Government faces challenges on finances

When Prime Minister Jacinda Ardern announced during last years election campaign that Labour would form a Tax Working Group if elected, many thought that this was a cop out mechanism for avoiding the heat on tax. Whilst not being one of these people, I did wonder how comprehensive Labour’s planning on tax had been. As we approach  the Fiscal Budget of 2018 next month, those concerns remain, but some definitively positive signals are also emerging.

The challenges are significant. Not all of them though, involve raising/lowering taxes, introducing new financial tools that affect taxpayers to prop up the books.

Some of them are about making corporate tax evasion more difficult to achieve by working with other nations to ensure corporates like – but not limited to – Apple and Facebook pay what tax they owe. Others are about making sure that tourists who come to New Zealand have some sort of medical insurance to keep the cost to the taxpayer in check.

Not all of these challenges will be or should be addressed in the coming Fiscal Budget. Some will require amendments to tax law and greater oversight.

At the last election Labour said that its plans, which did not signal income or business tax changes, had been costed and found to tally up. Opposition Members of Parliament claim Labour cannot possibly afford their plans for New Zealand without substantial tax increases. Some go so far as to suggest that by cancelling planned tax cuts, the Government has in effect announced a tax increase, something Labour denies.

My own concerns are that Labour, in ruling out business and income tax changes, has left itself open to a budgetary blow out. This would lend credibility to the likes of former Treasurer Steven Joyce’s claim of a budgetary black hole, and Labour being amateurish in budget setting.

However there have been a number of pleasing announcements that suggest to me that a degree of control has been exerted. One of those announcements is that there will be a royalty on the use of water for commercial and irrigation purposes. Another is the introduction of a tourism infrastructure fund. It will take the shape of a N.Z$25 levy placed on non citizens and residents visiting New Zealand. In past articles I have called for a levy to be placed on such visitors, as it is a useful user pays scheme that reduces the pressure on Regional, District and City Councils, whose rates are already subject to considerable pressure.

Of course, all of this said, Labour have yet to actually introduce a Fiscal Budget simply because it is not time. The Fiscal Budget for as far back as I can remember has always happened in May. I accept therefore that it is a work in progress and one not to be judged until the Treasurer Grant Robertson presents his first Budget on 17 May 2018.


Labour not doing enough about M.S.D.

The Ministry for Social Development is the umbrella agency for Work and Income New Zealand, Child Youth and Families Service, Studylink and other agencies. Holding the Social Development portfolio is something only a National or Labour M.P. generally gets to do so.

Labours start so far in overhauling the M.S.D. has so far been rather nondescript. Sure they have not even completed their first 200 days, but I was hardly impressed with the response I got from the Minister for Social Development, Carmel Sepuloni to a letter I sent concerning the state of the Ministry, the need to overhaul the legislation governing it and the agencies under it. Whilst the letter did not come across as patronizing nor do it come across as fully understanding the depth of the problem from the perspective of clients.

The death’s of those Work and Income staff in Ashburton was avoidable. Not only were Work and Income found to be culpable for poor security features and lay out, the culture of how staff treat clients can be at times toxic. Some staff are warm and friendly. Some ask how your day is going, whilst others have the hostility of U.S. Customs officials – your mere presence is somehow annoying and troublesome whilst others seem decidedly disinterested. How a staff member presents themselves is critical since the relationship of client and case manager is built on trust, which cannot be established if one or the other is not at ease. There will never be a justification for murder ever, but the motive for such senseless acts can potentially be derived from the poor treatment of clients, especially where their long term well being is at stake.

The toxic culture in itself though might not be entirely the fault of Work and Income. The governing legislation is quite prohibitive in parts, leaving no allowance for human nature. The computer systems, obviously defined by the physical parameters in which they were designed appear to lack a few basic checks and balances. When I asked for assistance following the cancellation of my benefit and being subsequently forced into the financial red, my eventual assistance was delayed two weeks when I could only wait two days because a staff member had failed to hit send on an electronic form enabling my assistance.

There are notable issues of waste inside the Ministry of Social Development and its umbrella agencies. I was called in 2012 to meetings where a number of clients would all sit around a table and tell a case manager what we had done to try to find work in the past few months – we had to be able to provide a list of employers that we had applied for jobs with. After going around the table and stating what we had done, the staff member would give us a spiel about which sectors s/he thought we would be best finding jobs – “right now there are two industries, you can get jobs in – the others are a waste of time: hospitality and construction”, said one staff member at one of these meetings, which perhaps fittingly seemed to be on dreary winter mornings. After 20 minutes or so, one would walk out and go back to their daily lives none the wiser than when they walked in.

Another instance was getting referred to a contractor working for Work and Income New Zealand. This person was a consultant working somewhere in eastern Christchurch. He was meant to help me with my Curriculum Vitae and Cover Letter, which someone at Work and Income thought needed improving. I found this funny then and I find it funny now that the consultant who I was meant to see took one look at both and actually admitted on the spot that as the two go, both were in pretty good order and he could only suggest minor improvements at best.

Granted these problems were five years ago, the letter from Ms Sepuloni seems to have completely dodged the questions I originally asked. I will try again, but I am not getting my hopes up.

Remembering Jim Anderton

Former leader of the Alliance and Progressive Parties, and businessman, Jim Anderton (James Patrick Anderton, born James Patrick Byrne)passed away on Sunday 07 January 2018.

There were plenty of times when I disagreed with Jim Anderton. The more socialist policies, with the exception of Kiwi Bank and Kiwi Saver, I found too left-leaning for my liking. The failure of his party to support minor gold mining operation on the West Coast by individuals who had obtained resource consents and were only operating for themselves I found off putting in a region where opportunities for economic development were – and still are – few and far between.

