragedy.
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yes gerrit…you make a very powerful argument for a more progressive tax system..a capital gains tax…and a financial transactions tax..
..to enable govt to raise the revenue needed to care for all..
..and given our rich pay zero capital gains tax..and are the lowest taxed in the oecd..i am sure they will be able to suck that up..
..and of course..the banks making record profits seriously strengthens the case for a financial transaction tax..
..eh..?
..thanks for your contribution to the argument/cause..
phil@whoar.
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SPC: In 1960 government was about 27% GDP. Now it’s about 45% GDP.
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it is also a powerful argument for DECREASING state expenditure to match tax flow.
So increase taxes on one hand, yep room for that.
How much revenue will it raise?
Will it be enough? Does the Mana party (or the Greens) calculate the volume of extra revenue it will raise?
And is this revenue sufficient to SUSTAINABLY keep state expenditure at 45% GPB as Andrew Atkin indicates?
At present we are only talking central government. Add local government and have a look at Auckland Len Brown’s attempt to raise taxes even higher.
SUSTAINABLE, not likely.
No need to thank me for my contribution.
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gerrit..do stop shouting..there’s a good chap..
a treasury fan..are you..
..they informed the mana party prior to the last election..
..that a financial transaction tax of 1%…
..would raise enough money to be able to do away with all gst..twice over..
..so..that..with a tax system bringing our rich more in line with the tax regimes in most other countries..
..and a capital gains tax at the rate currently being argued for in america..(mid-thirties..)
..higher sin taxes on booze and alcohol..
..sin taxes on the pollutors..as a disincentive..and to fund tax cuts for new/clean industries..
..and the legalisation/taxation of cannabis..
..would all go quite a long way towards raising the needed ‘readies’ to fix up new zealand..
..eh..?
phil@whoar.
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I got the point gerrit, you claimed that public servants were overpriced and you noted they were paid more on average than private sector workers.
That was a weak argument, as you can only determine price on like pay for like work.
I note you made no attempt to defend the point you made and started talking about Greece – not the point I called you on.
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Andrew – the source of your information about the government share of GDP in 1960 as compared to now is … .
The government share of GDP was never as high as 45% between 1999-2008, has it really risen this high under National?
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Already health boards are cutting front-line jobs.
http://www.stuff.co.nz/dominion-post/news/6444485/35-jobs-cut-at-Hawkes-Bay-health-board
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Gerrit has been taken in by the “Laffer curve”. Sometimes called the Laughter curve by realistic economists.
The myth that State spending will decrease spending in the private sector by the same amount. It ignores the expansionary effect State spending normally has on the economy as a whole.
It is obvious that the same Teacher doing the same amount of work is contributing the same amount personally to the economy in a State financed school as in a private one.
His taxes come out of his personal contribution in both cases.
It could even be argued that in a private school he is costing the economy more. His contribution has a greater cost due to profit taking, capital costs, and the costs of competition.
The Teacher also buys goods from private business locally. Expanding the economy.
Refraining from employing the Teacher, to cut taxes to those who use the extra money to gamble in offshore derivatives and Hawaii holidays, contracts the local economy as we have seen.
Economic contraction is accelerated by benefit cuts and general wage cuts. As we have seen proved all over the world recently.
Giving more money to the rich to play with has not resulted in greater productive investment, whereas putting tax money back into the economy helps local business and employment.
The USA has proved that giving money free to an already bloated financial sector is counterproductive. The rich in the USA, and elsewhere, are awash with cash. Where is the investment in productive companies and employment?
Greater inequality makes for a less economically functional Capitalist society, as a few remove the money that could have been circulating locally and re-invested by small entrepreneurs.
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Any one who argues that the State with its protection, supply of infrastructure, limiting unfair competition, supplying educated and healthy workers and maintaining a labour pool, does not contribute to their private business, is living in dreamland..
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SPC,
No, the point was that you need a volume of private sector workers (who on average earn $24/hr) paying taxes to pay for any state worker (receiving $33/hr).
It work fine to pay state sector workers any level of renumiration you like, until you run out of tax payers. Then the state worker (or benificiary) will not receive any pay from the state.
The only way that the state can keep on paying state servants and benificiaries is to borrow. It has no tax flow or cash flow.
Very much like Greece.
Kerry
No, the teacher is not as he pays no tax (except GST), State servants are tax recipients not payers.
Again wealth redistribution only possible if there are private sector tax paying workers to pay the taxes so that the state can pay the teacher.
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‘Slash and Burn’ is pretty emotive – my one enduring impression of the Public Service was the luxury of Waste – and the staggering, appalling cost of same.
