Do we have consensus on tax?

July 20, 2015

Labour finally answered the calls to show us some policy last week with an announcement on proposed changes to provisional tax:

The bad news for Labour was that it wasn’t its own fresh policy it was reheated National Party policy:

Acting Minister of Finance Steven Joyce has congratulated Labour Party Leader Andrew Little on finally announcing his first “new” policy after eight months in the job, although unfortunately for Labour it’s a cut and paste of a previous Government announcement.

“Labour announced today it was launching a discussion document on changes to provisional tax for businesses. However it seems to have overlooked that the Government launched its own discussion document containing almost identical proposals back in March,” says Mr Joyce. “These in turn were based on National Party policy at the last election.”

The Government has already consulted on proposed changes to provisional tax including a business PAYE, changes to use-of-money interest and penalties, increased use of tax pooling and the use of tax accounts. A Green Paper was launched on 31 March this year and submissions closed on 29 May.

“Feedback on the Green Paper’s suggestions has generally been supportive, and provisional tax was the part most commented on. As we’ve said previously, the changes will require new technology to be implemented, which will be developed as part of the IRD’s Business Transformation project,” says Mr Joyce.

“Quite why Labour has started its own consultation is beyond me.

“Submissions are now closed but the Government would be happy to accept a late submission from the Labour Party in support of the proposal,” Mr Joyce says. “We also appreciate its implied endorsement of the Business Transformation process that will make these policy changes possible.”

A link to  the March announcement can be found HERE.

A link to the Government’s Green Paper, Making Tax Simpler, can be found HERE.

A link to the National Party’s 2014 election policy on this issue can be found HERE.

Act supports the ideas in the green paper which the government released in March, last week New Zealand First also mooted a similar strategy and the Green Party is also open to the proposed changes.

The good news for all of us is that this could mean there is consensus on provisional tax which is very unpopular with businesses for good reason.

They have to pay on expected income without the benefit of a crystal ball that can give them an accurate forecast of their futures costs and income.

A reasonably accurate estimate is difficult enough for any business, it is particularly taxing in farming where there are so many variables and a lot of income is lumpy.

Dairy farmers get monthly payments for their milk but last year the pay out was far higher than expected, this year it is much lower.

Cropping, sheep and beef farmers and many horticulturists get most of their income in a very few payments a very few times a year. Estimating what they are likely to produce, how much that will cost and what they’ll be paid for it months in advance with any deegree of accuracy is next to impossible.

The changes proposed by the IRD which now seem to have support across the political spectrum would simplify the tax system.

Simpler taxes are less expensive to comply with and administer. That reduces costs for businesses which is good for them and the people they employ, service and supply.


Want voters but not govt

June 2, 2015

New Green co-leader James Shaw wants to woo National Party voters:

“I think there is a huge number of people out there who are concerned about the environment and they are concerned about the economy,” says Mr Shaw, “and they have been holding their nose and voting for the National Party. . .

Concern for the economy and environment aren’t mutually exclusive and people vote for and against parties for a variety of reasons.

But environmental concerns and initiatives aren’t the preserve of left-wing politicians and Shaw has sabotaged his campaign to woo National voters by ruling out going into government with the party.

Like his predecessor, he’s moored his party on the left flank of Labour which means its doomed to be in opposition if National wins another term and has no guarantee of being in government if Labour wins.

If Labour has a choice of coalition partners it would more likely opt for New Zealand First, safe in the knowledge the Green Party has nowhere else to go.


Greenwash not green

May 29, 2015

Green Party co-leader aspirant James Shaw has just got his learners’ licence:

. . . Aged 16, Mr Shaw decided he would not learn to drive for environmental reasons. He has maintained that stance while living in Wellington, Brussels, and London.

Now that electric cars are more readily available, the 42 year-old is planning to change his policy, and has gained his learner licence. . .

Does he travel in cars that other people drive, does he travel in taxis, does he use products which are transported by land sea or air, does he fly . . .?

Not driving but being driven or flown isn’t being green it’s greenwash that defies logic.

If this is the sort of intellectual rigour the politician and his party apply to their policies and practices they are destined to remain on the loopy left of the political spectrum.


