Fact check on tax

October 24, 2019

Some people think the tax rate and the tax take are linked so if the rate increases or decreases the take follows.

That isn’t always the case.

A cut in tax rates can lead to less effort put into avoidance so productivity improves, a cut can also lead to more spending and both feed into a higher tax take.

Some people think more is better when it comes to taking tax and spending it.

That isn’t always the case either.

The quality of the spend is often, maybe always, more important than the quantity.

Some people are confused about the relationship between tax and services. For example, Associate Health Minister Julie Ann Genter says tax cuts would come at the expense of the fight against measles.

Is she right?


Why so glum?

August 8, 2019

The quarterly unemployment rate is down to 3.9%; and the official cash rate is at an historic low of 1%.

Yesterday’s GlobalDairyTrade was down 2.6%, the fifth drop in the last six auctions but no-one’s suggesting the milk payout will be lower than $6.

Horticulture and wine are getting healthy returns, arable incomes are reasonable, wool is dismal but the outlook for sheep meat and beef is positive.

But Business confidence is down to -44.3% :

. . .That was the worst reading since August last year, when the index was at -50.3. Employment intentions slumped (-5.5 vs 0) as firms sought to cut jobs, capacity utilization weakened to its lowest since 2009 (0.4 vs 5.3), and activity outlook (5.0 vs 8.0) and export expectations (1.4 vs 5.3) deteriorated. In addition, profit expectations fell further(-16.3 vs -12.5), while investment intentions turned to negative (-0.3 vs 2.5). . . 

And consumer confidence is also gloomy:

The Westpac-McDermott Miller consumer confidence index in New Zealand fell to 103.5 in the second quarter of 2019 from 103.5 in the previous period. Households became increasingly worried about conditions in the global economy over the next five years (-3.5 points to 11.9); and the number of households who think now is a good time to purchase a major item has fallen to a two-year low (-5.5 points to 17.9).  . . 

Why are we so glum?

Today’s historic cut to the Official Cash Rate down to just one per cent sounds a dramatic warning that the New Zealand economy is slowing and the Government needs to get serious about growth, National’s Finance Spokesperson Paul Goldsmith says.

“The Reserve Bank’s cut came with the message, ‘Indicators of growth remained weak or weakened further over the past few months’.

“The only time in the history of the OCR there has been a cut of this magnitude have been after the 9/11 terrorist attack, during the Global Financial Crisis, and after the Christchurch earthquake.

“Of greatest concern is the absence of any clear growth plan from this Government.

“Budget 2019 was devoted almost exclusively to spreading national wealth, with very few policies to grow the economy. The most expensive Budget commitment to transform the economy was a $1 billion subsidy for rail. There was little else.

“Instead of ramping up infrastructure investment, the Government has stopped or postponed a dozen roading projects which were ready to get underway, and replaced them with projects that aren’t ready to go, and won’t be for a lot time yet’.

“We need to move beyond policies that add costs to the business and drive down business confidence.

“National would revive the economy by having a plan for growth which would see confidence bounce back and the economy gain the strength it’s lost under this Government.”

There is no doubt what the government is doing and not doing are a large part of the problem.

In spite of at least reasonable returns for almost all primary products farmers feel under-siege with very real concerns about the costs and restrictions the government will impose on them.

Other businesses have similar worries, not helped by the latest confidence-sapping message sent by the Prime Minister’s ordering Fletchers to not build anything until the Ihumātao dispute is settled.

Then there’s the on-going argument over the letter Associate Transport Minister Julie Anne Genter is refusing to release and the questions that raises over the part she played in delaying Wellington transport plans.

Concerns over this aren’t helped by claims from Wellington City Councilors that the Green Party confidence and supply agreement would have been put in jeopardy if a watered down Let’s Get Wellington Moving wasn’t accepted.

All of this points to government instability and is compounded by Winston Peters’ latest game playing over requiring a referendum on changes to abortion law.

When interest rates were already so low, it is unlikely the larger than expected drop in the OCR will have much impact on the productive economy when there are so many reasons pointing to the need for caution.

And while low interest rates help borrowers they punish savers.

All in all there is little to give anyone confidence anything is going to get better soon and plenty of reasons to doubt the government has the plans and policies to help.

And now the Reserve Bank has dropped the OCR, it raises the question of what happens when, as is likely, economic conditions get worse.


The Genter pay gap

June 27, 2019

Labour and the Greens like to think they’re champions of women but there’s a Genter gender gap at the Women’s Ministry:

Women’s Minister Julie-Anne Genter has confirmed that women are paid less than men at the very Ministry that is focussed on eliminating the gender pay gap, National’s Women’s spokesperson Paula Bennett says.

“Julie-Anne Genter told a Select Committee that the men at her Ministry are paid six per cent more than the women. The pay gap at the Ministry has changed in favour of men since this Government came into power.

