Andrew Little says he's happy when Winston Peters agrees with Labour policy (tourist GST for the regions); Not so keen on those more costly ideas, though (multi-billion student debt write-off)

Andrew Little says he's happy when Winston Peters agrees with Labour policy (tourist GST for the regions); Not so keen on those more costly ideas, though (multi-billion student debt write-off)

By Alex Tarrant

It will be one of the more regular questions lobbed at Andrew Little between now and the election: “What do you think about Winston Peters’ stance on [insert NZ First policy here]?”

And the Labour Party leader already appears to have worked out two standard responses.

‘Does it line up with existing Labour policy and/or looks like it won’t cost much? Sure we’ll take a look at it. Why not. It’s good that we’re in agreement.’

Or: ‘Is it likely to cost a few billion dollars when we don’t know where the money will come from? Sorry guys, we’ve just signed up to these Budget Responsibility Rules. Maybe next time.’

Parliament’s media pack lobbed two such policies at Little Tuesday morning.

The first was a comment over the weekend by Peters that he favours Local Government New Zealand’s call for GST captured from tourists to be siphoned off and given back to local authorities of regions where initial spending took place. LGNZ reckons this would be a pool of $1.6bn nationwide.

Little opted for the first standard response. In fact, the policy option was something he had started talking about two years ago.

“It’s not a new idea. It’s been around for a while and I’ve certainly indicated it is an idea well worth looking at, certainly for local authorities doing economic development stuff with a clear plan for that,” he said.

“[If] it’s attracting new business investment, new people, then let’s look at a way that we can do some sort of revenue sharing. That’s an issue that Grant Robertson and I have been discussing for some time.”

I had earlier asked Revenue Minister Judith Collins what her thoughts were on the proposal. Was it doable? Could IRD handle the workload?

“Pretty difficult to do, actually,” she replied. “As soon as you add complication, it actually puts up the cost of administration and unfortunately that means there’s less money coming into the pool. It would make it a pretty difficult thing, particularly as so many of our businesses work right across provincial lines. And guess what, there’s no actual provincial lines.”

I put that to Little. His response:

“We’ve just spent, or we’ve not yet completed spending, $1.5bn for IRD for their amazing whiz-bang new computer system. So, I’d be surprised if we can’t actually track sources of revenue very easily. I think it’s an idea well worth exploring and the mechanics of it we can deal with down the track,” the Labour leader said.

And with an eye on the election, does he welcome Winston Peters talking about policy that is compatible with the Labour’s Party’s stance?

“It’s always welcoming when Winston Peters talks about matters that Labour has committed itself to, for sure.”

That was the easy one. Then came questions on what he thought about the potential $4.5bn price tag of Peters’ policy to write-off student debt for people who opt to stay in New Zealand post-study for the same amount of time it takes to gain their qualification.

Little said he hadn’t seen the detail of that particular New Zealand First policy. Labour itself had a three-years free post-secondary school education package that it would look to phase in over a period of time, he noted.

“That’s based on revenue that the government is generating right now. We know those projections are changing, so these things can always be kept under review.”

However, the NZF idea “sounds like a big dollop of money. In the end, we have made a commitment under our Budget Responsibility Rules…that we’re going to make sure we are fiscally responsible. We’re not going to over-extend ourselves,” Little said.

Regardless of how well he manages to keep those responsibility rules at the forefront of responses, the question of price tags of New Zealand First policies (and the Greens for that matter) will keep popping up. Is it irresponsible for minor parties to be so flippant about policy costs?

“It’s a luxury that small parties get to have. When you’re one of the big parties, you don’t have that luxury because we get caned from here to Kingdom Come if we put those sorts of things up and can’t properly explain them, given current Budget constraints,” Little said.

“There is an issue, that a lot of students raise, not just about tuition but about their living costs. It is an issue that we’re going to have to come to grips with. But I do not see a $4.5bn programme being committed to at this point.”