Disillusioned with the market economics that Labour was starting to support and in trouble for explicitly refusing to back selling the Bank of New Zealand, Mr Anderton left the Labour Party. He formed the New Labour Party on 01 May 1989 and used it to challenge Labour at the General Election the following year, where Mr Anderton became the first to form a new party and retain his seat.

In 1991, New Labour became the Alliance when it combined with the Mana Motuhake, Democratic and Green parties. In 1996, the Greens left to become an independent party once more. They would provide supply and confidence to the Labour-Alliance minority Government.

Mr Anderton took some significant risks with his decision to support the Labour Government decision to deploy the S.A.S. in Afghanistan. Most of his party were desperately opposed to it and factions began to form in the party. One was led by Laila Harre and and consisted of much of the Alliance Party, which little did it know, was in the early stages of electoral oblivion. Mr Anderton and his deputy Sandra Lee who also had the Conservation portfolio in the first term of the Labour-Alliance minority Government plus a couple of loyal backers made up the rest.

However, before the Alliance disintegrated, Mr Anderton had notable successes including the formation of Kiwi Saver, a sovereign fund to partially fund superannuation and Kiwi Bank, a Government controlled bank. Mr Anderton also claimed success in abolishing market rates for rental housing and lifting the minimum wage for ordinary New Zealanders.

It was the type of infighting that destroys a party, and when it broke out, combined with a swing to the centre that benefitted New Zealand First and United Future, this is what killed the pary in the 2002 election.

Mr Anderton retired from politics in 2011. He endorsed Labour candidate Megan Woods to stand in the electorate. Mrs Wood is now Minister for Earthquake recovery.

Following his retirement, Mr Anderton and a former National Party Member of Parliament, Philip Burdon decided to push for the rebuild of Christchurch Cathedral. In 2017 Mr Anderton was appointed a Companion of the New Zealand Order of Merit.

In his private life, Mr Anderton and his wife Carol had three sons and two daughters, who survive him. He was 79.

Jacinda’s first 100 days

100 days. The first three months plus 10 days. It is a thing in politics to lay out for everyone to see what one plans to do in their first 100 days in office.

Well, most governments. I cannot recall any such plan being put in place by the LIberal Government of Malcolm Turnbull in Australia, which at a glance looks like it is really not supposed to be there. Clueless as to the issues, wracked by infighting and potentially crippled by revelations that several of its most senior politicians are not legally entitled to be serving, one cannot help but wonder if they will the next Government to fall.

Contrast that with former President Barak Obama of the United States and current President Donald Trump. Both had extensive plans for their first 100 days in office. Contrast it also with former Prime Minister John Key who also had a first 100 day plan.

So does Labour leader Jacinda Ardern. And yesterday she laid out for everyone to see, what Labour’s priorities would be should Ms Ardern and her colleagues in Parliament pick up enough seats to form a coalition. At an address in Wellington to hundreds of Labour Party supporters and their candidates, Ms Ardern told New Zealand what Labour would do as immediate priorities:

  • Urgent legislation banning overseas speculators by Christmas from purchasing houses that they are not going to live in
  • Tertiary education will be free from 01 January 2018

Other priorities outside the first 100 days, but within the first year of taking office would include:

  • The minimum wage will rise to $16.50 from
  • Implementing Labours family support package by not later than 01 July 2018
  • Locking in carbon emissions at zero
  • Investigating a capital gains tax that exempts the family home – no details until after the election

Whilst appearing to be a relatively full on agenda for the first 12 months, Labour caucus members need to be thinking at the back of their minds about a longer plan. I am not talking about one just until 2020 when Labour would be up for re-election. I am talking about a bigger vision for New Zealand for the next couple of generations. In other words a plan that New Zealanders can try to see into the future with.

Political parties – and this might be an M.M.P. symptom – generally seem to look at the country’s future through the election cycle, i.e. every 3 years. Yet they seem to like using the word visionary. It would be more realistic if they could think about the next couple of generations rather than the next couple of election cycles.

Show me the money: Parties await the opening of Treasury’s books

Today is the day of the big reveal for Treasury. Today is the day that it reveals the state of the New Zealand Government coffers. Today is also the day that the election campaign writ is issued, enabling the formal period of campaigning to begin.

But back to the Treasury’s books. If not today, tomorrow or in the next couple of days is when, based on what the individual political parties know, to expect substantial policy announcements. The major policies relating to tax, investment and spending priorities will be arriving shortly.

I expect that Labour will focus on health, education and investment in jobs creation. New leader Jacinda Ardern has promised that there will be significant moves made to address climate change and has also mentioned an emphasis on railways.

We have already seen a major signal from National that its priority is road transport in its $10.5 billion announcement on roading projects. The party will also be trying to woo voters by appearing serious about policing, health and education in an attempt to shore up its voters.

New Zealand First made a major announcement in 2016 at its convention that year about its Upfront Investment policy for tertiary education, which was costed at $4.6 billion. It has mentioned several times that its major transport plan will be to improve railways.

We can expect significant policy announcements to follow from the Greens, A.C.T. and Maori Party in the next few days as well. I expect that A.C.T. will focus on reducing taxes and red tape, as well as ways of implementing its promise to build 600,000 new homes. The Green Party will have social welfare, the environment and climate change at its core, and I expect some significant policy from them on mental health. And the Maori Party will be looking at ways to improve socio-economic indicators for Maori in education, health, social welfare and crime – none of which have done very well in the last nine years..

Once the books are open and we can see what shape they are in, I will make recommendations on what the spending priorities for New Zealand should be. Although I showed at the weekend my general drift on where I think New Zealand should be heading, I have not yet mentioned in depth policy. That will come when I have an idea of the state of the Treasury books.