Open and transparent?

September 30, 2019

When Jacinda Ardern declared hers would be an open and transparent government this probably wasn’t what she was meaning:

Controversial Cabinet Minister Shane Jones told a forestry awards ceremony they needed to vote for him or miss out on the billions he’s handing out for provincial growth, it has been alleged.

One person present labelled Jones’ comments as an inducement to “bribery” and another thought the minister – responsible for forestry and the $3 billion provincial growth fund – was “buying votes”.

But Jones says New Zealand can expect him to remind it over the next 12 months that votes for New Zealand First are needed to ensure it continues to fulfil promises in its coalition agreement with Labour.

“When you get a retail politician like myself – a son of the north – you’ve never going to take the politics out of the politicians.” . .

There’s politics and there’s politicking and then there’s blatant vote-for-us-or-else which looks very close to bribery.

Another person who paid close attention to Jones’ speech said he was angry and shocked at the political approach.

“Some of the things he said I didn’t particularly like. [It was] he had this big pot of gold so make sure you keep voting for me. There were direct comments along those lines.”

A third person who objected to Jones’ comment said it detracted from the intent of the evening, which was to celebrate excellence in forestry.

“It should never have been a political rally, which is what he made it. He was saying ‘if you don’t vote for me, you won’t get any share of the billion dollars’. He said you’ve only got a few months of me here, so you’d better vote.

“It’s just bribery. I thought that was pretty disgusting.”

Another person present said: “It wasn’t a political forum. He didn’t do himself any good. He just made a complete idiot of himself.”

Those interviewed did not want to be named, citing the influence of Jones’ Provincial Growth Fund and concerns speaking openly could have a personal and financial impact. 

Whether it was meant as a threat or not, these people have not only interpreted what Jones said as vote-for-us-or-else, they’re scared about the consequences of speaking out.

What he said is bad enough. That he said it so openly is worse. It shows that he thinks he’s immune from any censor by both his leader and the Prime Minister that ought to follow this behavior but won’t.

Reacting to the Herald piece, Taxpayers’ Union Spokesman Jordan Williams said:

“This is truely banana republic stuff.  A Minister telling an industry sector that they need to pony up with support, or else lose taxpayer funded lavish.”

”It is shocking, and belongs in Namibia, not New Zealand.”

“Even for Shane Jones this is breathtakingly shameless.  This not only sours the reputation of the current Government, it sours the reputation of our whole political establishment.  It is pork barrel politics in its true meaning.”

“Taxpayers are relying on the Prime Minister to prevent Shane Jones dragging us down the transparency indexes.  Now is the time for her to show whether she demands western democracy standards of her Ministers, or whether her junior coalition partner wields the true power and can do what they like with public funds.”

Sadly the junior coalition partner does wield the true power and its members not only can and do do what they like with public funds, at least one is open that they’re vote-buying with them.


If can’t count the concrete . . .

April 11, 2019

Statistics NZ has finally come out with the number of partial responses to the census:

Stats NZ’s confirmation that the problems with Census 2018 is not just with the record low response rate, but a doubling in the partial response rate compounds the problems for the State Sector, says National’s State Services Spokesperson Nick Smith.

“We now know over 700,000 people or one in seven New Zealanders did not complete Census 2018. This leaves a huge data hole that will create problems for years in allocating tens of billions of dollars in funding for central state services like health and education, as well as affecting electorate numbers and boundaries for Election 2020.

“Stats NZ needs to accept responsibility for the 2018 Census shambles. It cannot blame the funding when it was 36 per cent greater than Census 2013 and when this budget was underspent. It cannot blame the digital strategy when Australia successfully delivered its 2016 Census with a 95 per cent response rate using a similar strategy.

“Stats NZ botched the delivery of Census 2018 by excessively relying on online responses and providing insufficient neighbourhood backup for others. It compounded the problem by dismissing concerns expressed by Census field offices, commentators and the National opposition when the Census could have been retrieved. . . 

The census shambles hasn’t stopped the department coming out with more things to measure:

Indicators Aotearoa New Zealand is being developed by Stats NZ as a source of measures for New Zealand’s wellbeing. The set of indicators will go beyond economic measures, such as gross domestic product (GDP), to include wellbeing and sustainable development.