Better results not ideological obsessions

April 30, 2015

A new funding system for people with disabilities was the subject of this exchange at question time yesterday:

CARMEL SEPULONI (Labour—Kelston) to the Minister of Finance: Is the Productivity Commission report released yesterday indicative of a Government agenda to privatise the welfare system?

Hon BILL ENGLISH (Minister of Finance): No. It is indicative of a Government agenda to get better results for people who really need them. We are happy to debate the kind of toolset that the Productivity Commission has laid out, but I would like to signal to that member and to the Labour Party that we are focused more on getting better results and less on their ideological obsessions. What we are doing is building a system that allows Governments to invest upfront in personalised interventions for the child, the individual, or the family for a long-term impact, and to track the results of that investment. The Productivity Commission has produced a framework that gives the Government a wider range of tools. It has been heavily consulted on with the social service sector to a draft form, and now it will be further consulted on before it gives us a final report. But I expect at the end of that that the Labour Party will be out of step with pretty much everybody by sticking to its 1970s models.

Carmel Sepuloni: Does the Minister intend to establish a voucher system for social services in New Zealand?29 Apr 2015 Oral Questions Page 11 of 15 (uncorrected transcript—subject to correction and further editing)

Hon BILL ENGLISH: Yes. We are under way in establishing a voucher system particularly for people with disabilities. It is called Enabling Good Lives. It has been broadly welcomed by the disability sector. I suspect that the mass adoption of it by the Australian Government in the form of the National Disability Insurance Scheme is going to put a lot of pressure on New Zealand to further develop a sophisticated voucher system for people with disabilities. The reason why is that it gives them some choices rather than being subject to a system where the Labour Party tells the providers—

Mr SPEAKER: Order!

Jami-Lee Ross: What progress has the Government made in delivering better outcomes from social services?

Hon BILL ENGLISH: We have made considerable progress in focusing on our customers—that is, getting to know much better the circumstances and prospects of those most vulnerable New Zealanders. For instance, a child under the age of 5 who is known to Child, Youth and Family, whose parents are supported by a benefit, and where either parent is in contact with the Department of Corrections—and there are a lot of those families; around 470 of them in Rotorua, for instance—is around five times more likely to end up on a long-term benefit and seven times more likely than the average to get to be in prison before the age of 21. In the light of that information, we feel a moral obligation, as well as a fiscal one, to act now to reduce the long-term costs, and we are not—

Mr SPEAKER: Order!

Carmel Sepuloni: Does he agree with the findings of the draft Productivity Commission’s report he commissioned that the Government faces incentives to underfund contracts with NGOs for the delivery of social services, with probably adverse consequences for service provision; if so, does he agree that greater contracting out could harm service provision?

Hon BILL ENGLISH: I agree with the first one but not the second one. The Government often does deliberately, as a result of Government policy, actually, pay less than the full cost of services, and often the users of those services need a higher level of more sophisticated service that what we currently offer them. There is no evidence at all that contracting out, as the member calls it, will reduce service provision. Sometimes that is the right way to do it. For instance, the Government owns no elderly care beds in New Zealand. It is all contracted out. That has been a bipartisan approach for many years with a highly vulnerable population. There are other areas where there are benefits from competition and also benefits from cooperation.

Jami-Lee Ross: What results has he seen from investment in Better Public Services?

Hon BILL ENGLISH: One of the first results we are seeing from taking an investment approach to public services is a much better understanding of our customers. The reports, now published 6-monthly, into the welfare liability have lifted the lid on a very complex ecosystem of dependency. Now we are starting to take initiatives in order to change the way that system works. For instance, around 70 percent of the people who sign up for a benefit in any given month have been on a benefit before. They are long-term regular and returning customers. In the past we have thought that because we found them a job once, that was the end of it. In fact, they need sustained support and employment, and we expect to be taking more measures in order to back up that initiative. But there will be hundreds of others that will involve contracting out, will involve competition, will involve the private sector, and will involve better results. . .

Carmel Sepuloni: Does he agree with the finding of the report, which he commissioned, that “Problems with contracting out are often symptoms of deeper causes such as the desire to exert top-down control to limit political risk.”?

Hon BILL ENGLISH: Yes.

Carmel Sepuloni: Does he agree that the Government needs to take responsibility for system stewardship and for making considered decisions that shape the system, including taking the overarching responsibility for monitoring, planning, and managing resources in such a way as to maintain and improve system performance?

