More than a little stupid

29/03/2016

Mirror, Mirror on the wall, which is stupidest of all?

Strong arming banks and legislation was rightly met with indignation.

Then came 200 bucks for “free”, funded from tax paid by you and me.

And now you want the flag to change by whatever process you arrange.

If you think you’re going to pick it, you know just where you can stick it.

 

March hasn’t been a good month for Andrew Little, the Labour Party and anyone with hopes they might soon be fit to lead a government.

Little’s attempt to get onside with farmers by suggestions of strong arming banks and legislating to force them to reduce interest rates was met with the derision it deserved.

Then he came up with the proposal of a Universal Basic Income which, as the Herald points out is an idea that’s more bad than good  :

. . . The economy would suffer under punitive levels of taxation, avoidance would be rife, and the benefits would be illusory. . . 

The Taxpayers’ Union points out a UBI would require income tax rates of 50% or more:

A Universal Basic Income which avoided superannuates and beneficiaries being made worse off would require a flat rate income tax of more than 50% or drastic cuts in government services to pay for it, according to a new report released today.

The report, Money for all: the winners and losers from a Universal Basic Income, by economist Jim Rose, examines the Labour Party’s “Future of Work” proposal for a UBI and the more modest proposal by the Morgan Foundation.

A more affordable version of Labour’s scheme, such as that proposed by the Morgan Foundation of $11,000 per annum ($210 per week), would cost $11 billion dollars more than the existing welfare system, while making solo mothers $150 per week worse off. For superannuates, a UBI at this level would see their weekly income reduced by $50.

Taxpayers’ Union Executive Director, Jordan Williams, says:

“We find it startling that the Labour Party would be floating the idea of a replacement to the welfare system that would see those most vulnerable in society being far worse off. A UBI replaces helping those most in need with handouts to the middle-class and millionaires.”

“If you take Labour’s assurances that no one will be left worse off under their UBI, the amount would need to be so high that Treasury’s economic modelling suggests that a flat income tax of between 50.6% and 55.7% would be needed to pay for it.”

“Here is a political party which for years has rightly been telling New Zealanders that current superannuation entitlements are unaffordable. Now they want to effectively extend the same scheme to every New Zealander from the age of 18.”

“The Morgan Foundation proposes to pay for its more modest UBI with a tax on those holding capital. Such a tax would incentivise all those modern and innovative industries Labour want to encourage, to shift off-shore.”

Jim Rose, the author of the report, says:

“We don’t believe Labour have fully considered the consequence of a UBI on labour supply and economic incentives. People would almost certainly work fewer hours meaning that the burden of supporting the programme would be borne by a fewer number of taxable working hours, potentially requiring even further tax increases.”

“Even the Labour Party’s own paper concedes that the taxes that would be required to fund a UBI higher than $11,000 per year may be ‘unrealistically high’. The analysis in the report certainly backs that.”

Key points and conclusions:

• The Morgan proposal would cost $10 billion more than the current welfare system but leave those most in need worse off.

• For a UBI to achieve any reduction in poverty levels, or to avoid it costing those in society who most need help, much higher taxes are required. These reduce the incentives to work and economic growth.

• A UBI which allowed those currently receiving benefits and/or superannuation would need to be at least $15,000 per year (equivalent to the current average level of benefits). To pay for this, Treasury estimate that a flat income tax of between 45% and 56% would need to be introduced (assuming other taxes stayed equal).

• Child poverty is not reduced by a UBI less than $15,000 per year because single parents receive no more income support than before.

• A UBI would likely push the New Zealand economy into recession off the back of the reduced labour supply from the windfall increase in incomes alone.

One of the National-led government’s successes is a reduction in number of people in long term benefit dependency with all the financial and social costs that go with it.

A UBI would reverse the good done by that and encourage more people into welfare dependency.

Not content with these two bad ideas, this morning Little has come up with another:

In the wake of the flag referendum, the opposition leader said he voted against the alternative as it “doesn’t reflect anything about New Zealand at all”.

“I’m pleased to say we haven’t adopted it,” he said. 

Mr Little said the country should revisit the issue “sooner rather than later”, suggesting a flag that “genuinely represents who we are, the diversity that is New Zealand”. 

Doesn’t reflect anything about New Zealand at all? Anyone’s views on the merits of the alternative flag are a matter of opinion but there is no arguing that the Southern Cross reflects New Zealand’s place in the world and that the fern is recognised as a symbol of New Zealand here and abroad.

It was used long before sports teams adopted it and they did so for that reason.

That aside, there is a mood for change but Little can’t lead it.

He voted for the legislation which set the process, campaigned for Labour with a policy to change the flag then, after the election put political expediency before his principles by criticising the process, the timing and the cost.

The time to criticise the process was before voting for it.

If the timing was wrong last week, it can’t be right this week.

And if the cost of the process we’ve just gone through was too high, another process “sooner rather than later” is even higher.

The party partisan part of me is amused by the way Little stumbles from one demonstration that he’s more than a little stupid to another.

The rest of me is concerned that the leader of the second biggest party in government keeps showing he’s ill-fitted to lead the Opposition let alone a government.

 

 


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