“If Julie-Anne Genter wants to have any credibility criticising private businesses or other Government departments, she needs to sort out her own Ministry first.

It’s so much easier to talk about the theory than to have it work in practice.

“This is another example of hypocrisy by Green Party Ministers who have swallowed more dead rats than a hungry stray cat. They supported the Waka-Jumping legislation, they didn’t get their Capital Gains Tax and there’s been no progress on the Kermadecs.

“Under a National Government the Gender Pay Gap decreased from 12 per cent to 9 per cent. It hasn’t changed under this Government.

“There are only 30 per cent women in this Government’s Cabinet, fewer than under the National Government. The Prime Minister has the opportunity to address this tomorrow in her reshuffle.

“The Greens were incredibly vocal in Opposition but they’re finding the reality of Government much harder. It’s time for them start walking the walk, because until now they’ve been all talk.”

One of the reasons the two women who were demoted from Cabinet haven’t been replaced is because the most likely candidates are men.

That poses a problem for a PM and a party that worries more about gender than ability and performance.


Minister mincing words on meat tax

January 30, 2019

Climate change and health zealotry have merged in a call to ban meat:

A report by The Lancet Commission on Obesity, released on Monday, said a tax on red meat was an example of the urgent action needed to address the greatest threats “to human and planetary health” – obesity, under-nutrition and climate change.  . . 

The idea that a tax on red meat will reduce obesity is ludicrous.

Lean protein, of which red meat is a good source, plays a very important role in a healthy diet. It has a low glycemic index so satisfies for longer and therefore helps in helping people eat less over all.

A meat tax will increase the price, forcing people to look for cheaper alternatives which will have less nutritional value, more calories per gram and be less satisfying.

It will do the opposite of what the Commission wants – contribute to both obesity and under nutrition.

Associate Minister of Health Julie Anne Genter​ said the Government did not plan to tax red meat “at this stage”, but an increase in awareness about climate change was affecting people’s behaviour. 

No plan to tax ‘at this stage’? That’s mincing words when she needs to put a steak stake in the ground for the sake of people’s health and our trade in red meat which not only helps finance first-world necessities, it helps feed the world.

This point is well made by National’s Agriculture spokesman, Nathan Guy:

“The red meat sector is worth around $9 billion of exports. Over 25,000 New Zealanders are employed and will be horrified the Government is not ruling out taxing the red meat industry.  . . “

Our red meat production has one of the lowest environmental footprints in the world.

Even the UK Department for the Environment, Food and Rural Affairs admitted in a report which found Kiwi lamb is reared at such a low intensity that, even after shipping, it uses less energy.

Genter should be championing our chops, not casting the shadow of yet another virtue signaling tax over our food and farms.


Road toll too hard

January 4, 2019

Associate Transport Minister Julie Anne Genter says it will be decades before the road toll drops substantially:

The Government announced last month it would invest $1.4 billion in road safety upgrades over the next three years in an effort to reduce the road toll, which ended at 382 for last year.

But Genter says while she expects the number of deaths to come down over the next few years, it will be decades before the number drops significantly. . .

But National’s associate transport spokesperson, Brett Hudson, said the public should get more for the amount invested.

“The immediate question is: What do we get for that $1.4b?

“Is the associate minister saying these things won’t save lives? Are they [the Coalition Government] prioritising that money in the right place, or do they not have confidence in what they can achieve?

“If we’re spending $1.4 billion but it’s going to take decades [to substantially reduce the road toll], the associate minister seems to be saying that $1.4b isn’t actually effective.

“Then shouldn’t she actually be doing something that is?”. . .

Putting fuel tax into roading improvements instead of cycle lanes and public transport would help.

Getting people off roads and onto bikes, buses and trains would reduce the road toll but most goods have to be transported by road, and cycle lanes and public transport are only the answer in some routes in some cities.

Like all people who live in the country, most of my driving is on the open road, from home to town.  In spite of the increase in population in our district, I can still do the return journey of nearly 40 kilometres without seeing more than a very few other vehicles until I get to the main road on the outskirts of Oamaru.

But major roads are much busier.

The state highways I use most often are north to Christchurch, south to Dunedin and west to Wanaka. All of them have far more traffic than there used to be and because of that every trip takes longer than it used to.

Longer trips with more traffic are more dangerous, especially when most of them are on two-lane roads with few passing lanes and without median barriers.

Why has Genter put reducing the road toll sooner into the too-hard basket when part of the solution is simple?

Redirecting money from cycle lanes and trains back into widening the roads, and adding passing lanes and median barriers would make more roads safer, sooner.

 

 


Do as they say not as they do

July 9, 2018

Minister for Women Julie Anne Genter wants more women on boards.