Hon BILL ENGLISH: Yes, the Government can do a better job of what the Government does. We are still unravelling the damage done by the previous Labour Government to our social services delivery, where that Government turned it into what I would call a dumb funding system. Communities and families have an important role as well as Governments—in fact, a more important role. In fact, one of the programmes that the commission refers to is Whānau Ora, which is designed around the radical proposition that a lot of our most dysfunctional families can actually heal some of their own problems and improve some of their own aspirations. . .

This exchange shows a stark difference between National and Labour.

National is determined to improve the delivery of social services, give people with disabilities more choices and reduce dependence.

Labour which is still ideologically opposed to private provision of services even if that gives better results.

And it’s not just Labour which has the wrong idea of welfare and the government’s role in services.

Lindsay Mitchell writes on Green MP Jan Logie’s contention that social problems aren’t solved one individual at a time:

If problems aren’t solved “one individual at a time”, when it is individuals who abuse or neglect each other, when it is individuals who successfully resolve to change their behaviour, what hope? And why have role models eg Norm Hewitt to show what individuals can achieve? Why have organisations like AA who focus on each individual owning and addressing their problem; in living one day at a time to break their addiction?

Logie believes in deterministic explanations for human behaviour. Causes are outside of the control of the individual. For instance, colonisation and capitalism cause social chaos to entire groups. Therefore the largest representative collective – government – must play the major remedial role.

And she has the gall to talk about private service providers securing an “ongoing need for [their] services”.

When for the past forty odd years  government policy has been creating and increasing social problems through the welfare state.

This reinforces this morning’s quote from Thomas Sowell: Although the big word on the left is ‘compassion,’ the big agenda on the left is dependency.


Rural round-up

April 1, 2015

Big dump culmination of years of worry – David Bruce:

A frustrated North Otago farmer drove 120km on Monday to dump a load of excrement at the Otago Regional Council’s doorstep in Dunedin. David Bruce talks to him about why he did it.

Five Forks dairy farmer Robert Borst says he is at a loss about where to go from here.

He says he faces losing everything he has worked for in an industry he has wanted to be in since he was 15.

He left school and started at the bottom in dairying, shifted from Taranaki to the Waitaki Plains in 1992 then, from 1997, he and wife Sylvia started to build up what are now three dairy farms at Five Forks.

Changes in a water plan by the Otago Regional Council setting new limits on discharges from his farms has put everything in jeopardy, he believes. . .

Positive agriculture Omarama winner – Sally Rae:

Omarama farmers Richard and Annabelle Subtil want to help highlight the positive side of agriculture.

Mr and Mrs Subtil were named the supreme winners in this year’s Canterbury Ballance farm environment awards.

The couple farm Omarama Station, a property of nearly 12,000ha, which has been in Mrs Subtil’s family since 1919. . .

Farmer confidence grows – Dene Mackenzie and Sally Rae:

There is a sense of relief as two surveys show regional economic confidence rose in the three months ended March.

Farmer confidence has taken a ”significant jump” in the first quarterly Rabobank rural confidence for the year. The survey, completed earlier this month, was released the same day as Fonterra dropped its dividend estimate range by 5c to between 20c and 30c to the disappointment of farmers.

The Westpac McDermott Miller regional economic confidence survey showed rural regions and smaller centres generally showing the biggest gains. Confidence in the main centres was mixed. . .

Can science fix the dairy debate – Kevin Ikin:

The debate continues on whether there should be a moratorium on further dairy farm development.

The Green Party and the Fish and Game organisation are keen on the concept, which they say should be given serious consideration while the impact of intensive farming on the environment is properly assessed.

The issue also came up at a water management forum in Geraldine, South Canterbury, last week.

One of the speakers, Morgan Foundation economist Geoff Simmons said if the Government was serious about water quality then it had to consider a moratorium on further dairy farm conversions.

“Actually, if you are maintaining or improving the water quality, how can you do that when you are still doing conversions? . .

Fonterra’s disappointing performance – Allan Barber:

Fonterra’s interim result announcement contains confirmation of the farmgate milk price forecast of $4.70, but a reduction in the added value dividend.

