Tax cuts. Good, because the individual knows better? Or bad, because it means less available for central government services for all?

Tax cuts. Good, because the individual knows better? Or bad, because it means less available for central government services for all?

By Alex Tarrant

Tax cuts. Good, because we individuals know more than government about to best spend our money? Or bad, because they essentially mean less government revenue able to be put towards pooled services such as health and education?

The difference between the respective stances of National and Labour on the issue was stark over the past week. This will be a regular discussion as the 23 September general election approaches. See all published policies here.

Exhibit one was Prime Minister Bill English’s speech to the National Party annual conference on Sunday: “National wants to do more to put more money in people’s pockets and reduce the pressure on those families most in need. We believe that taxpayers make better use of their own money than politicians.”

He was backed up by his Finance Minister Steven Joyce in Parliament, as MPs debated the Bill set to bring Budget 2017 initiatives into law. The Budget debate was best described as the typical ‘we-know-more-than-you’ clash between Left and Right.

Joyce extolled the benefits that would stem from the Budget’s $2bn family incomes package made up of tax threshold adjustments, Working for Families adjustments and Accommodation Supplement increases.

“…delivering for low and middle-income families very big increases in their incomes,” Joyce said. “This package is very significant. It delivers 1.34 million New Zealand families an average of $26 a week.”

He said business groups had been telling him they wanted to see the current government continue on passed 23 September “so we can deliver more growth, more jobs, and also more income so that the government can actually deliver more public services, more infrastructure and more for family incomes.”

As for Labour’s opposition to the package: “They haven’t heard the public on this one yet and there’s still time to change their minds.”

'An election bribe from National'

Labour’s Grant Robertson sought to show how the party had indeed heard from the public. (He first had to apologise for earlier calling Nick Smith a liar and refusing to withdraw the comment in order to be allowed to speak.) When he got going, the differences started to show through.

Joyce had the opportunity to deliver a Budget “that would finally do what for nine years his government had failed to do. Finally invest properly in health, and in housing and in education, and in lifting children out of poverty,” Robertson said.

“What did that Minister do? He squandered that opportunity. He squandered that opportunity because he saw the dangled carrot of tax cuts. And the campaign manager for the National Party, who happens to be the Minister of Finance, couldn’t resist it. He had to grab hold of that tax cut.”

Labour did not think the priority for New Zealand today “was to give a Cabinet Minister like Steven Joyce, or a member of Parliament like me, a thousand bucks a year.”

Robertson then turned his attention to embattled health Minister Jonathan Coleman. “Everywhere I go around New Zealand, when they say to me, ‘but why are our health services being cut, why are we paying more money to go to the doctor?’ I say, ‘that’s because Jonathan Coleman, the Minister of Health, wants a tax cut of a thousand bucks for him.”

Robertson referenced one Cantabrian parent approaching him this week detailing how their daughter had been diagnosed with a mental illness, but wasn’t able to get treatment for four months. “So…Jonathan Coleman says, ‘thousand dollar tax cut for me,’ but that young woman in Christchurch, she doesn’t get to have a second appointment.”

“How’s that right?” Robertson asked. “How’s that morally right? How’s that fiscally right? Come on Minister. Because Jonathan Coleman and the rest of that National government have their priorities completely wrong in this Budget.”

Time for an anecdote. “I was on an aeroplane recently next to someone – a plumber from Dunedin. And he said to me, about the tax cuts, that he didn’t want them,” Robertson began.

“Because he’d thought about it. That, if he added up the $26 a week that everyone in his street would get, added all of that up, that would be one more nurse for the hospital; one more community police officer for his community. And he said, ‘that’s what I want. That’s what I want in my community’.

“That’s what New Zealanders do want,” the Labour finance spokesman continued. “This government is all about the sugar hits and not about the solutions, when it comes to this Budget.

“By all means, put in front of the public a tax cut. People say, ‘that’s great, I’m interested in that – I like the idea of that’. But New Zealanders think about that and they care about their neighbours and their families and their communities, and they want to see the investment that has been so sadly lacking from this government,” Robertson said.

“You’re not delivering for all New Zealanders when Statistics New Zealand tells us there’s 41,000 people who are homeless. You are not delivering for all New Zealanders when we have the lowest home ownership rate in 60 years. You’re not delivering for all New Zealanders when rental prices in Wellington go up by 10 and 15 and then 20% a year. They’re not delivering for all New Zealanders when we have an education system where early childhood centres are $40,000 worse off a year than they were when National came into office.”