The wellbeing indicators will build on international best practice, and will be tailored to New Zealand.  . . 

The indicators cover New Zealand’s current wellbeing, future wellbeing (what we are leaving behind for future generations), and the impact New Zealand is having on the rest of the world. Under these dimensions are a list of topics and indicators developed to measure wellbeing.

You’ll find a link to the suite  of indicators if you click on the link above.  Among them are abstract things like spiritual health,  sense of belonging, ability to be yourself, locus of control and sense of purpose.

If Stats NZ hasn’t managed to properly count concrete things through the census, how on earth is it going to measure these abstract things?

Even if it can, when did spiritual health, a sense of belonging, the ability to be yourself, locus of control (whatever that is) and sense of purpose become the government’s business?

Stats NZ isn’t the only state entity getting touchy-feely.

Eric Crampton reports on a Treasury initiative:

There’s a $35 registration fee for this event at Treasury. . .

I have no clue whether the money goes to the folks running the session or what; I suspect it covers a cost of the deck of cards provided. But they recommend that attendees buy a deck of their cards in advance as practice as well, so attendees would wind up with double the compassion. It’s wonderful how Treasury is helping to promote a small business by hosting it and encouraging folks to buy its products.

Minister Jones would approve, if Heartwork were based in the Provinces.

Here’s the pitch. Treasury is Love.

Imagine surprising Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!

COME TO THIS SOCIAL LAB TO CONNECT AND CREATE TOGETHER.

We’ve created a “compassion starter culture” – a network of people who want to create a more compassionate culture in Aotearoa, starting where we are – in our workplaces.
We’ve been playing and rapidly prototyping with the Heartwork Wellbeing Card Game* – now available publicly. 
We know that the intention for what we want to create has a huge power.
We don’t have all the answers. And we can’t do this mahi alone.

So we’d like to invite you into this social lab.

So we can grow an even more beautiful, and more resilient strain together.
We’ll share what we’re learning while we’re still metabolising. . . 

Crampton concludes:

I, for one, love that this is a priority both for Operations and for Strategy and Performance at Treasury, as indicated by the attendance and presumed endorsement of the Chief Operating Officer and the Manager for Strategy and Performance.

Just imagine how better Treasury would have been prepared for the currency crisis after Muldoon lost election if they had thought to consult both their sun feelings and their moon feelings. I don’t know how New Zealand came through it without that. But we will be far better prepared for the next crisis. Treasury may have few remaining economists, but every single person who remains there will care deeply.

And surely that matters more than anything else.

You can watch a video of the card game here.

Not surprisingly the Taxpayers’ Union isn’t impressed:

Treasury’s ‘well-being’ focus is leading it to replace economic rigor with buzzword culture, says the New Zealand Taxpayers’ Union, as top department officials host a ‘social lab’ centered around a ‘Heartwork Wellbeing Card Game’.

Taxpayers’ Union spokesman Louis Houlbrooke says, “The purpose of Treasury is to provide the Government with economic analysis and monitor the success of the wider civil service. It seems this has been abandoned in favour of feel-good card games.”

“It’s no wonder we need a taxpayers’ union when the agency responsible for monitoring public spending is busy trying to ‘surprise Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!’”

“Treasury was once a proud institution, a key cog in the vital economic reforms of the 1980s and 1990s. It’s a bleak vision of the future when you see adult civil servants consulting with their ‘sun’ and ‘moon’ feelings.” . . 

Do the government, and it’s agencies, know about Maslow’s Hierarchy of Needs?

Maslow’s hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.

Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and belonging, esteem and self-actualization. . . 

 

Image result for maslow hierarchy of need

The government has a role in ensuring some of its citizens’ basic physiological and safety needs are met.

The abstract concepts in the indicators come under psychological and self-fulfilment needs. Most of these aren’t the business of government and those which are won’t be met unless the government and its agencies get the basics – health, education, welfare, housing, infrastructure . . .  right.

 


Union funded CGT campaign ‘astrotruf’

April 9, 2019

A union-backed lobby group is campaigning for a capital gains tax:

Tax Justice Aotearoa, a coalition of community and union groups, has spent $15,000 on ads in major newspapers, billboards and buses.