The steady milk payout forecast was anticipated, although Global Dairy Trade auction results have so far failed to achieve the US$3,500 per tonne average which is estimated to be the minimum needed to underpin the payout. The higher volume being released for auction GDT and likely milk production by competitors such as American and European farmers may actually increase the risk of underachieving the forecast end of year payout. . .

Fonterra says it’s holding its own in Canterbury as farmer suppliers look to new processors – Fiona Rotherham:

(BusinessDesk) – Fonterra Cooperative Group, New Zealand’s largest dairy processor, says it’s holding its own in the dairy-intensive Canterbury region, despite reports some of its 10,600 farmers shareholders are lining up to supply milk to its competitors in the wake of its weak interim results last week.

Farmers were disappointed with the half-year results, which included a 16 per cent drop in profit to $183 million and a trimming of the forecast dividend payout for the year by 5 cents to a range of between 20 cents and 30 cents. Faced with a low forecast payout of $4.70 per kilogram of milk solids this season compared to a record $8.40 kg/MS last season, farmers had been expecting a fatter rather than skinnier dividend from its value-added activities. . .

Search on for 2015 Young Horticulturist of the Year:

A nationwide search begins this week for young men and women who exemplify the leadership qualities that have earned New Zealand’s primary products the trust of consumers all over the world.

Starting this April, young horticultural leaders from every corner of New Zealand will compete in six sector competitions to qualify as a finalist in the Royal NZ Institute of Horticulture Education Trust’s ‘Young Horticulturist of the Year 2015 Competition’.

2014 overall winner, Northland orchardist and horticultural business owner, Patrick Malley, believes that despite the ups and downs the primary sector has faced in recent times, New Zealand’s value as a leading producer of primary products comes from the high levels of trust this country’s products enjoy overseas. . .


Peters standing to give Invercargill MP at Northland’s expense

February 27, 2015

New Zealand First leader Winston Peters is standing in the Northland by-election.

. . . He said today that standing in the by-election was not an easy decision, but he had a long held concern for “Northland’s forgotten people”.

National had forgotten Northland for years, and the region was stagnating, Peters said. . .

He will be hoping that Northland voters have forgotten, or never knew, about the vagaries of MMP.

Should he win the seat he will become an electorate MP and the next person on NZ First’s list will get into parliament. That’s Ria Bond from Invercargill.

Quite how Peters will persuade the good people of Northland they will be represented by voting him in as an electorate MP with his reputation for talking big and doing little and in the process losing an MP from their end of the country and gifting parliament one from the other will remain to be seen.

Labour has confirmed Willow-Jean Prime as its candidate, and the Act Party will stand Whangarei orchardist Robin Grieve.

The Green Party and the Maori Party are not standing candidates.

If Labour sabotage their candidate in an attempt to unite opposition votes behind Peters it could happen.

Voters often punish the governing party in a by-election and a new candidate usually doesn’t attract the same level of votes a sitting one did.

The 2014 election results show:

NZ First didn’t bother standing a candidate in Northland last year. Mike Sabin won the seat for National with 18,269 votes and a majority of 9,300 over Prime who got 8,969 votes.

National gained 17,412 party votes; Labour got 5,913 and NZ First 4,546. the Green Party managed to get 3,855 votes and its candidate gained 3,639 votes.

National members in the electorate will select their candidate tomorrow.

The five in contention are: Grant McCallum, Mita Harris, Matt King, Mark Osborne and Karen Rolleston.

 

 

 

 

 


Strike two

February 18, 2015

Labour has been plagued by political mismanagement under its last three leaders and it hasn’t got any better under this one.

Strike one for  Andrew Little came with the very tardy payment of a contractor. Bad enough in itself from a former union head and at least of bad a reflection on his office:

. . . Any small business owner will tell you that the one thing they really hate is people who don’t pay their bills.

But one of the worst aspects of this is the shocking political management. Someone, anyone on Little’s team should have paid this bill. It was obvious that Cohen would go feral.

Even when Cohen wrote about it in the National Business Review, Labour still didn’t pay, allowing Steven Joyce to expose and embarrass Little in Parliament.

Why didn’t chief of staff Matt McCarten step in and clean up the mess?

All for the sake of $950 and a bit of internet banking.

First strike on the hypocrisy front for Andrew Little.

