EFA leads to target

07/10/2008

Big News  reports that women dressed in black went to the home of Family First director Bob McCoskrie at the weekend, stuck about 1000 knives in his lawn and taped an intimidating note on his door.

It’s presumed they traced him because his home address is on Family First’s authorisation statements as required by the Electoral Finance Act.

It should be enough for the Electoral Commission to be satisfied that those who register with it are bona fide, there is absolutely no need for anyone else to know where they live.


MMP still a mystery

07/10/2008

People’s understanding of MMP has improved but a survey  carried out by the Electoral Commission shows that it’s still a mystery to some.

Commission chief executive Helena Catt said it knew from past experience that levels of knowledge would keep increasing and peak on election day.

The results were pleasing in that this election could be the one taken with the highest levels of understanding since MMP was introduced, she said.

In the survey of 3000 potential voters, 67 percent correctly identified the party vote as more important than the electorate vote in deciding the numbers of MPs each party gets.

“Equally pleasing was finding that only a fifth think that MMP’s hard to understand, a significant shift from the quarter saying the same thing last year,” Dr Catt said.

Ignorance of MMP isn’t restricted to the voter in the street. I remember an interview with the leader of one of the wee parties (Jim Anderton I think) after a previous election who said he’d been horrified when one of his supporters gave him his electorate vote but gave his party vote to Labour.

But the knowledge that 33% still don’t udnerstand it’s the party vote that counts give some credence to the this morning’s post about it being better if some people didn’t vote.


Tax cuts trimmed

07/10/2008

The red ink is worse than expected so National is scaling back its tax cuts.

“We have made some changes to our tax package in light of the news Michael Cullen dished up in yesterday’s pre-election fiscal update (Prefu),” Mr Key said.

“The thrust has not changed. But we are being realistic about what is fair and affordable in light of the mess Labour will be leaving behind it.”

Following on from the Labour tax cuts of October 2008, National would still be making further tax reductions on April 2009, April 2010 and April 2011.

“The largest chunk of this tax reduction will be provided on April 1 next year.

“For someone on the average wage, the actual amount of the tax cuts will be similar to that which we have previously signalled, and I will detail those numbers tomorrow.”

Guyon Espiner said on TV1 (not on line) he thinks the average income earner will still get around $50 a week off their tax but the upper income earners won’t get as big a cut as was expected.


How bad will it get?

07/10/2008

Adolf Fiinkensein over at No Minister  thinks the dairy industry’s a bit off colour and it’s going to infect the rest of the country.

He bases his diagnosis on five symptoms:

1 Sliding world commodity prices for dairy products

2 The melamine scare in China and other Asian countries.

3 The world wide credit crunch caused in the first instance by the Democratic Party’s drive for ‘affordable housing’ for indigent blacks and the subsequent sub-prime fiasco.

4 Most of our major farm banks are Australian owned. (Australians don’t understand NZ agriculture)

5 Our trading banks’ attitude to risk and their habit of re-rating individual client risk from time to time.

I agree dairying is not at the peak of health it was a few months ago, but my prognosis is more positive than Adolf’s.

To address his points:

1. World prices for dairy products are going down but this is a correction after hitting a record high. They’re still well above the historical average and while they’re likely to be volatile in the short term they’re unlikely to go right back to where they were before the boom and the medium to long term outlook is positive. As Adolf notes the dollar is going down and that will help off-set any decline in commodity prices.

2. The melamine scare may actually help us because although Fonterra is a minority shareholder in San Lu, more than 30 companies were also victims of the poisoning. Because of that it’s regarded as a Chinese problem and companies which had used Chinese milk, in China and other countries, will be looking for suppliers whose milk they can trust – and one of the first they’ll come to is Fonterra.

3. The credit crunch is already having an impact. Mataura Valley Milk has put construction of its new plant near Gore on hold; planned dairy conversions are on hold and farmers are closing their cheque books. That will have a negative impact on the people who supply and service them but as long as the farmers have reasonable equity they’ll weather the storm.

4. Regardless of who owns them, the banks employ people who understand agriculture here and they’re not going to want to threaten their equity by doing anything which will put a farming business at risk if they can avoid it.

5. If banks are worried about their debtors, and they have reason to be, I think those who’ve borrowed for houses will have more to worry about than dairy farmers.

People who converted for this season or are in the process of converting for next season, who budgeted on a higher payout than is now expected and have little equity will be overstretched. However, one good thing about dairy farming is the cash flow. Unlike sheep, beef and cropping where you get one or two large payments a year, dairy farmers get paid each month and as long as the banks get their share of that they will probably be prepared to watch and wait.

As well as that, interest rates are likely to come down and providing the banks are reasonably confident of farmers’ performance in the medium term they will probably give them a bit of leeway in the short term to allow them to farm their way out of trouble.

That doesn’t mean everything on the farm is rosy, but it’s nowhere near as bad as it was in the 1980s.

Then we’d been dependent on subsidies which were stripped away but the economy was still highly regulated; inflation was over 20% and interest rates were higher still.