At its launch at Parliament today, about 15 members of Tax Justice Aotearoa gathered holding signs saying: “Fairness is the Kiwi way, it’s time for a capital gains tax.”

It’s also calling for tax cuts for low to middle income-earners and hikes for the highest paid.

Spokesperson Paul Barber responded to questions from the Taxpayers Union about the source of the money used to pay for it.

“We’ve funded the campaign by chipping together our various skills and resources, and we’ve had a bit of support around communications work and that’s all we’ve got at this stage.”

Mr Barber from the Council of Christian Social Services earlier told RNZ the group’s campaign had been largely supported by the Public Health Association.

The association’s a registered charity which is partly funded through a contract with the Health Ministry, but also receives donations from the public. . . 

Registered as a charity, partly funded by the Ministry of Health and spending money on a political campaign? . . .

How can that be?

But Mr Barber said the ads were paid for from donations, and the Public Health Association only contributed by offering communications support.

Services in kind for a political campaign still isn’t right from a publicly funded body.

Jordan Williams from the Taxpayers’ Union says:

“This campaign is not a grassroots movement – it’s more like astroturf. The campaign group is a union-funded front for New Zealand’s usual left-wing agitators. They are funded by the same people who bankroll the Labour Party’s campaigns and even include the Labour Party’s recent General Secretary in their steering committee.”

“The group’s key message – claiming that ‘most’ New Zealanders support a capital gains tax – is false. Public polling consistently shows Kiwis want the Government to axe Dr Cullen’s unfair tax.”

“Despite extensive media coverage of their campaign ‘launch’, the front organisation has attracted just a few hundred signatures on their pro-CGT petition. That will be embarassing for the union cronies when more than 3,000 New Zealanders have used the Taxpayers’ Union’s email tool to tell Jacinda Ardern to axe this tax.”

“If the Government is too afraid to promote Michael Cullen’s unfair tax itself, it should scrap the proposal, instead of palming off the politics to a front group for the Labour Party.”

“Anyone with big-union money can hold a press conference in Wellington and set up a website with American stock images, but until this group can show that typical New Zealanders are engaged in its campaign, it shouldn’t be taken seriously.”

A Reid Research poll confirms a majority are opposed to a CGT::

New Zealanders do not want a capital gains tax (CGT) – not on their investment property, not on their farms or businesses, and definitely not on their KiwiSaver.

Newshub has been given exclusive access to a Reid-Research poll commissioned by Business New Zealand that shows an overwhelming majority of voters – 65 percent – don’t think a CGT should be a priority for the Government.

The poll found that just 22.8 percent think it should be a priority. And nearly half of voters – 47.8 percent – say the CGT debate has harmed the Government, while 33.1 percent say it hasn’t, and 19.2 percent don’t know.

David King, a waterproofing and industrial coating master, spent 26 years building his business Modern Maintenance Products from scratch. And it’s endorsed by Parliament – he just finished fixing up a bunch of MPs’ leaky homes.

But King told Newshub he’s livid about a potential CGT on his business.

“I’m a bit hot under the collar about this. I don’t have a KiwiSaver, I don’t have any other savings – my savings are in this business.”

That’s the case for a lot of small businesses people. They work long hours and pour their profits back into the business leaving little if any for other savings.

Most New Zealanders are also opposed. The Reid-Research poll asked New Zealanders: “Do you think there should be a capital gains tax on things like businesses and farms?”

The majority – 54.3 percent – said “no”, while just 31.6 percent said “yes”.  . . 

On taxing property profits, half of voters pushed back. The poll found 49.8 percent don’t think there should be a CGT on property – the family home would be exempt. 

And that’s versus just 39.1 percent that support it.  . . 

When it comes to KiwiSaver, voters say hands off. The poll found that 90 percent do not think there should be a CGT on KiwiSaver earnings. That leaves just 4.4 percent – next to no one – that support the idea. 

Ninety percent is a very clear majority, even with a margin of error of 3.1%.

Fairness and justice that are motivating supporters of a CGT are abstract concepts but neither would be improved by the proposal put forward by the Tax Working Group with three of its members dissenting.

The proposal would be both unfair and unjust and would do nothing to counter the inequity which concerns its supporters.