Nevertheless, was Little worried about being ‘outpromised’ by Winston Peters?

“Well, if he does that, it wouldn’t be the first time.”

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24 Comments

Winnie's policy of wiping tertiary debt after working in NZ for a set amount of years wouldn't work; it would just incentivise young Kiwis with a student loan to stay in NZ for as long as they need to then bugger off to Aussie/the UK/the USA etc if possible for bigger bucks. Excluding the student loan defaulters, at least interest accruing after being out of the country for more than six months helps prevent people from escape overseas indefinitely and paying tax to another government.

I'd much rather he introduce a passing threshold for the papers/courses taken by tertiary students. E.g. you take eight papers in a year and have to pass at least four to get a student loan for the following year. Also, make it harder for students to get into uni to reduce the amount of muppets taking useless papers and offer building/plumbing/electrician/trades etc courses at high school. Not everyone needs a tertiary degree.

It would also be beneficial to rejig the student allowance scheme for post graduate students; it's farcical that a Masters/PhD/PGDip/PG Cert student can't get an allowance but undergraduate students can.

The current requirement for getting a student loan with regards to passing papers is already as you described.

Maybe we just need to start paying people for what they are worth. New Zealand has for a long time put pressure on wage growth to stay down.

That is why it needs to be 10 years, as people are more likely to have found a partner, and had a kid or two, which creates a tie to NZ. After 5 years, people are likely to go overseas where they can earn more and find a partner.

Writing off student debt is unfair on those who have actually paid and not buggered off to Australia , the Islands, Dubai and other middle eastern tax havens to work

House prices at 10 times the median income is unfair on current FHBs compared to 40 years ago.

Savers are being punished at 2% interest rates which were far higher 30 years ago.

Kiwi job hunters are being penalised due to rampant immigration which didn't occur 20 years ago.

Times and policies change, causing both "fairness" and "unfairness." Personally, my parents benefited from tax payer funded education, affordable housing and "jobs for life." I have missed out on those "fair" things because times and polices changed between when my parents were born and when I was born.

Change always happens, and it causes some to win and some to lose.

I braoaly agree with you , the reality is that a job for life is something that simply does not exist anywhere anymore, even in a socialist utopia

There have been lots of changes to student loans and education costs. I don't resent rule changes. I paid off my student loan while interest rates on them were high. I didn't benefit from 0% rates they have today, but I had a higher proportion of my fees funded by the Government than those being educated today.

I think what we should do is examine irresponsible student loan lending. Many institutions are just farming the students and oversupplying qualifications that aren't needed.

Also we need more post graduate funding. That's where a lot of the benefits come from with education and instead of funding productive post graduate work we're funding too many art history and law degrees.

I'll simply refer common taters to my comment at http://www.interest.co.nz/comment/929304

It's nowhere as simple as the Little one suggests: he is quoting the server/IRD side of the set-up, whereas the heavy lifting has to take place at the point of sale.

Winnie the Wizened is actually proposing a layered and/or differential sales tax - a massive client-side compliance impost, a long delivery time, and an opening of a hitherto firmly closed door to all manner of locally devised and pleaded new taxes.

But the policy sounds so catchy.....it will doubtlessly attract votes.

Recall H L Mencken's view of elections - 'an advanced auction of stolen property'.....

I can't see any reason to require a record of tourism spending at POS in order to calculate a tourism-related GST take on a geographical basis. SNZ and TIA/TNZ have all kinds of other statistics and data gathered that could be used to extrapolate shares of overall GST paid relating to tourist spending on a district or regional council boundary basis.

They already calculate the overall portion of GST that relates to tourism as mentioned here;
http://www.stuff.co.nz/business/85757401/tourism-seeks-slice-of--28-bill...

A formula for apportionment would be quite easy I imagine.

That said, the idea of GST-sharing is a dumb idea to my mind - it's not as if CG have enough revenue as it is.