Favourite quote from a Colleague – “I don’t Care – they Can’t Sack ME!”
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If that was the point, why claim that state sector workers were “overpriced” as you did?
And as for calling any country with a budget deficit during an economic downturn, as being like Greece, that’s nonsense we were running a rather large budget surplus only a few years ago.
With a little economic growth the deficit would end, the real issue is the failure to return to growth.
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@photonz1 February 17 4:12 PM
Sorry, been away without internet access over the weekend so a bit late responding, but can’t let you get a way with that comment photonz1.
Denise was talking solely about the recent austerity measures that have been imposed by Greece and the UK, and how they will harm rather than benefit the economies in those countries.
That is a completely different issue from the past economic mismanagement in those two countries, which is what you are referring to. Just because governments in Greece and the UK have a lengthy history of fucking up their national economies doesn’t excuse their current governments for continuing to do through the latest austerity measures they are implementing.
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And your solution is that they continue spending at a rate far higher than they can afford.
They can only do that if someone will loan them the money.
And who will do that when they can’t pay back what they already owe now?
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photonz, the argument is that the cost cutting should have occured earlier.
Applying it now, after the GFC, is not making repayment of debt more likely, but less likley.
The debt load is rising against GDP, not falling. As the economy is shrinking faster than the cost savings. This means the deficit is not declining, it’s adding to accumulated debt and the GDP is falling against the rising debt.
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Going further into debt whan you can’t pay back what you already owe will make things better?
That’s like telling someone up to their eyeballs in credit card debt to fix their problems by getting another credit card.
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I was happy to return to the private sector where efficiency was a daily necessity for survival – indeed it is quite unfair to ask one part of society to carry another, simply because the PSA has always been the strongest Union in town – and woe betide the poor Polly who takes them on – without looking too closely at the nuts and bolts (so far) of the proposals – I feel it would be near derelict not to address these issues.
Photo’s line has the timbre of common-sense about it for mine.
Lean doesn’t have to be Mean.
And if John Key has that sort of courage, I for one would generally support him.
Since it has been mentioned here and in other Media – I remain a supporter of decriminalising Cannabis – along the South Australian model.
Lately I’ve seen far too much abuse of things that are already legal – not to be very careful – though the Portuguese laissez-faire approach has been successful.
Cannabis won’t magically disappear from our Black Markets, so Controls seem the logical course.
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photonz, er don’t you know that Greece is going further into debt, despite the cost cutting? It’s not working. The economy is declining faster than the cost cutting. Things are getting worse.
The EU may have done better investing for growth in Greece.
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this problem attacks my country too, indonesia. we, people, suffer and get bad public service
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SPC,
Your interpretation of my reference to “overpriced” state servants is that they are paid to much.
My meaning is that (quite clearly made in a comment later) the service they provide is not affordable (overpriced) for the volume of tradeable sector tax payers available in the NZL economy.
So to maintain the state workers sector at current pay and staffing levels requires either increased taxation on the tradeable sector.
Or you could look at reducing state expenditure to be in balance with tax receipts. Outgoings budgeted according to income.
You could of course borrow against your childrens children potential future income to maintain existing state expenditure.
But that requires your childrens children to be employed in the tradeable tax paying sector. If employed as non tax paying state servants you will not be able to repay loans or interest.
You could raise the volume of taxation by increasing GST (the only tax the state servants pay) to capture more of their take home pay.
That will increase the “cash job” market decreasing taxation more.
Realistically only cutting state expenditure together with a growth in tax paying tradeable sector is it viable to enable increased wealth distribution.
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Maybe you should not have compared the average pay of public sector and private sector workers, if that was not your point, unless it was to infer either paying public sector workers less, or having those remaining do the work of those laid off.
The fact is that over the economic cycle our public sector spending has been afforded – this is why we have low public debt.
It’s simply a matter of keeping a cool head on the upturn and the downturn. Banking the surpluses into paying down debt or building up funds (NZSF) in the good times and not heeding the calls for tax cuts (our tax rates are already low by OECD standards) – and prioritising infrastructure investment (deferring the rest) to ease inflation. In the bad times not exacerbating recession by retrenching government. And undertaking the deferred infrastructure spending when input costs are lower.
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That said, I should add the government has done nothing in proper government accounting terms to provide for the cost of the Christchurch rebuild or the future cost of tax paid super (or the cost of old age care).
These are two items we have not afforded across the economic cycle in the past. So the prudent would now have or develop a plan for both.
