An election bribe
I have to say that I found it hard not to hop around on the floor laughing last night when I saw National describing Labour’s student loan policy as “an election bribe”. In fact, Don Brash said of the policy:
It is the most extraordinary bribe I’ve ever seen offered by a New Zealand government quite frankly.
Well, I know that Dr Brash says he doesn’t know much about New Zealand political history, but this is possibly the most extraordinarily dumb statement I’ve ever heard by a man wanting to be New Zealand’s Prime Minister. How could anyone seriously claim that a $300 million a year student loan policy is the most extraordinary bribe ever offered by a New Zealand Government? What about Think Big? Besides which, isn’t National just about to bribe voters with a tax cut package presumably worth many times more than $300 million?
In any case, whoever’s doing the bribing, the division lines in the election are becoming clear. Labour and the Greens are seeking to protect the tax base so that we can deliver important social and environmental policy programmes, like this one. As Helen Clark is wont to say, whenever you go to a public meeting, there are people talking about public services that need more money. Against us are ranged the forces of National and NZ First, which want to slash the tax base and, accordingly, starve funding to important government programmes and prevent the government from proposing important new ones.
I suspect that National’s rather hysterical reaction to the student loan policy had more to do with its realisation that Labour was on to a winner than actual opposition to the policy. John Armstrong’s already describing it as a “guaranteed vote winner” which has allowed Labour’s election campaign to “shine”. No wonder Dr Brash is worried.
July 27th, 2005 at 11:01 am
As I have noted elsewhere, for the Nats to give tax rebates, the recipient must first have the money to spend, and the lower income folk do not have the wherewithal. I think the Labour policy for student loans is a good step.
“Bribe?” coming from Dr Don? That is a bit rich. Come on, they all do it, only Labour appears, now, to be making their announcements look pragmatic. Good on them, and when they win may the Greens keep them honest. Joy.
July 27th, 2005 at 12:33 pm
Don is just trying to have it both ways. When he does it, what is it? I am learning to respect him less and less… but he does have to know that this sort of thing will pull some of the teeth of Nats core issue, and it does it with rather specific conditions. If graduates have to stay in NZ to get the benefit of it, it greatly reduces their incentive to wander off to Oz (or further).
respectfully
BJ
July 27th, 2005 at 1:26 pm
Good grief. Tax cuts are not bribes. Returning people’s confiscated property is not a bribe. You cannot bribe people with their own money, only with other peoples.
July 27th, 2005 at 1:30 pm
Fwog, it is not only Green who wish to protect tax base, NZ last policy says
” NZ first maintains its interest in protecting our Nation’s tax base”
” disclosure of tax schemes … mandatory”
The student loan tax incentive will cost more than $300 mill, because effective means testikng is not possible. Hidden wealth.
Disgustingly wealthy students like my daughter say openly already that they will be taking out biggest loan and putting it in sharemarket, like Cuillen say, that ok with you fwwog, you don’t mind pay taxes for millionaire girl, whats about you chipper, you ok with that?
July 27th, 2005 at 1:33 pm
The policy change seems (at least fromt he response on NoRightTurn) to’ve touched a genuine vein of enthusiasm from those feeling burdened by their debt.
I think that sort of enthusiasm is going to be important, as I suspect a significant part of the disenchantment with Labour isn’t issue-specific so much as a general restlessness.. let’s face it, a stable govenmnet is kinda *boring*.
I think this is a large part of Brash’s appeal (and Winnies for that matter).. despite his fairly woeful showing as a politican, he’s a fresh face, and people may well vote for excitement ahead of common sense.
Now one way of combating this would be for the Green’s to assume the role of the ’spice’ in the lefty stew - sufficiently controversial to generate interest, without becoming overplayed and reactionary. I’m interested whether the political relationships and understanding of MMP have matured to the point of such tacit cooperation.
July 27th, 2005 at 2:23 pm
I think this is a good move.
I’m still outraged that students can’t get the dole while studying though.
While some students that are uneligable for allowances have heaps of hidden dosh, others like myself had parents up to the eyeballs in debt of their own. my debt is in excess of $40 000 and about 3/4 of that comes from living costs!
I think at the time I studied there was a way you could get parents to sign a paper that basically said they have disowned you, which would mean allowance eligibility.
I always thought that would be a pretty scummy thing to do.
This interest releif will help me alot ( I may actually be able to pay back the debt - something I had never expected to do). I also like the sound of the compulsery savings tax thingy that they’re planning , that can be cashed in (with a bonus of $1000 per year up to 5 years from the govt) for a deposit for a house.
Of course some kind of star trek like system would be even better but hey its a start.
July 27th, 2005 at 3:54 pm
While there are places in this that look to be potential sources of trouble (millionaire daughters of pq taking loans to pull down an interest based profit on some investment somewhere) I would reckon that this has to be handled where/when the loans are issued, not where the interest is paid. Personally I don’t believe that its a good idea to make people go deep into debt to get an education. I accept that some will slide through, but I don’t think that so many will cheat as pq expects. Again though, this has to be policed at the front end, not the back.
It isn’t entirely out of line to go into debt somewhat, as that keeps you honest about your prospects of making enough extra to pay it back, education as an investment in yourself, but I want to see adequate funding up front, and less debt being loaded on.
respectfully
BJ
July 28th, 2005 at 9:00 am
Percy,
You argue that you can’t bribe people by agreeing not to take money off them which they otherwise would owe. But then by that same logic you can’t bribe people by not taking interest off them.
Please, be consistent.