CGT will hit everyone

April 4, 2019

The Taxpayer’s Union has launched a campaign to axe the capital gains tax (CGT) :

New Zealand’s tax system is admired around the world for its simplicity, affordability, and fairness. The capital gains tax proposed by Sir Michael Cullen’s Tax Working Group would put all of this at risk.

It is bureaucratic, costly, and would be the harshest in the world. It will curtail entrepreneurship and investment, meaning a reduction in all New Zealanders’ economic prosperity.

The rate is one of the world’s highest, it would be unfairly levied on inflation, it would require costly and fraught asset valuation, and in many cases it would break the Government’s promises by targeting the family home.

New Zealanders deserve better than this unfair tax.

    • It unfairly taxes people with assets for inflation
    • It will unfairly tax 350,000 home owners who live on a lifestyle block even if they only have one home
    • It will unfairly impose billions of dollars of compliance costs on 500,000 small businesses
    • It will unfairly tax farmers who sell a farm in order to buy another farm
    • It will unfairly lead to higher rents for over a million tenants
    • It is an unfair double tax on 500,000 business owners who already pay company tax
    • It will unfairly benefit tax lawyers and accountants who can exploit American-style loopholes
    • It will unfairly advantage foreign owners of New Zealand shares and disadvantage 800,000 New Zealand investing in local companies

Who will be affected by the CGT?:

Anyone who owns a business, including a farm, shares, bach/crib/holiday home, lifestyle block bigger than .45 hectares,  or rental property; anyone who claims expenses for a home office; has intellectual property, anyone who owns a home and moves into a rest home without being able to sell it within a year, or buys another and can’t sell the first within a year, or goes overseas for a while; anyone who buys a section for a new home that isn’t completed within a year;  any homeowner who forms a relationship with another homeowner;  and anyone who has taxable assets and migrates.

A lot of people would be hit by the tax directly but everyone will be hit indirectly when costs go up and the economy slows.

Even Inland Revenue advised against it:

Tax officials advised the Government 15 months ago that our small companies, start-ups and innovators were better off without a Capital Gains Tax, Leader of the Opposition Simon Bridges says.

“Even before Sir Michael Cullen and others were named to the Tax Working Group in December 2017, Inland Revenue officials told the Government that the absence of a Capital Gains Tax in New Zealand was ‘potentially advantageous to start-ups’.

“Not having a Capital Gains Tax is ‘advantageous’ to every Kiwi willing to give it a go by starting a small business and creating jobs. People who take risks with smart ideas and build something bigger than themselves shouldn’t be discouraged.

“Governments should encourage innovators because smart people will take us to a better future. We need people who take risks and stretch themselves because the ones who succeed create more jobs.

“The Government was also told that the lack of a Capital Gains Tax ‘indirectly incentivises’ people to put more of their own money into a venture because they have the chance of a better return when they sell. That could be somebody who wants to stop working, sell the business and retire. . . “

That’s another consequence that would hit a l9ot of people – disincentive to invest and carry out succession as aging farm and other business owners hang on instead of selling.

The economy is slowing.

If it’s going to reverse that the government must take a much more frugal approach to its own spending and axe the CGT.


If not sacking AG must investigate

March 11, 2019

Shane Jones is in another spot of bother:

After declaring a conflict of interest in a proposed Northland cultural centre, Shane Jones sat through a meeting when ministerial colleagues decided on its multi-million dollar funding application, even giving reassurance about its governance.

Manea, Footprints of Kupe was among the first group of projects to be awarded cash from the Provincial Growth Fund, a $1 billion a year fund secured in coalition negotiations between Labour and NZ First, which is coming under increasing criticism. . . 

He has repeatedly said he stepped back from having involvement in the project and denied advocating for it.

But documents quietly posted on the website of the Ministry of Business, Innovation and Employment (MBIE) showed that Jones attended what appears to be the single ministerial meeting to determine the application.

“Minister [of Finance Grant] Robertson raised his concerns about the broader management and commercial operations of the project,” MBIE official Mark Patterson wrote.

“Minister Jones provided reassurance that as the project has Far North Holding Ltd, the commercial arm of the Far North District Council, involved in its governance structures, he was comfortable their presence would alleviate any concerns on the issue.”