The Greens have suggested a plan for the former, I have suggested that any compulsory deduction from workers pay should be dedicated contributions into the NZSF each year, rather than making Kiwi Saver compulsory as Labour proposes (this remaining voluntary).
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SPC
The enunciation of the difference in pay rates is required to show the inbalance and inequality beween the private and public sector.
Why are state servant renumerated higher? Yep, the state may have more educated graduates but surely you would want them in the tax paying tradeable sector?
Tax rates low compared with OECD? Yep because the state servants pay no tax but the tradeable sector pays high tax.
50% of the workforce pays no taxes (except GST), the other 50% pays ALL the taxes.
The overall tax rate is low but the tax burden on the tradeable sector is high.
Lets compare tax rates with countries having similar ratio of tradeable sector tax payers and non tax paying state workers we have in NZL.
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We need educated people doing the jobs requiring this in the public sector (to run hospitals, schools, manage public service delivery and offer competent policy advice), what we also need is more better paid jobs in the private sector.
We don’t have more public sector jobs than per the OECD average (given we have tax paid super, and no health insurance or unemployment insurance we have a surprisingly low government share of GDP – nearly always under the OECD average).
We do not have high income taxes or company taxes compared to other OECD countries. Our GST is lower than in Europe, but higher than Oz, US and Japan.
What particular burden on our tradeable sector is there but the high dollar, and the high cost of land in the case of some sectors, because it certainly is not taxation.
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Gerrit do you really believe that workers in the public sector don’t pay income tax, only GST? You’ve said this twice now.
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SPC,
Went through with you on this before. Do you need another reminder?
Here goes (This is for Kerry as well),
If the state pays a teacher $1000 gross per week. it than taxes that $1000 at 30% for a theoretical PAYE tax of $300.
So the state pays the teacher $1000 but takes back $300. It has NOT gained $300 to use in wealth distribution, it has only spent $700.
The tax a state sector worker, as shown on the wage sheet, pays is a paper transfer that has no value.
What the state does is collect $700 from the tradeable sector in taxes to pay the teacher.
The $300 does not by magic appear from the teacher.
If the state collects $1000 from the tax paying tradeable sector it has left over $300 AFTER paying the teacher.
The teacher never ever pays tax.
Simple he.
Or do you still not understand?
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Your understanding of economics is unusual.
The only difference between the public school
teacher and the private school teacher is the
route by which the funding to pay the teacher’s
salary takes.
In the case of the public school teacher, IRD
collects $1000 from tax payers, and the government
then gives $700 to the teacher. The remaining
$300 (tax paid by the teacher) is used by the
government for other purposes (army, health care
and so on).
In the case of the private school teacher, the
parent directly pays the school $1000. The school
then gives the teacher $1000, and the teacher gives
IRD $300 which the government then uses for various
purposes.
One of the arguments for publicly funded education
is that children will have the opportunity to get
a good education, irrespective of the financial
circumstances of their parents. With public education
high earners will typically pay more in tax towards
education than low earners, so in effect some
form of redistribution is taking place. On the
other hand, with private education, rich
parents will end up paying less for their
childrens education (compared to what they would pay
in tax directed towards public education). However,
low income parents will simply not be able to send
their children to school.
I think where you are getting confused is in the
difference between someone producing some material
product for sale (a car, leg of lamb or whatever)
versus someone who produces a service for sale
(for example the teacher).
Cheers,
Samiuela.
ps. Please forgive the formatting of this post,
I am posting using the lynx web browser which
doesn’t seem to handle line wrapping very well.
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Samiuela,
Not confused at all. Denise posting was about the ills befalling the country when slashing the public service sector.
Wrong wrong wrong.
The teacher does not pay the tax (except as a paper transaction between the education department (or what ever it is called) and the IRD.
The extra $300 tax comes from the tradeable sector tax payer who fronted with the $1000 as collected buy the IRD.
Never ever the state sector teacher. All the state has to find is $700 for his weekly stipudent. The rest is a paper trail.
Which is why we are better of without an 50% engorged, by Clark/Cullen, public service and hence to need to trim.
Now the state is getting the $300 tax
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Then where on Earth does the $1000 to pay a
private school teacher come from ($700 after tax
salary plus $300 tax). Of course it comes from
the same source as the $1000 to pay a public
school teacher.
If a nation cannot afford $1000 per teacher for
public education, then how can it afford $1000
per teacher for private education?
What you are really arguing is that the nation
can afford $1000 per teacher for private education
of the elite, but not $1000 per teacher for
public education of all children.