July 28th, 2005 at 9:03 am
Peter,
What puzzles me is this: how come a millionaire can’t spell or construct a sentence?
Though I have noticed you’re more coherent elsewhere: does proximity to frogs befuddle you? Leave your head spinning? If so, is this a symptom of infatuation?
July 28th, 2005 at 9:29 am
It’s a good policy and an election bribe. That’s politics.
Because of the paradoxical nature of politics students can thank National. Had National not been doing so well then this policy would never have been introduced.
July 28th, 2005 at 12:20 pm
Icehawk,
You say that by not forcing people to owe something that is not a bribe. I would differ. The cost of this borrowing (the interest) will not go away. As the streets say “A grand don’t come for free”. It will merely be spread across the country as a whole.
Now what I consider a bribe is saying that we will get other people to pay for the cost of your borrowing. Here have some more cake someone else is picking up the tab. In that scenario do you think anyone will stop eating the cake? Hell no, they would be stupid to.
Tax cuts are not a bribe for exactly the reasons Percy mentioned. Promising not to take so much off people is not a bribe.
July 28th, 2005 at 1:32 pm
I find it amusing too, Frog. There’s an intense hypocricy at work in the claims of Nationalists that this is a bribe, and a bizarre take by the media that it’s cynical.
It is, of course, neither. It’s a policy totally in line with Labour’s principles. The party has always believed that access to higher education is a right of citizenship; it is not a privilege dictated by the size of your wallet (or your parents’). So we are taking another major step to make it more affordable, just like we did in 2000.
The cynicism is all the media’s, who seem not to believe that one might offer popular, big-vision policies like this for principled reasons. Go figure that. Just shows how twisted their perspectives are.
And as for National, your cartoon sums it up perfectly. Let’s keep that line up, and keep highlighting the kinds of social investment you can make if you don’t slash taxes for rich people.
July 28th, 2005 at 3:49 pm
Yep, its all about hitting the rich isn’t it. That is exactly why the tax steps are set at $38,000 and $60,000. I might believe you if they were stepped at $60,000 and $200,000.
Until then, you just want to make the middle class success mediocre, and force families to have 2 working parents, with “generous” subsidies to encourage Mothers to stay away from their children.
July 28th, 2005 at 4:33 pm
Zen Tiger, all…
The marginal effective rate of tax is computed by working out the benefits withdrawn as well as the tax paid, and it hits 90% for a wide range of mid to upper middle class incomes and then DROPS to 40% or so on all the money made from 70K to the sky.
This is exactly the target range (parents and students) which will benefit from the policy, and the 90% rate is so punishing, that they all breath this big sigh of relief to see even a small lift of the pressure put on them. I do NOT want my wife to work, do NOT want to form an LAQC and become a landlord, I just want to do my job, live in my own home and pay a reasonable level of tax compared to someone on a 40K income and someone on a 400K income. That means a rate higher than the guy on 40K and lower than the guy on 400K. That is NOT the case now.
Which is why this is an issue. Labour may have a winner and may get itself re-elected with this small sop to the tax-paying-class, but it hasn’t FIXED the tax problem. It has fixed a problem for students and schools.
The question will be whether the public will understand this in the run-up to the election or whether there are other issues that prevent deeper analysis from being used.
respectfully
BJ
July 29th, 2005 at 12:17 pm
Mike,
No, I don’t say that. I say that Percy should say that to be consistent.
Your argument is that this (but not tax cuts) are a bribe because “someone has to pay the interest”, as if tax cuts have no cost. The costs of tax cuts are, likewise, spread across the country in less govt health care, poorer education, etc.
Zen,
A two income family with over 60k each (or with one of the two incomes significantly over 60k, ie paying a significant amount of the top tax rate) is almost certainly in the top 10% of households by income (top decile starts around $110k, from memory). That might be “middle class” in your view - but if so the majority of New Zealanders aren’t rich enough to be “middle class”.
July 29th, 2005 at 1:06 pm
Icehawk:
I suggest middle class is a wide band. The top tax rate starts at 60K. Fact. Your example relies on both parents working, or one to be significantly hinger than 60K. My point was exactly that - it requires both parents to be working.
To put it another way, it is just as silly to define a single income earner with a family on $80K, living in Auckland, as in the same category as those on 200K. Maybe we could compromise, and move the 60K to 110K and allow income splitting?
The incentive for a Mother to stay at home and look after her children, even if the father is on 60K is such that it is hardly an option. Indeed, if he gets a 10K rise the extra dosh is effectively taxed at 51% (39%+12.5%), so there is less incentive for him to do better as compared to getting the wife out on a 10K job, which then gets eroded by transport and crèche fees. Rather than complex rebate systems creating paper work, and relying on the tax returns being completed correctly, with screeds more legislation and bureaucrats, moving the tax brackets and/or allowing income splitting would provide fairer tax relief. And every extra dollar in a pocket will still be spent in some way, and therefore taxed as it goes around.
And the deciles sound as interesting as Cullen, redefining his 1999 statement that only 5% of taxpayers would be paying the top rate. What he could have more truthfully said is that 22% of the workforce are paying the top tax rate. He apologised for that a few days ago I believe.
My opinion still stands - Labour seem to be trying to make out the folks on $80K should consider themselves bloody rich and bastards for complaining about paying not only more tax in pure dollar terms, but then compounding that by also upping the percentage taken at the same time.
The policies are reflections of equalisation by bringing mid range people down, whilst making out these people are the fat cats. In terms of the ACTUAL taxation burden, we could show more respect to these people instead of trying to make out they are rich, greedy sorts.