Patterson added that MBIE would manage other concerns through milestone payments.

“Minister Robertson was comfortable to sign the briefing knowing this mitigation was in place.”

Less than a month after Davis announced the funding, Jones was asked by Act leader David Seymour whether he had held any discussions with his ministerial colleagues about Manea.

“I asked my colleagues to make the decision on that project in order to manage a conflict of interest”.

Later he said he “noted” the involvement of Far North Holdings to colleagues.

On Friday, Jones insisted he purely offered “statements of fact” in the meeting and he believed he had managed his conflict of interest, but acknowledged others would consider it appropriate to exit meetings altogether.

“You can physically exit or you can declare a conflict and let colleagues deal with the issue,” Jones said.

“I don’t believe my presence in any meeting with three other powerful ministers has any deterrent effect.” . . 

He might believe that but it doesn’t stop the perception that he used his influence when he declared a conflict of interest and ought to have not even been in the room.

[Act leader David] Seymour said the documents suggested Jones “was decisive” in seeing the funding go ahead to an organisation he had a prior association with.

“He actually provided reassurance to his colleagues, which is at stark odds with  his repeated assurances in Parliamentary questions that he’d recused himself from any role,” Seymour said, claiming Jones had breached the Cabinet manual.

“I don’t see how you can continue to be a minister when something as simple as a conflict of interest, you can’t manage.”

On Sunday morning, Seymour, called for Prime Minister Jacinda Ardern to sack Jones.

“Shane Jones not only involved himself in an application in relation to which he had a conflict of interest, he also concealed this key meeting in answer to a written parliamentary question,” Seymour said.

Clare Curran was eventually sacked for a similar transgression.

National’s regional development spokesman Paul Goldsmith said it defeated the purpose of declaring a conflict of interest and delegating responsibility, “if a minister then engages fully in favour of a project which Shane Jones appears to have done”.

“We need a full explanation from Shane Jones of his involvement in this project from start to finish.” . . 

 Seymour and the Taxpayers’ Union have both called for the Auditor General to investigate:

Taxpayers’ Union spokesman Louis Houlbrooke says, “Ministers have it drilled into them that when it comes to decisions that involve a personal interest, they shouldn’t be in the room, let alone provide advice and ‘reassurances’. Shane Jones’ behaviour will give taxpayers zero confidence that the Growth Fund is being spent impartially or for economic good.”

“Businesses across the country will look at this example, along with other Growth Fund handouts, and figure that the key to profitability is cosy relationships with the political class. That is the path to cronyism and corruption.”

“The Prime Minister mustn’t let her Government’s reliance on NZ First lead to an open season on taxpayer funds. She should call in the Auditor General to investigate Shane Jones’ actions, and be prepared to strip him of his Regional Economic Development portfolio if necessary.” . . 

The Provincial Growth Fund is a $3 billion fund which has been criticised several times for doling out money without the usual cost-benefit appraisal and rigour which should precede largesse with taxpayers’ money.

The Prime Minister dilly-dallied before sacking Clare Curran.

Given the sensitivities with New Zealand First, it is unlikely she will act on the calls to sack the minister over this matter so it is up to the Auditor General to investigate.


Govt can’t cope with CGT oppositon

March 8, 2019

The normal course of events for government working groups is to do the work, submit a report and leave what happens next to the politicians.

That this government feels the need to keep the chair of the Tax Working Group, Sir Michael Cullen, on at  $1000 a day to explain and defend the group’s recommendations is a sign the politicians don’t think they’re up to explaining and defending it themselves.

Paying a working group chair $1000 a day might be the going rate while he’s actually chairing for a day but continuing to pay him that to lobby is outrageous:

The Tax Working Group process has become blatantly politicised with the Government’s decision to pay Sir Michael Cullen to continue lobbying for a capital gains tax, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union spokesman Louis Houlbrooke says, “The advertised purpose of the Tax Working Group was to deliver an expert-driven appraisal of the tax system along with a series of recommendations. That advice has now been received, but Sir Michael is still being paid over $1000 a day to argue for higher taxes. Funding for expert advice is one thing, but taxpayer-funded public campaigning is outrageous.”

“If the National Party set up a Steven Joyce led Working Group and paid Mr Joyce to get on radio and attack the Labour Party and advocate for lower taxes, the political left would rightly get up in arms. It’s the same principle here: expert advice should not be politicised at taxpayers’ expense.”

“Grassroots organisations like the Taxpayers’ Union campaign using voluntary donations. Proponents of the capital gains tax should try to do the same.” . . 

Paying Cullen is in effect a government vote of no-confidence in themselves and their ability.

Government MPs have had remarkable little to say on the TWG’s report, with the exception of James Shaw who asked if the government deserved to be re-elected if it didn’t introduce a capital gains tax (CGT).

That it needs to hire the group’s chair to speak for it, shows it doesn’t deserve to be re-elected anyway.


CGT gets it back to front

February 21, 2019

If there’s such a good thing as a good tax, it’s one that discourages things we don’t want and encourages things we do.

That’s where the Tax Working Group was handicapped from the start when the government ruled out any CGT on the family home.

A CGT hasn’t had any impact on keeping house prices down in other countries, but if, as we’re constantly told New Zealander’s over-invest in their houses, taxing other capital gains and leaving houses alone will only make matters worse.

We’re also told, with good reason, that New Zealand lacks savings and investments. Why then would a government introduce a tax which disincentives them?

If has been widely forecast the Tax Working group’s report recommends a CGT on savings, investment and businesses and not on family homes, it will be getting the tax the bad more and the good less rule back to front.

It will almost certainly get a lot more wrong.

The Taxpayer’s Union provided five rules for a CGT:

To be fair, a new capital gains tax must abide by the following:

  1. No Valuation Day: Any capital gains tax regime should exclude a valuation day approach in favour of grandfathering assets into the system upon sale, as was the case in Australia when it introduced a capital gains tax.
  2. Indexation for Inflation: Any capital gains tax regime must discount for inflation, so taxpayers are taxed only on their real capital gains, rather than nominal gains.
  3. Revenue Neutrality: Given the Government’s surpluses, any revenue from a capital gains tax must be used to fund tax cuts in other areas so that the total tax burden does not increase overall.
  4. Roll-Over Relief: Tax should be paid only on sale – not death. Further, there should be roll-over relief when capital raised from a sale is then immediately invested in the same asset class.
  5. Discounted Rate: Any capital gains tax should apply at a discounted rate, instead of at the full personal income tax rate, to avoid New Zealand having one of the highest capital gains tax rates in the world.

The TU has also provided 19 details to look out for in the recommendation for a CGT:

Details to look out for include:

  • Rollover relief:
    • will the capital gains tax apply on death or just on sale of an asset;
    • will the tax apply if capital is simply being recycled within the same asset class (selling a smaller farm to purchase a larger farm, for example)?
  • The rate:
    • will there will be a discounted or lower rate, like in Canada, Australia, the United Kingdom, or the United States?
  • Revenue neutrality:
    • will the revenue be offset with tax cuts;
    • if so, who will receive them;
    • will revenue neutrality be maintained in the medium-to-long term as CGT revenue grows?
  • Family home exemption:
    • will there be exemption exclusions for large properties (will lifestyle blocks be subject to the tax?);
    • will there be a ‘maximum value’ for the family home;
    • how much tax will be payable if there is an exemption exclusion?
  • ‘Valuation Day’:
    • will asset owners be required to value their property and businesses;
    • if so, will it be at their expense, or will the general taxpayer be required to pay;
    • if the general taxpayer is required to pay, what will be the estimated cost of ‘V-Day’;
    • how much time will taxpayers have to obtain asset valuations;
    • if valuations are not obtained, will other ‘default valuations’ be used?
  • Exemptions:
    • are there any sectoral exemptions (e.g. racing, fisheries);
    • will Maori authorities pay capital gains tax, if so, at what rate;
    • how are vehicles, boats, antiques etc. treated?
  • Trusts:
    • at what rate are trusts taxed;
    • will they be taxed on accrued or realised gains?

Fairness, which is the supposed motivation for introducing a CGT, is very much a matter of opinion but if the proposals from the TWG don’t meet the five rules, it will be anything but fair and do more harm by disincentivising savings and investment.

 


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