There’s nothing wrong with wanting but this sounds more like a warning:

. . .CORIN Yeah. But are you saying that some of those men have got into that position because they were white men?

JULIE ANNE Well, I think the reason there’s not diversity on boards is because we haven’t actively sought to overturn the status quo, which is the result of historic discrimination and bias and unconscious bias. So we just have to make an active effort to find those talented people. And through attrition, it can happen. You can replace people. I think there’s a role for men to play in terms of identifying people they can mentor and bring on to boards and champion that diversity. And so the key question is, you know, who is going to be responsible for this? And ultimately, the private sector is responsible for making those changes.

CORIN But what you’re saying is that they are going to have to get there themselves. You’re not going to force them to do it. Because that’s the point that I’m trying to make, which is, you know, you are going to get some resistance there. And are you willing to do that?

JULIE ANNE Well, the evidence is mixed on how successful that is. So quotas in some places have been successful, but they also can have perverse consequences. So what I would say is let’s start by putting up the challenge. NZX did have a diversity policy that they released. So they’ve said to their members you have to have a diversity policy or explain why not. That has increased diversity to some extent. We’re awaiting the next report, and I’m keen to see where they get to. But yeah, if they’re not going to make progress, if it’s going to sit there at 19%, then we might have to start thinking about ways government can incentivise them.

CORIN Quotas? 

JULIE ANNE Well, I think there’ll be a range of tools available. But we want to do what’s most effective, right? So whatever’s going to be most effective at motivating that change and ensuring that it doesn’t have any perverse consequences. . . 

Motivating sounds more carrot than stick but whether it would be or not isn’t clear.

But it’s what she seems to forget, or not know that is of most concern.

It’s shareholders who elect directors to the boards of companies in the private sector and what she’s saying suggests that the government might come up with something that would interfere with their right to elect who they want.

There is evidence that diversity can make a positive difference to governance but that still doesn’t give government the right to second guess shareholders or usurp their right to elect the directors of their own choosing without government motivation or what could well be regarded as meddling.

Before stirring up the private sector, the Minister should start much closer to home by addressing the gender imbalance in cabinet:

Ardern has released a list of 16 Cabinet ministers and five ministers outside Cabinet, including all 12 MPs on its current front bench.

Just seven of the 21 are women, six of whom are in Cabinet.

That is fewer than National which had nine in total, including seven inside Cabinet – and was often pilloried by Labour for its lack of representation.

In a Newshub debate during the election campaign, Ardern had said she believed Cabinet should be 50/50 female and male and would make it a target.

However, even the five ministers outside Cabinet chosen by Ardern herself rather than by caucus included just one woman – Meka Whaitiri. . . 

Genter’s aim for equal representation would look much less hypocritical if Cabinet didn’t show it’s a case of do as government says, not as it does.


Greens go redder

April 9, 2018

If political parties had to adhere to the Trade Descriptions Act the Green Party would be called the Reds and they’ve just voted to go redder:

South Auckland-based MP Marama Davidson will join James Shaw in the role of Green Party Co-leader, after the result of the leadership contest was announced this morning in Auckland.

Ms Davidson secured 110 delegate votes. Julie Anne Genter, the Minister for Women and Associate Minister of Transport and Health, also contested the Co-leadership role and won 34 votes. . . 

The party is split between members with a radical left social and financial agenda and those whose focus is the environment.

Davidson represents the radical left side. She has a lot in common with the woman she replaced, Meteria Turei, and is more likely to reopen the wounds Turei and her departure created than heal them.

Her radical left agenda could also cause more headaches to the government her party supports.

It is also more likely to prove true Heather du Plessis-Allan’s prophesy that the party will disappear in a decade:

 

. . . If you assumed the co-leadership contest between Julie Anne Genter and Marama Davidson was simply about two women interviewing for a job, you’d be wrong. It was so much more than that.

These women are the yin and yang of the Greens. . . 

This leadership battle was really a death match over which is more important to the Greens: the environment or beneficiaries. . . 

This is why the Greens won’t last 10 years unless they make big changes. The split personality can’t go on living together. Not only is the animosity in the party too great, but not all voters who care about the environment also want to give hand outs to beneficiaries. . .

Oddly enough the biggest threat is coming from the party the Greens are mostly likely to hiss at: National.

There’s a long tradition of Blue-Greenness within the Nats and things are really starting to ramp up. In his first interviews in the job, new leader Simon Bridges couldn’t have made it clearer he plans to go greener.

Once all the other parties go green, the Greens will lose their big point of difference. And what are they when that’s gone? . . .

They’re a radical left party as shown by the small group of Young Greens who threatened to resign if Genter defeated Davidson.

Passing quickly over their disdain for democracy, there is an element of karma in that for Genter.

She called for old white men to get of boards . She is white and old (in comparison to the youth wing). But she is 38 and lost to the older (44) brown woman.


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