“We have a National government that has run out of steam. Because this Budget is back to the 90s playbook. Back to the tax cuts to get yourself an election win. It’s irresponsible, it completely fails the tests that New Zealanders set for their government to make sure that every person in our country gets the basics.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

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Tax cut is good though the national intention is to get vote and is a bribe - no two doubts about that.

Take the bribe and vote for change.

Health and education need the money more than the rich. If the poor are suffering use working for families to boost their income. A tax cut is too wide and cuts tax for the rich who do no need a cut (myself included).

When do we address why poor people are suffering? Or even why we have poor people? WFF is merely a band aid, or a blindfold.

Tax cut is good in my opinion because it rewards people who work.

All it is largely doing though is keeping up with inflation for the cost of living. But it won't make any difference in terms of people wanting to buy their own house, because house price and building cost inflation is excessively high.

Double edged sword - I agree that people generally know how they want their money spent than Governments (note that BEs comment here is a quiet acknowledgement that Governments spend where they prioritise it, not necessarily where their constituents place their priorities), and also that MPs dip into the trough putting themselves first over their constituents. But Governments are expected to provide certain services, and they are expected to prioritise that spending, health and education being two top needs. How ever successive Governments National and Labour have both proven that they are equally insensitive to needs and put their own first. So yes i want a tax cut but I want it funded from MP pay and conditions, and Auckland projects rather than health and education.

I thought about the 'vote for a change' mentality.

The key question is 'to change' TO WHAT?

Red + Green will do a better job than the current Blue? Ask yourself. Do you believe that?

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Yes.

A better job of what and for whom?

Running the country, for the majority of inhabitants. Any particular issues you think they'd struggle with?

The Economy. Business. Taxes. Immigration. Property. Inequality. Education. Health. Primary Industries. Energy. Transport. Technology. Innovation. Productivity. Working out where the Beehive is.

Apart from that they'd be great.

Yeah, I'm going to need some more concrete examples and reasoning before I spend any time arguing back.

No, what I'm saying is I'd like to see some examples of areas where the National policy is, in your opinion, superior to the opposition policies. As they're the incumbents, there's also the extra test of why they haven't enacted the policy already.

Where did I say that Nationals policy is superior?

Please post the quote from me where I said that, or anything like that.

My apologies, I'm still answering the original questions in this thread, yours was slightly different. Regardless, I'm not putting in the time to answer each of the areas you mentioned.

I'll most likely be voting either Green or Labour as they have more promising policies on the areas I care about, and National have had a disappointingly reactionary style of government rather than facing up to issues before they become unavoidable. If Labour/Greens get into power and do poorly, I'll take my vote elsewhere, but National have done nothing to convince me they're able to provide leadership.

They don't have any promising policies, just basic economic ineptitude like "we're going to build lots of houses and improve affordability, but we aren't going to drop prices". Thanks Andrew.

Most of the issues people have (like Auckland house prices and transport) have been building for decades and Labour have been just as useless as both National and the Council on the issues.

Anyone who thinks voting for Labour will fix anything is dreaming.

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Anyone but National :)

Red & Green cannot form a government. It needs to be Red + Green + Black (I think that's NZ1st colour)

That'll be a nice simplification from the current four party coalition running the country.

It's not really a tax cut - it's just reversing the stealth tax hike that has occurred via inflation/bracket creep over the last few years.

So in this respect, i approve of it and it's very difficult to label it a "bribe". It's also a highly progressive tax cut for National as it doesn't focus on the top tax bracket.

Also they did increase gst when they first came in, which is a significant additional cost that affects anyone building a new home.

I am not opposed to paying taxes, and would on the whole be happy to pay more to get some better/additional services.

But looking at the jokers than run this place, and the general incompetence of most of the services they provide, I can without a doubt say that the money is better in my pocket than theirs.

"But looking at the jokers than run this place, and the general incompetence of most of the services they provide, I can without a doubt say that the money is better in my pocket than theirs."

Come on Noncents what do you expect, if you pay peanuts, you get monkeys...

We don't pay peanuts though. We have some of the highest paid officials going.

Plus they aren't meant to be in it for the money now are they.