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Samiuela
Rubbish, I did not say that AT ALL. Your wrongly concluded inference.
Rubbish again. It does not come from the same source at all. Think about it.
One comes out of AFTER tax income gained in the tradeable sector, the other comes from the taxes raised by the state from the tradeable sector.
Those sending their kids to private schools are double paying (which could or could not be a good thing – the individuals choice).
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Oh really gerrit.
Of course the public sector worker paid for doing work pays tax on the income. You can say that his gross wage came out of taxes, but you cannot say that he did not pay tax on his income (for one it influences the tax liability for interest earned and other income).
Your argument gets really silly when public hospital doctors leave their job and return as better piece rate paid locums, or doing the same patient work contracted to a private hospital. Or when a teacher gets hired by a charter school and is part by the school operater not the taxpayer – yet the taxpayer pays for the charter school including any profits.
In the end these services are paid for by either taxes or user charges. If it’s user charges, has the wealth creating “tradeables” sector really grown? Local services are not exports.
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Gerrit,
Read your own last post more carefully. You
yourself said public education was funded
“from the taxes raised by the state from the tradeable sector.”
and private education was funded
“out of AFTER tax income gained in the tradeable sector”.
In other words, funding for education comes
from the “tradeable sector”, the only difference
between public and private education is the route
by which the money makes it into the teachers
pay packet.
If the “tradeable sector” cannot afford public
education for all children, then how on Earth
can it afford private education for all children?
One cannot make services appear out of thin air
simply by moving the provision of those services
from the public sector to the private sector.
Given that you seem to be advocating we cannot
afford the public education system, but can
afford a private system, I can only draw the
conclusion that the system you seem to be
advocating will not be universal, or the quality
will vary depending on how much money one has (or
does not have).
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Again your inference and interpretation on what I hav enot said.
The teacher reference was an example. Not about private versus public education. You can discuss that in the general debate.
SPC
I guess the notion the the “taxes” a state servant pays cannot “grow” the wealth distribution fund is not understood.
Cool
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Should be “Or when a teacher gets hired by a charter school and is paid by the school operater not the taxpayer – yet the taxpayer pays for the charter school including any profits.
The idea that a nations wealth grows by merely transferring public service delivery from public to private providers (and simply by reducing the numbers of workers paid directly by the state), because these providers receive the money before it is paid to workers. Or because the public pay for the services (and workers wages) directly in user charges, rather than in taxes, is risible.
The real issue is the efficiency and effectiveness of the service delivery including the public sector.
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gerrit, every dollar paid in user charges (for services transferred to the private sector) is a dollar not available for wealth/income re-distribution.
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Andrew notes:
Indeed we did have a bigger and more expensive public service back in the day, but, we also proportionately had far more wealth; this was about the time that the decline in our wealth (compared to OECD average) set in.
The problems we have now are nothing to do with public sector borrowing or spending, but all to do with insufficient productivity as a country.
Yeah, I know, it’s as broken record, but me parroting this at frequent intervals doesn’t make it any less true. If we fix the productivity problem then all the other problems just go away by themselves.
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The OECD categorised total public spending as a share of GDP [2004 - 07 average] into low (below 40%), medium (41-49%) and high (50% and above).
At 38.9%, NZ was in the ‘low’ category, with only 6 countries spending less than us. These include the US at 36.7% and also Spain. The OECD average was 43.6%. The UK (43.9%), Germany (45.8%), Sweden (54.4%).
Our total public spending is now forecast to be around 43% in the next couple of years because of the impact of the economic downturn.
http://stats.oecd.org/Index.aspx?QueryId=32446
http://www.oecd.org/document/18/0,3746,en_21571361_44315115_49102162_1_1_1_1,00.html
http://stats.oecd.org/Index.aspx?QueryId=32440
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@ Gerrit
A quick note, which may have been covered off earlier but I couldn’t find it, is that government spending on services in not a closed loop – the money used to pay teachers does not necessarily come from tradeables sector taxation (i.e. it could come from SOE returns or other imposts that aren’t generally designated as taxes, such as fines imposed by the courts etc.)
It all goes into the big bucket called ‘revenues’ and gets divvied up across the board.
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gerrit..
you asked me earlier this thread ‘how could we pay for this..?
i gave you a detailed breakdown of just that..
..yu never answered..
..and just pop up again repeating the same bullshit…
..this is the definition of a troll..
..just repeating the same lies/bullshit..
..running away from any challenges..
.and repeat..
..all of course done from the safety of/snivelling behind a fake-name..
by any definition..you are a lying/spinning-troll..
phil@whoar.