We’ve adjusted to life without subsidies and are stronger because of it; and  in spite of Labour’s scorn for the “failed” polices of the 80s and 90s, they’ve left them more or less alone so the economy is freer and stronger. Interest rates are higher than desirable but they’re likely to come down and while inflation too is above the comfort level, it’s still well below the levels we faced in the 80s.

Dairying accounts for about 25% of our exports so Adolf is right that if its off colour the rest of the country will catch the bug. There’s no doubt the economy is sick,  and dairying will be affected, but because it was fitter to start with it’s better equipped to withstand the infection than most other sectors.


Cutting the tax cake

07/10/2008

National: for every dollar in tax cuts there is almost a dollar for increased expenditure on priority issues dear to the public’s heart – this is the nearest you’ll get to having your cake and eating it too.

 

Labour’s policy will take the cake you’ve baked, share it around and, when pressured, give you some of the leftovers.

 

ACT will provide no cake. They will however, give the tax cuts needed to enable you to purchase a dietary plan of your choice which depending on how well you manage your allowance may or may not include cake.

 

The Maori Party will hold a hui and invite you to share the cake your bring as koha.

 

New Zealand First will ask you to pay for cakes that it will sell, give away or eat themselves as its leader sees fit.

 

The Green Party will legislate so you have to make your own cake from low fat, low sugar, high fibre, home-grown organic ingredients and share it with your neighbours.

 

The Progressive Party will nationalise all the bakeries then force you to eat badly made state baked cake.

 

The Libertarianz will ask, “Why do we have to have cake anyway?”

 


More time on forms than farm

07/10/2008

Does this sound familiar?

Ask any farmer, and the complaint is the same: “Bloody paperwork. I spend more time filling forms than I do looking after my animals. It drives me to distraction.” I’ve heard those self-same words more times than I care to remember (Magnus Linklater writes).

It could be New Zealand and any business and I suspect it’s the same the world over however, the writer is referring to farming  Britain.

You can read the rest of the column here.


Lessons from China

07/10/2008

The melamine milk poisoning has highlighted China’s defects but of course there is much to admire in that country.

Roderick Deane found lessons we could learn  from China on a recent visit.

And Kathryn Ryan interviewed David Speary  a New Zealand teacher who spent seven years at a provincial Chinese training college.


China vows to clean up milk industry

07/10/2008

The Chinese government is giving a very strong message to the world:

China’s Cabinet has vowed a complete overhaul of the scandal-ridden dairy industry, pledging to inspect every link from the farm to the dinner table to try to restore public trust in Chinese-made food products.

In its strongest action yet, China’s highest level of government called the industry “chaotic” and acknowledged there was a lack of oversight.

At Monday’s meeting of the State Council, or Cabinet, the government said it would punish companies and officials involved in the contamination of milk products that has been blamed in the deaths of four babies and for sickening more than 54,000 children.

The scandal revealed “that China’s dairy production and circulation has been chaotic and supervision has been gravely absent”, said a notice about the meeting on the government’s Web site. Unscrupulous “elements” and companies had also put profit above people’s lives, it said.

Their concern is not just about health:

The head of China’s quality watchdog said the country was stepping up checks on its exports to ensure they conformed to the food safety standards of recipient countries, the official Xinhua News Agency reported.

“Food safety concerns not only the health of the public, but also the life of business,” Xinhua quoted Wang Yong, the director of the General Administration of Quality Supervision, Inspection and Quarantine, the agency responsible for ensuring that China’s food supply chain is safe.

Health should be the first concern but the damage to Chinese businesses, and China, from the melamine posioning scandal is immense. Domestic and international consumers will take a lot of convincing that it is safe to eat Chinese produce.


NZ heart services in poor health

07/10/2008

New Zealanders are getting fewer heart operations than they were six years ago and those most in need don’t always get the fastest treatment.

Wellington patients waited the longest – an average 163 days – compared with the national average of 93 days and almost twice as long as in Auckland (75 days).

In Australia, the level of coronary artery surgery is 85 per cent higher.

What was Labour’s 1999 pledge? Oh yes – give us a little more tax and we’ll fix health.

And what do they think the election’s about? Oh yes, trust.

That obviously isn’t supposed to mean we can trust them to spend the extra money they’ve taken from us wisely.

Update: The Minister of Health has announced a $50m plan  to increase cardiac surgery by 25% over four years.


The case for tax cuts

07/10/2008

Liberty Scott  uses the tax chart I showed in the previous post to argue the case for tax cuts.

That reminded me of this fable:

Suppose that every day, ten people went out for dinner. The bill for all ten came to $100.

 

If they paid their bill the way we pay our taxes, it would go something like this:

The first four (the poorest) would pay nothing, the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, the tenth (the richest) would pay $59.

 

So that’s what they decided to do. The ten people ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw offered to reward their loyal custom by reducing the cost of the meal by $20.

 

So now the dinner for ten only cost $80. The group still wanted to pay their bill the way we pay our taxes.

 

So the first four were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?

 

The six people realised that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth and the sixth people would each end up being ‘paid’ to eat their meal.