Sounds like Labour is getting somewhat desperate......
Total health budget for NZ works out at around $3,500 per person per annum. This budget expenditure doesn't include money from ACC for when healthcare provisioned comes from ACC events.......

Education (exclude the 60,000 new borns from children 18 years and under) and you get just a shade under $11,000 per child per annum. If you use an average school class size of 25 students that is approximately $275,000 per annum per class......land, building, salary, overheads etc.

There is not a lack of funding in either healthcare or education it is how it is being spent......but typical labour thinks throwing more money is somehow going to fix poorly run organisations......

Labour obviously doesn't care about the kids or parents who can't afford shoes, heating, clothing or food.....but while you and your kids are starving to death in the cold and damn at least the teachers and healthcare workers will be well fed and clothed.

$3,500 per person for health services - do you have any idea how much common health services actually cost?

Do you?

A family of 5 can buy a surgery only health insurance package for around $200 per month.....so that equates to $2400 per annum.....yet that family of 5 is generating $17500 in the healthcare budget per annum. We have accidents and medical misadventure covered under ACC.......so Dr's visits and hospital care for all other health problems are what is spending that enormous budget per annum.

I don't know about you but I don't go to the Dr very often maybe once in every 3 to 5 years if that. So I am subsidising those with poor health and much of that poor health is preventable due to it being from the food chain. Then there are the other preventable environmental diseases that we are not coming to terms with.
Doctors are running subsidised healthcare as it puts the costs of the services up to what a competitive market would be.......No one in the healthcare industry has to guarantee their work or the drugs they dish out and any issues that do arise get dumped into the ACC basket.........so yes healthcare is highly expensive but it shouldn't be so.

1. Surgery only, as the name suggests, does not cover you for the entirety of your healthcare, the rest you'll be paying extra for or the tax payer will help out.
2. Now try looking at health insurance costs for older people. The majority of health care costs occur later in life, the cost to you right now is only part of the story.
3. No argument that a large amount of health spending relates to preventable disease, but I don't see how that makes any impact on whether our health budget is too large. The system has to deal with the illness in front of it, and there's sadly no political will to put significant money into prevention. Without extra funding, the healthcare system can't do this itself without affecting the quality of treatments delivered today.

It's one of the basic facts of living in a socialist country, sometimes you have to pay for things that you don't use. I'm not complaining about paying for the education provided to your family even though I have no children of my own, neither do I resent my money going to keeping sick people alive, with the understanding that the system will be there to provide for me when I need it.

I didn't suggest surgery only as being suitable to cover other medical events........

Socialism maintains it can deliver cheaper and more efficiently and that is more my point.....the system can't deliver anything efficiently and effectively so I cannot understand why people hang onto an obvious failed system. If this was business it would have gone down the gurgler as it should have.......it is only terror that is keeping people piled into this system......and that is not a good reason in my books........we never used to have this intrusive nanny state nonsense that costs between 15 and 30 years of the average persons working life to fund.......

The system has deliberately taken people's rights to look after themselves away, making thousands upon thousands of people dependent.......everyone sings the same song...."what do I get out of it" or " what is the government giving me" or " I've paid taxes I expect blah blah" or " I've got such and such problem and it is the governments role to fix it"...........for socialism to be effective it must have causes and incapitate people from being independent..........what is the point of having an education system when it produces mainly dependent people? Is our education system being used to indoctrinate the masses? Shouldn't the education system be producing enormous numbers of entrepreneurs after all it is 2017?

If education was remotely any good in NZ we would not be seeing the proliferation of private education providers that have popped up all over the country........sending one's children to school and then having to pay for extra tuition etc is an option available to the few who can afford......when just about every public service provided has to have an equal private service available we know the system is a failure......Would you take your car for a service a pay twice?......or build a house and pay the builder twice?

My only advice is don't rely on the system being there for you and make your own plans for your needs.......there are thousands upon thousand of people who have fallen through the cracks purely because they thought there was a system there for them.......

Look at healthcare systems the world over. The USA spends more per person by far. Health outcomes for citizens are better in national systems. This is why countries use them.

Lol. First of private health insurance relies on some - usually very expensive - things being provided by the public sector. So for example ED care, medicines, acute care, and maternity care.