So much easier to charge an entry tax to non-NZ citizens/residents as a one-off lump sum payable at the time of booking an airfare, applying for a visa or on arrival - if not paid prior.

In other words, tax the tourists - not the residents!

That GST is universal is a good thing. In my view the regular efforts every time there is some issue to break that universality, is just evidence of lazy thinking. Not a vote winner from me Winnie.
Given that, there is a need to extract from the tourist industry the true costs to infrastructure. Currently tourists and the tourist industry are getting a free ride. I would be happy to see a considerable levy at the border for tourists. A daily rate and Compulsory Health Insurance.
Recently I climbed a big rock in Sri Lanka. A world heritage site. Cost me $35. Locals price. 45c.

Yeah in most place have different rate for locals and foreigners. Even in Europe had different fare for Local, European Union and other foreigners.

Seriously?

Don't let Labour nor Winston touch Taxes, that's a one way trip... usually not having a good ending!

If I have multiple sites around the country and I pay GST every month, how is the IRD supposed to know where I collected it? Am I supposed to file a return for each region? If I sell online, is it my address it works off or the customers? It seems far from simple. Sounds like we would end up like the US with sales tax and having to track across states etc. There must be simpler waysto distribute money back to the regions e.g refund the council the GST collected on the rates or better still not charge GST on rates

Precisely. To get at the exact targeting this suggestion requires would need three additional items of tax data for each and every transaction, none of which is currently collected:

  1. Region (to which GST slice should be directed)
  2. Tourist or local flag (a Kiwi-sounding name, perhaps?)
  3. Rate (because every Region will have differing needs and once the gate is open, there will be special cases galore)

Plus hideous complications for e.g. package tours (a 10 day package, taking in the sights from Auckland to Milford Sound, from the comfort of a 1953 Bedford bus with Port-a-Loo, Freedom Glamping on the side of the road in canvas tents - distribute That, Winnie!)

It will, quite simply, foobar our internationally praised (because simple, rational and thus certain) GST.

I'm not fond of the idea about regional GST. But don't attempt to capture each transaction just send in a statistician - instead of billions of transactions they can get to the gist of it by analysing a few thousand.
I would just assume no tourist plans to visit Auckland - it is just a gateway to where they want to go so measure what the spend in total and give 15% to the regions (of course some regions are better than others but no system is perfect).

A possible conversation:

"Oh, I see you're the Tax Statistician, come to our Humble Region to ascertain our slice of the GST cake"

"Er - yes"

"May I interest you in a Holiday Home, water/lake view, season tix to the skifields and other Urban Entertainments of your choice, if you could see your way clear to - um - Adjusting them Estimates ever so slightly in our Humble Region's Direction?"

"Er - is this conversation being Recorded?"..........

Or we could just make some numbers up. That would be faster and cheaper. Or you could allocate funding based on benefit and need. The bit I find disturbing is that Andrew Little thinks it will be simple because of the computer system IRD have or will have with functionality it may or may not have. No understanding of what it will mean for businesses and no concern for the costs that will be incurred. He did say something about the small parties not needing to think about reality so is he pitching labour as a small party?

It is the way they fund schools via the decile level - stats not actual pay packets. Decent stats always provide a margin of error and they increase sample until the margin or error is acceptable.

I have just re-visited The Opportunities Party website and re-read some of their policy statements , and do you know what ?

The have some good ideas ( some silly ones too ) but some are really good .

I agree. The unfortunate thing with TOP is that they have some decent policies, but they get tarred with the "Gareth Morgan is a bellend" brush. People won't see past Gareth as a person and look at TOP's policies on their own merits if they dislike him.

What about regions that don't have a lot of tourists? I understand the idea is to pay for extra infrastructure required by tourists, but presumably the balance will be less money for the government to spend on regional development in general. So a less touristy region , has no tourists spending money in the region, and less money spent on the region by the government.