 

So, the restaurant owner suggested that it would be fair to reduce each diner’s bill by roughly the same amount, and she proceeded to work out the amounts each should pay.

 

And so:

The fifth person, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33% savings).

The seventh now paid $5 instead of $7 (28% savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

 

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the diners began to compare their savings.

 

“I only got a dollar out of the $20,” declared the sixth. He pointed to the tenth diner, “but he got $10.”

 

Yeah, that’s right,” exclaimed the fifth diner. “I only saved a dollar too. It’s unfair that he got ten times more than me!”

 

“That’s true!” shouted the seventh diner. “Why should he get $10 back when I got only $2? The wealthy get all the breaks.”

 

“Wait a minute,” yelled the first four diners in unison. “We didn’t get anything at all. The system exploits the poor!” The nine diners surrounded the tenth and beat him up.

 

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered they didn’t have enough money between all of them for even half of the bill.

 

And that, boys is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more. There are lots of good restaurants in Australia and Europe.


Who pays how much tax?

07/10/2008

 Who pays how much tax:

Individual taxable income ($) Number of people Tax paid
  (000) % ($m) %
Zero 237 7% 0 0%
1 – 10,000 440 14% 263 1%
10,000 – 20,000 851 26% 2,199 8%
20,000 – 30,000 381 12% 1,746 7%
30,000 – 40,000 352 11% 2,401 9%
40,000 – 50,000 318 10% 3,071 12%
50,000 – 60,000 197 6% 2,549 10%
60,000 – 70,000 148 5% 2,432 9%
70,000 – 80,000 100 3% 2,018 8%
80,000 – 90,000 50 2% 1,212 5%
90,000 – 100,000 35 1% 977 4%
100,000 – 150,000 78 2% 2,953 11%
150,000+ 45 1% 4,108 16%
All 3,232 100% 25,929 100%
Individual taxable income ($) Number of people Tax paid   (000) % ($m) %

This table is sobering reading. It shows we are a very low income country and that 53% of the tax take comes from just 14% of people. The table below shows family assistance for working families:

Family annual income Number of children under 13
before tax ($) One Two Three Four
30,000 142 199 256 328
40,000 118 175 232 304
50,000 84 141 198 270
60,000 43 100 157 229
70,000 3 60 117 189
80,000 0 25 82 154
90,000 0 0 42 114
100,000 0 0 2 74
110,000 0 0 0 39
Family Tax Credit cut-off point 56,000 71,000 84,500 99,500
In-Work Tax Credit cut-off point 71,000 86,000 101,000 119,000
1 – 10,000 440 14% 263 1% 20,000 – 30,000 381 12% 1,746 7%

Doesn’t it seem more than a little stupid to take 39c in tax on earnings over $60,000 then give it back as a benefit?


Not voting could be public good

07/10/2008

I’ve suggested in jest that people ought to have a comprehension test before they’re allowed to vote but Anti Dismal  has found some academic support for the contention that if you can’t vote intelligently you shouldn’t vote at all.

Brown University philosopher Jason Brennan has written a paper entitled: Polluting the Polls: When Citizens Shouldn’t Vote.

Just because one has the right to vote does not mean just any vote is right.  Citizens should not vote badly.  This duty to avoid voting badly is grounded in a general duty not to engage in collectively harmful activities when the personal cost of restraint is low.  Good governance is a public good.  Bad governance is a public bad.  We should not be contributing to public bads when the benefit to ourselves is low.  Many democratic theorists agree that we shouldn’t vote badly, but that’s because they think we should vote well.  This demands too much of citizens.  

Will Wilkinson interviewed Brennan and then wrote:

People should be public-spirited, and act with the common good in mind. When enough people vote badly–from ignorance or bias, for example–the result is often bad policy. The quality of policy matters to the public good. Higher-quality democratic decisions, and better policy, can be secured if bad voters choose to abstain. Because the personal cost of not voting badly is so low, a public-spirited person shouldn’t do it. And it seems that a lot of people are quite likely to vote badly. So there are many people who, if they care about the common good, ought to choose not to vote.

That would be one way to get rid of New Zealand First’s support.

However, I can see a couple of difficulties with this proposition: if you’re too ignorant to vote you’re probably too ignorant to realise it; and what one person regards as voting in ignorance may well be regarded as voting intelligently by another.


Fresh approach needed

07/10/2008

Bill Enlgish said the figures in yesterday’s PREFU were worse than National expected.

“We are currently digesting them. However, National is not content to run a decade of deficits.

“Slamming the brakes on at this point would make things worse. The way out is to control the growth of government spending and grow the economy. That will require a fresh approach.”


Couple cheat death after car crash

07/10/2008

A couple had to sit in their burning car because it was draped in high voltage wires after it crashed into a power pole north of Oamaru yesterday.


Another farm bike fatality

07/10/2008

A 10 year old boy was killed while riding a motorbike when he and a farm truck collided yesterday.


If . . .

07/10/2008

. . . we’ve been overtaxed so Michael Cullen could hoard our money for a rainy day, why is there none left now the storm has hit?


Only 32 sleeps . . .

07/10/2008

. . . until election day and the cupboard is bare.


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