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HAHAHAHA
..all of course done from the safety of/snivelling behind a fake-name..
Gave you my web site address not that long ago. Seems like the drugs have addled your memory.
Not a good advert for habitual cannabis abuse!!
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Gregor W,
Point taken.
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Gerrit. Still counter-factual and in fact showing not much understanding of economics.
Money is not the only player.
$1000 worth of Labour is $1000 worth of Labour whether provided by a private employee or a State employee. $300 tax off the labour is a $300 charge on that $1000 of labour no matter who the employer is.
A power company employee, Teacher, road mender is doing the same job and contributing the same amount of labour to the economy. It doesn’t change if he/she is employed by an SOE, private firm or directly by the Government. The $300 tax is coming from earnings of the person to pay for State services.
The Teacher by providing $1000 worth of teaching has expanded the amount of goods and services in the economy by their labour. $1000 more than if they were not there.
The $300 tax would not exist, to be used for services provided by the State, if the teachers work had not expanded the size of the economy by $1000.
This contribution becomes an educated member of your workforce. A service which you have paid for with taxes, presumably. If you are not one off the many businesspeople who fiddle their tax.
Take an SOE chief executive on $500k a year. Does their work value change when the SOE is privatised? Are they paying tax when private, but not when working for an SOE.
What about a private contractor working for the Government and paying tax on their earnings?
Tell Singapore about your idea. They get away with almost no income tax because SOE’s such as Temasek are doing so well. According to your idea they are a State enterprise so could not possibly be contributing to the economy.
What about Soviet Russia? We probably agree about the dis-functionality of a total command economy, but they did survive with no private sector at all.
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you asked me a question..
challenging me to show you how we could pay for the changes we need…
..i gave you a clear list..
..you just ignore that/go away..
..and come back later and repeat yr same bullshit..
..look at that list you asked for..
..and try for an intelligent response…
..eh..?
..gerrit who..?
phil@whoar.
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fact/reality check:…
during the eisenhower years the top tax rate was 95%..
(when america needed rejuvenation/an infrastructure catch-up..
..as do we now..)
..it’s not/never we can’t afford it..
..it is a lack of political-will/action..
..end of story..
phil@whoar.
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The only sustainable way to have more money for greater public expenditure (assuming such a thing is both necessary and desirable) is to increase productivity and preferably, increase it dramataically.
Every other approach, and in particular, increasing taxes, is non-sustainable.
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absolute rubbish..buckley…
..do you have any science/evidence of that..?
..or is it just a plucker…?
..dredged up out of yr t.i.n.a-archives..?
..perchance..?
..i will hold my evidence in abeyance until you produce yours..
..you are the one..after all..making this provably erroneous claim..
..but somehow..i don’t think you have any..eh..?
..pluckers usually don’t..
phil@whoar.
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Its simple maths Phil.
Option A: Increase taxes at 1% per annum compound keeping productivity constant.
Option B: Increase productivity at 1% per annum compound keeping tax rate and coverage constant.
Run the numbers over a few years. Ask a few questions. Which option improves everyone’s standard of living? Which generates morew money for health, welfare, and education? Which one fails when taxation reaches 100%?
Sustainable.
And I haven’t a clue what a “t.i.n.a-archives” is, much less have one.
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I admit to being somewhat baffled by your comment that “Technological fixes won’t help either. What exactly would a ‘virtual’ public service look like anyway? We have all become more technologically savvy. Even me! But many public service users still do not have access to a decent internet connection, let alone a smartphone. Many public services deal with complex, cross-cutting issues that can’t be solved by calling an 0800 number.”
I readily acknowledge that yours is not an entirely unreasonable point … as far as it goes. But taken in context, the notion that “Technological fixes won’t help…” appears to make relatively little sense standing on its own merits within the broader scheme of the problem(s) being addressed.
Such a strategy may not represent a ‘cure-all’ in and of itself, but does it reasonably follow to conclude that it “…won’t help…?” Must everything – and every contributing solution – be ‘all or nothing’? Is it not feasible that multiple strategies can coexist and combine to contribute positively and effectively – to whatever extent possible – to a larger, broader, more inclusive and exhaustive solution comprised of each?
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@joel klutch 5:14 PM
There are many older New Zealanders and those with physical, sensory or intellectual disabilities for whom the internet or a call centre in India is not an option if they are to be delivered the public services they need.
They need contact with a real person who both knows the intricacies of how the public services they administer work and have the time to explain them, in person, to those who are reliant on them.
I think part of your comment acknowledges that, so I am not sure what your point is.
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