NZ Power 3x more expensive

September 16, 2014

Labour’s numbers don’t add up for its power policy:

 

Dr Michael Dunn, engaged by the Taxpayers’ Union to provide the figures for the ‘Bribe-O-Meter’ election costing website, is questioning the Labour Party’s costing of it’s flagship “NZ Power” policy.

Dr Dunn says, “Labour’s claim that NZ Power will cost taxpayers’ $90 million per year is optimistic at best. A more realistic figure is $276 million.”

“As the Government continues to own majority stakes in many of New Zealand’s power companies, NZ Power would see the Government forego much of the income tax and after tax dividends it currently receives.”

“When these aspects are factored in, the NZ Power policy would not cost $178 million as Labour is claiming, but instead cost at least $828 million over three years.”

“The foregone revenue to the Crown is, we estimate, $276 million per year. This is significantly more than Labour’s average of $90 million.

“Labour assume that bringing down the cost of power will introduce offsetting economic benefits. But their assumptions are open to debate, and Labour do not appear to consider who benefits, the long term costs, and the cost to the private shareholders of power companies.”

Dr Dunn’s independent figures are reflected in the Taxpayers’ Union Bribe-O-Meter, which tallies this year’s election promises. The Bribe-O-Meter currently stands at $3,500 per household for Labour compared to $760 for National.

Jordan Williams, Executive Director of the Taxpayers’ Union says, “This isn’t some political hack calling into question Labour’s numbers. Dr Dunn led the team at IRD that costed revenue policy for 12 years. He has advised both National and Labour administrations.”

“The Bribe-O-Meter is to give transparency to the cost of politicians’ promises as we head into the general election.” . . .

A power policy costing us three times what Labour reckons on top of five new taxes and compulsory KiwiSaver with higher contributions all add up to a lot more money out of people’s pockets.

 


Bribe-O-Meter

August 13, 2014

The Taxpayers’ Union has launched an election campaign  Bribe-o-meter:

As political parties announce their policies in the weeks leading up to the General Election, we’ll be crunching the numbers and showing you just how much all the promises cost.

This week we’re launching with the total cost of the policies announced by the two main parties, up to Monday 11 August 2014.

And the results are:

National Party’s total cost of announced promises: $2,770.37 per New Zealand household (or $4.698 billion)

Labour Party’s total cost of announced promises: $4,081.85 per New Zealand household (or $6.922 billion) . . .

The Taxpayers’ Union has commissioned Dr Michael Dunn of Economic and Fiscal Consulting Ltd to independently calculate the data for the Bribe-o-meter. Michael is politically independent and has extensive experience in the field of economics, including as a Manager within IRD’s Forecasting and Analysis unit for 12 years. . .

The Bribe-o-meter compiles the political promises of each of the main political parties and places them within the major spending portfolios.

It assumes that the government elected on 20 September will last for a full three-year term and oversee Budgets 2015/2016 to 2017/2018.  Policies announced that do not come into effect during the next Parliament will not be included in the figures.

Our analysis includes spending pledges announced between 2011 and now. Given that the purpose of the Bribe-o-meter is to track spending pledges announced by politicians, it does not model the effect of tax cuts or tax increases and the effect they have on households.

Tax credits and rebates have been considered as constituting new spending.

Our cost tables do not include the provisions for future budget spending that have been made by each party.  For the next three budgets (2015, 2016 and 2017) National propose additional spending of $9.1 billion, and Labour $6.9 billion.  In addition, Labour plan to contribute $3.9 billion to the NZSF over the 3 year period.. . .

The quantity of money spent is only one factor, the quality of the spend – where and how effective it is –  is more important.

Spending is only one side of the ledger.

The other side – revenue the government gets in from taxpayers, user-pays and other charges – and the impact of policies on economic growth and the tax take are also important.

Though as a general rule of thumb, when it comes to government spending, less is often more and almost always better.


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