And strike one for mismanagement.

Strike two was Little’s failure to consult other parties on the membership of the  Intelligence and Security committee:

Climate change targets, deep sea oil drilling, the Trans Pacific Partnership … there are many thorny issues that could divide Labour and Greens.

In fact, all it took was membership of a parliamentary committee and some clumsy manners from Andrew Little.

The Labour leader raised the hackles of out-going co-leader Russel Norman by excluding his party from Parliament’s Intelligence and Security committee, instead choosing David Shearer.

The Green party learned of the decision through the media – Little had not even informed his own chief of staff Matt McCarten.

To further rub salt into the wound, Little then slighted co-leader Metiria Turei by suggesting she could not compete with Shearer’s knowledge, skills or understanding of security issues.

He appeared to under-estimate the Green Party’s anger, quipping “ask them [if they are upset] tomorrow” when pressed on how he would smooth ruffled feathers.

Little’s first mistake was in seemingly breaking the law by not consulting with the other opposition parties. Refusing to take Norman seriously was his second – and the Greens retaliated with fury. . .

Little is right about Shearer being better qualified than Turei or, as David Farrar points out, any member of the Green Party:

 The Greens are effectively opposed to the very existence of the intelligence agencies. Hence appointing them to an oversight committee means that their interest is just to find ways to discredit the agencies, not to play a constructive role in oversight. . .

However, that doesn’t excuse Little’s failure to follow the law in consulting other Opposition parties.

Political leaders don’t get a very long honeymoon, these two strikes signal Little’s is over and that he’s dogged by the problems of mismanagement which dogged the last three Labour leaders.

P.S. the column in which David Cohen raised the issue of the non-payment is here.

. . . What I was being asked to provide was not media advice or training, after all, but to take out a few hours to talk with Mr Little and then independently distill his views as they might sound to an outsider. Mr Matthews seemed to think his man could do with a bit more clarity. 

As assignments go, it sounded offbeat but I’ve taken far odder ones in my time.  . .

As a nosey-parker, too, I was interested to know more about the opposition’s calamitous recent history and perhaps even some of its current internal tensions. 

Happily on that last point, this was something Mr Matthews immediately hinted at with a number of less-than-enthusiastic references to Grant Robertson and Jacinda Ardern, along with a slightly baffling digression on how the party’s fortunes will yet be reversed by installing the MP for Kelston, Carmel Sepuloni, as deputy party leader ahead of the next general election. 

Scrolling back through a number of more recent clips of his television interviews, though, I could see why Mr Little’s friends might feel he needed a touch more clarity. 

Like many trained lawyers, and indeed working journalists, I think he tries to parse tumbling thoughts into cogent words as he speaks. Sometimes this serves him better than others. There were occasions when I couldn’t make head or tail of what he was saying. . .

 The atmosphere was congenial if a touch odd. Nobody had thought to turn the lights on, which lent a slightly film noir-ish air to the next couple of hours.

But the conversation was illuminating enough. We talked about Mr Little’s view of his own personal attributes – a lifetime of private sector engagement, an intimate knowledge of the organisation and a track record for bringing people together – and how these may or may not rejuvenate his party. 

We chatted about his time representing journalists as a union leader. He spoke about his general engagement with the media. 

From there, the conversation moved on to last year’s ghastly election campaign, Labour’s perceived image problems and what seems to me to be the piquant irony of a party claiming the mantle of diversity and yet almost consistently refusing to welcome businesspeople into its ranks. 

Interesting stuff. I wrote up my notes as best I could, and sent them off along with an invoice for the time spent. Both were received with thanks.  

Then came the silence.

Four months, many inquiring telephone calls and gazillions of emails on – as of the time of this writing – I’m still none the financially richer for having taken this oddball assignment.  Not by a bean. I’ve been left feeling rather like a one-man nocturnal performer in a Christchurch insurance office. 

Oh well. Isn’t that how things so often are for we self-employed and small business types grinding away in the engine room of the economy? 

This supports my theory that Labour and unions want to be tough on employers because of their own poor record with employees.

There are bad employers and bad employees but they are the minority. Employment law should not be designed as if all employers and sinners and all employees saints.


Follow

Get every new post delivered to your Inbox.

Join 1,665 other followers

%d bloggers like this: