False kindness is cruel

February 26, 2020

Benefits have been indexed to inflation rather than wages for good reason – to ensure there is a big enough gap between the two to make work more attractive than a benefit.

Lindsay Mitchell points out that the previous government understood the danger of this:

 “…it is desirable to create a margin between being dependent on a benefit and being in employment….
The Labour Party isn’t the party that says living on a benefit is a preferred lifestyle. Its position has always been that the benefit system is a safety net for those who are unavoidably unable to participate in employment. From its history, the Labour Party has always been about people in employment.”
Michael Cullen, 2008

This is supposed to be a government of kindness but linking benefit increases to wage rises is false kindness, cruelly disincentivising work and trapping more people in poverty.

The Taxpayers’ Union points out that beneficiaries are getting something denied to the people who pay the taxes that fund the benefits:

The indexation of benefits to wages means that taxpayers are treated less fairly than ever, says the New Zealand Taxpayers’ Union.
 
Taxpayers’ Union spokesman Louis Houlbrooke says, “The Government says it’s fair to index benefits to wages because we already do this with superannuation. So about tax brackets? These aren’t indexed to inflation, let alone wages. The result is that each year, taxpayers keep less, while beneficiaries get more.”
 
“Politicians often say we cover the costs of super and benefits by increasing productivity. But under this Government’s policies, increases in productivity will automatically trigger hikes to benefits and super, meaning we can never dig ourselves out of this spending hole.”

 

Mike Hosking also raises the issue of productivity:

Most who got a three per cent wage rise did so because they did something productive. They made more, produced more, worked more – that’s the productive side of the economy. That’s how you incentivise people: there is reward for work

Beneficiaries got the same rise, that’s the non-productive side of the economy. Nothing more was produced, but more was put into it. And that is why the money is gone and we are borrowing.

Economies grow because of productivity, not because of non-productive spending. You need one to fund the other, and one must be stronger than the other. That’s how you move forward, run surpluses, and afford to cover difficult days.

A level of redistribution, the likes of which we are currently experiencing, leads nowhere sound fiscally. It makes us increasingly vulnerable to global shocks, and we are too small to be running that risk.

The spread of coronavirus (COVID-19) is bringing a global shock ever closer, threatening jobs and increasing the likelihood of more people on benefits.

It is neither kind nor sensible to be doing anything that will discourage work and add to the burden placed on taxpayers.

 


Honest people keep rules

February 20, 2020

Serious Fraud Office investigations into political donations has prompted the inevitable calls for taxpayer funding of political parties.

The arguments the Taxpayers’ Union made against that six years ago still stand:

. . . “Politicians having to justify their work to supporters, members, and donors is healthy. Public funding would give a huge advantage to the established political parties. It professionalises politics and stamps on the grass roots.”

“The vast majority of donations made to political parties are small. That is a good thing. It means politicians and party bosses are accountable to many.”

Besides, whoever the funder is, there will have to be rules and where there’s rules there will be honest ones who keep them and dishonest ones who will break them.

The furor over alleged funding impropriety has also led to calls for full disclosure of every donation.

That is unnecessary.

People who donate to all sorts of causes, political or not, choose to do so anonymously for a variety of reasons including not wanting to show off their generosity.

A charitable trust of which I am a trustee has received a $20,000 donation this week and a $10,000 donation a couple of weeks ago. The donors in both cases prefer to keep their philanthropy quiet.

Charitable donations are different from political ones, but the right to privacy for donors of smaller amounts still stands.

If politicians can be bought for the amounts under the threshold for disclosure, it’s the politicians who are wrong not the threshold.

That said, the SFO investigations provide grounds for a look at current rules governing behavior of political parties including the powers and capacity the Electoral Commission has to initiate investigations and deal with complaints.

Election after election there are complaints that one party or another has breached the rules and election after election nothing is resolved until well after polling day.

If the commission had much stronger teeth and the capacity to investigate and, should it be necessary, act expediently

It might not stop the dishonest bending or breaking the rules but it would increase the chance of them being caught, should it be likely to influence an election, caught in time to ensure voters are informed before they vote.


Don’t waste it

January 24, 2020

The Taxpayers’ Union has submitted a design proposal for a 3.5-metre artwork in the Beehive entrance.

 

The Union will save taxpayers money by refusing the $15,000 commission fee should its submission be chosen.

Taxpayers’ Union spokesman Louis Houlbrooke says, “Perfectly placed to greet MPs and Ministers arriving for work, Don’t Waste It serves as a warning to would-be money-wasters in the heart of government.”

“For those New Zealanders not lucky enough to earn a politician’s salary, a five dollar note represents a meal, or the bus fare for a job interview. That small sheet of polypropylene can be the difference between hunger and happiness, poverty and opportunity.”

“Taxpayers understand the value of money, because they work for it. But too often, politicians take money from us only to fritter it away on pet projects, political fads, and minor extravagances. The taxpaying public can never be too firm in its opposition to government waste. It is in this spirit that we submit our proposal.”

Former MP Eric Roy used to have a shearing hand piece in his office in parliament to remind him where he came from.

It would be good for everyone who works in parliament – MPs and staff – and everyone who visits, especially those who come to lobby for funding to have this reminder that no money should be wasted.

 


KiwiBuild failed

September 5, 2019

The government’s KiwiBuild reset is an admission of how flawed the policy was in the first place.

The 10,000 houses it said it would build wasn’t a target, it was a figure plucked out of the air, completely distanced from reality.

Worse than the unrealistic number, was the money wasted on houses no-one wanted to buy and houses sold to people who should not have been beneficiaries of taxpayer assistance.

Now Housing MInister Megan Woods has announced another plan, with no targets, which includes selling the houses no-one wanted – almost certainly to be a win for the buyers and a lose for the public.

There’s also a government backed low equity scheme that sounds horribly like the Fannie Mae and Freddie Mac scheme in the USA that precipitated the Global FInancial Crisis.

The Taxpayers’ Union points to the potential  dangers that poses to taxpayers:

Replacing KiwiBuild with easy credit policies for first home buyers places significant risk on taxpayers, says the New Zealand Taxpayers’ Union. 

Taxpayers’ Union Economist Joe Ascroft says “The American housing crash and ensuing Global Financial Crisis was driven in part by the American Government’s decision to offer subsidized mortgages to low income households, who then failed to meet debt repayments when interest rates increased. Our Government’s decision to adopt a similar approach by offering taxpayer-backed mortgages to households who can only scrape together a 5 percent deposit is an uncomfortable echo to those easy credit policies which induced a housing crash overseas.”

“If households on ultra-low deposits ever failed to meet repayments due to rising unemployment or interest rates, either taxpayers or the banking system would be put under significant pressure.”

“Of course, the best approach to housing unaffordability isn’t to load on more debt and subsidies – which will inevitably push housing prices higher – but to enact meaningful supply-side reform. Allowing our cities to become more dense and removing the rural-urban boundary would be good places to start.”

The new policy, like many of this government’s lack details and the Minister’s repeated “we’ll build as many as we can as quickly as we can” is no substitute for a target tand a concrete plan to get there.

The root of the housing problem is simply one of supply not keeping up with demand, this hasn’t been helped by Prime Minister Jacinda Ardern’s calling a halt to development at Ihumātao.

The solution is more houses, faster which requires sorting out the infrastructure restraints, regulations that make the consent process so long and costly, and building here so much more expensive than in many other countries.

Anything which gives people more money without increasing the supply of houses will only make them more expensive.

KiwiBuild failed because it didn’t deal with the underlying causes of the problem and the so-called reset will do very little, if any, better.

We’d all benefit if the government set about addressing the constraints on supply rather than throwing more taxpayers’ money at policies that will benefit a relatively few people at considerable cost and risk to all of us.


Houses bad, trees good?

August 15, 2019

The government has launched a draft National Policy Statement for Highly Productive Land (NPS-HPL) that proposes a nationwide approach to protecting our most productive land.

New policies and standards could protect the most fertile and versatile land as soon as next year.

Agriculture Minister Damien O’Connor and Environment Minister David Parker have put out proposals to value high-quality soils as a resource of national significance.

“The threat to elite soils in this country has been very real,” O’Connor said. 

“We’ve been losing soils for the past 20 years at an alarming rate.

“You don’t have to be a rocket scientist to visit Pukekohe and see what is happening.

And not only Pukekohe. Urbanisation creep and the development of lifestyle blocks have been encroaching on productive land all over the country.

The Government has released a draft National Policy Statement for Highly Productive Land that proposes a nationwide approach to protecting NZ’s most productive land for future generations . . .

It is intended to target the high-value classes 1 and 2 soils that account for 5% of NZ’s soil profile but almost 85% of high-value crop production.

“One of the greatest challenges facing the world right now is the need to feed a growing population. 

“We have a well-earned reputation for producing some of the best food in the world,” O’Connor said.

“Continuing to grow food in the volumes and quality we have come to expect depends on the availability of land and the quality of the soil. 

“Once productive land is built on we can’t use it for food production, which is why we need to act now.” . . 

These are exactly the arguments farmers, councils and other advocates for rural communities have been using against the government’s policy that incentivises planting pine plantations on land better suited for cattle, deer and sheep.

We can’t eat trees and once farmland is converted to forestry it is both difficult and expensive to convert it back.

“We appreciate the balance for councils between the need to provide more houses and the need to protect their soils and economic activity,” O’Connor said.

Since April last year the Government has been looking at the best options for the protection of NZ’s high-value soils.

“This is not about spatial planning.

“It doesn’t dictate exactly what will happen.

“But it does place an obligation on councils to ensure there is enough highly productive land available for primary production now and in the future and to protect it from inappropriate subdivision, use and development.”

Councils will have to complete a cost-benefit analysis of using land for growing fruit and vegetables, assessing that against the short-term value of converting it to housing.

The criteria will be consistent nationwide but be flexible enough to allow councils to take into account their local situation and circumstances. 

“The NPS is not absolute protection for all soils. 

“It does consider local growth aspirations and the reality of where urban growth is now but it does force the councils to recognise the value of this soil for its productive capacity not just its subdivision capacity.”

Until now councils have not always had to consider the productive value – decisions have simply been based on market value and the potential for subdivision. . . 

All of that sounds vague enough to drive several tractors through especially if people who have bought land on the edge of urban areas at prices that reflect development potential seek to prevent the loss of value if it has to kept for food production.

The Taxpayers’ Union points out:

The Government’s plans to prohibit housing on ‘productive’ farmland will serve as yet another regulatory tax on housing, and is a shameful breach of Jacinda Ardern’s promise to fix housing supply, says the New Zealand Taxpayers’ Union.

“Maddeningly, Government is now introducing even more restrictions on housing, ensuring prices will continue to rise, all for the sake of a small gang of potato-growers who want to keep urban farmland prices artificially low. This is a slap in the face for aspiring homeowners, and makes a joke of the Government’s claimed concern over housing affordability.”

“There is no need for the Government to intervene here, because the market already works to allocate land to its most productive use. If the land is more productive as farmland then farmers will outbid housing developers, and vice versa.” . . 

Ending the incentives for forestry on farmland could happen immediately without providing anyone with viable reasons to oppose the move.

It must happen for exactly the same reasons the government wants to protect class 1 and 2 soils – so we can keep growing the quantity and quality of food the country and the worlds needs.


Are electric vehicles as green as they’re painted?

July 10, 2019

Stuff asks which are the cleanest and dirtiest car brands in New Zealand?

. . .Actually, the car brand currently on sale in NZ with the lowest emissions of all is Tesla, which boasts an unbeatable CO2 output (or non-output?) of 0.0. Obviously that’s because they are fully electric, which means the only connection with CO2 these cars might have, would be from what emerges from any gas or coal-fired power stations that generate the electricity in the first place.

But, as so often in the climate change argument, this doesn’t give the whole picture. It counts only the emissions from running the car, what about the emissions in making it, in particular the battery?

A friend has recently returned from Africa where he saw a continual procession of fuel tankers making the journey from the coast to supply mines in the Congo so that cobalt and lithium can be exported to allow people in rich countries to buy electric cars to save the world.

If you take into account the emissions from the many thousands of kilometres those tankers travel and everything else involved in their manufacture and disposal when judging the CO2 output of electric and hybrid cars, would they still be as green as they’re painted?

I don’t know the answer to that question and it raises another: how can we know what is green and what is greenwash if only the emissions from running vehicles are quantified and not those from their manufacture to their eventual end?

The answer to those two questions is even more important now the government is proposing a ‘feebate’ scheme on the sale of new vehicles.

The Government’s proposal for a sweeping fuel-efficient vehicle policy is being criticised because it doesn’t apply to the majority of cars being sold.

It would only apply to newly-imported used and brand new light vehicles from 2021 onwards, and would only hit those vehicles when they are sold for the first time – taking in about only a quarter of vehicle sales.

School Strike 4 Climate NZ criticised the proposal and said all vehicle sales should be affected by fuel efficiency standards.

The “feebate” scheme wouldn’t cost the taxpayer anything, instead using money gained by putting a fee on imported high-emissions cars in order to make imported hybrids, electric cars, and other efficient vehicles cheaper with a subsidy. . .

It wouldn’t cost the taxpayer anything but who would it help and who would it hurt?

The proposed penalty on ‘gas guzzling’ vehicles is a painful, regressive tax, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union Executive Director Jordan Williams says, “Let’s be very clear: this is a tax on Otara vehicles to subsidise Teslas in Remuera.”

“Only a few, largely high-income, motorists will benefit from this subsidy, while many more low income motorists will have to choose between a nasty penalty or delaying the purchase of a new car. And as this tax leads driver to hold on to their existing vehicles for longer, we’ll miss out on improvements to safety and environmental standards.”

Older cars are less efficient and also not as safe as newer vehicles, but what’s the environmental impact from holding on to them longer?

Would spreading the emissions from making them over a longer period compensate for the emissions from driving them?

What about utes and trucks that are used for business and transporting goods and for which there are no hybrid or electric alternatives.?

“Successive Governments have already whacked motorists hard with hikes to petrol tax. Now Julie-Anne Genter is mixing it up with scheme to ‘take from the poor, give to the rich’.”

“Just because something is shrouded in environmental branding doesn’t make it any less nasty to the poor.”

Electric and hybrid cars cost less to run than petrol or diesel ones and newer vehicles are more efficient than older ones so  people who can’t afford newer, more expensive vehicles will be paying a bigger proportion of the fuel tax.

London has emission charges and diesel vehicles, including taxis, have to use AdBlue  to their fuel. When we were there recently we noticed the air was much cleaner than it had been several years earlier.

Clean air is to be encouraged but until the total lifetime emissions, not just from driving vehicles, but from their conception to their ultimate end, are quantified, we won’t know if the policy will make a positive difference or not to global CO2 emissions or not.

The emissions picture is a very complex one to which the ‘feebate’ policy, like so many other climate change ones, provides a simple answer but we don’t have enough information to know if it’s the right one.

The push towards electric vehicles raises two other questions: does our electricity generation and transmission have the capacity for a significant increase in electric vehicles?; and what will replace fuel taxes when the uptake of hybrid and electric vehicles reduces them to the point a replacement is required?


Tax Freedom Day at last

June 1, 2019

We’re nearly half way through the year and have only just got to Tax Freedom Day:

A media release from the Taxpayers’ Union says:

From today until the end of the year you are finally working for yourself, and not the taxman, says the New Zealand Taxpayers’ Union.
 
‘Tax Freedom Day’ marks the day on which New Zealanders have collectively worked enough to pay off the cost of government for the year.
 
Taxpayers’ Union spokesman Louis Houlbrooke says, “For the average New Zealander, getting to work on Monday represents the first day they’re working for themselves.”
 
“This year’s total government expenses have been forecast to suck up 41.5 percent of the economy. That means, if a taxpayer wanted pay off their share of government expenses as soon as possible this year, they would have to work sacrifice all their wages from January the 1st, until today, June 1st.
 
“Today is worth celebrating, but it’s a shame we had to wait so long to pay off the politicians’ expense card. Unfortunately, government spending increasing faster than economic growth means the continuation of the trend of a later Tax Freedom Day.”
 
“Some other groups chose to observe Tax Freedom Day earlier this year. But our chosen date – based on OECD figures – takes into account local government and spending paid for with debt, meaning it reflects the full burden of government on taxpayers.”

And on the eve of Tax Freedom Day, the government pushed through an increase to fuel taxes under urgency:

The Taxpayers’ Union is slamming the passage of legislation hiking the price of petrol at the pump to see that more than 50 percent of the price paid will soon be tax. Union spokesperson, Jordan Williams says:

“Clearly ‘wellbeing’ is just marketing fluff.  Petrol taxes are highly regressive – they hit the poor, those in regional New Zealand, and those who live on outer suburbs the hardest. It’s one of the cruelest forms of tax.”

“Rushing these new petrol taxes through Parliament under urgency is disgraceful. They are a total breach of the Prime Minister’s ‘no new tax’ election promise.  And Labour know it.”

“Pain at the pump underscores the fact that big-ticket Budget announcements come at a real cost, regardless of the fuzzy wellbeing language the politicians use to promote them.”

Petrol was more than $2.45 a litre when we passed through Omarama earlier this week. Tax is already too big a contributor to that.

Taking more money from everyone and adding to the cost of everything will not contribute to wellbeing.


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