Also health expenditure covers aged residential care and older persons care (very expensive, around $2B of expenditure or 1/8th), disability support services (around $1.2B or another 16th). Neither of these are covered by insurance. It also covers ambulance services.

There are probably other things I haven't even thought of

Finally, as someone points out your figure targets people in age groups that don't cost very much. 70% of expenditure is for people over the age of 65. Check out the insurance rates for someone 80 years old - will they even cover people at that age?

I never stated that a surgery only cover paid for all these other things did I?
I was informing on the costs of surgery which is easy to identify.

The what's left to cover is what you have basically identified.

The cost of keeping people in aged care facilities is rediculously high in comparison to the services provided. It is far cheaper to put a child through boarding school with similar facilties and more staff on hand.....

"The cost of keeping people in aged care facilities is rediculously high in comparison to the services provided."

Oh god you do know that these services run on the smell of a oily rag. Plus they are run by the same private sector you laud in an earlier post.

There is no evidence that the private sector is more efficient at delivering healthcare that I am aware of. The New Zealand health system compares very well internationally in terms of expenditure versus outcomes. Most of the activity is public.

I don't get why people think government is always bad and private business always good. Yes, government stuffs up and wastes money all the time but so do private businesses. For every AirNZ there is a Feltex. Sky is a great example of a dinosaur in the private sector that couldnt innovate itself out of a paper bag. That company won't exist in any meaningful way in 10 years and even they know it which is why they are trying desperately to sell themselves to vodafone before the share market figures out they are worthless.

The USA is the ultimate in privatised healthcare and it is the least efficient system in the world. All the private incentives lead to gaming and inefficiencies across the board.

I think you are confusing big corporates getting a lucrative handout from the tax payer......which is an entirely different story.......I take it you do know the cost of having someone in an aged care facility it is around $1500 per week.........now look at the service those residents receive and then take a peek at the subsidised share payouts.......private enterprise is not meant to function on taxpayer handouts......it is meant to sink or swim......the best brains and entrepreneurs are meant to unleash their creativity......it is the SME's who are contributing 90 to 95% of the tax take........and it is politicians and bureaucrats who are constantly taking from this hardcore group and it is misadvised people like yourself who fail to acknowledge this group when it comes to taxation, services and delivery......why the obsession with the corporates? Their conttribution is poor.......NZ along with all western societies are built upon the efforts of the small and medium sized business operators. All socialists are doing is allowing fascism and corporatocracy to reign supreme with the expectation that the SME's will pick up the bill!!!

If there really was so much money flowing in there would be competition for it and services would have improved to attract a greater share of oldies. Also things like healthcare and education are not sectors we can allow to sink, when we allow private sectors to take over such key areas it results in too big to fail.

No to tax cuts! No to National being in Government to implement as he had already said in an interview with Mike Hosking on Newstalk 1ZB (8th May) - when they can afford it. Can we be sure that they will actually happen or is this just a "bribe" for votes.

I think you're confused about the definition of a bribe. If it's my money in the first place then how can someone use it to bribe me? I suggest you find a Marxist bolthole..let's say Venezuela...and transport yourself to the socialist paradise you so desperately seek.

Is it your money? Depends on your age. If you are 55+ then no it's not your money, it's owed to the Cullen fund to pay for your retirement, and National giving you the money now is just stealing from future generations.

If we could afford tax cuts, then debt would be back to where Labour had paid it down to, and we would be able to save for our future retirement.

Your assumptions are based on the belief in the social contract that a proportion of your taxes go into a pot, which is then paid out to you as a pension in retirement. The fact is that that money is long gone and you are in fact in debt. Taxing more and borrowing more to put into another "Cullen Fund" or whatever would be just tipping more money into a hole that a future govt will confiscate to pay for even more squandering. I suggest you educate yourself on what is happening in Europe and the US and elsewhere to see where we are going. In a nutshell, govts are going bankrupt everywhere and they will continue raising taxes until we're all broke. If we work four months on average to pay our taxes then that's likely to be over 6 months within 10yrs. I suggest you volunteer 10 months worth of your income to try and keep things afloat.

Why not choose a Scandanavian or European exemplar rather than a massively corrupt state with only a pretence of a political system?

Using Venezuela as an example of socialism makes as much sense as choosing the Republic of Congo to represent capitalism.

North West European socialism works pretty well and would be amazingly successful if they just kept it to themselves and didn't listen to the Americans or try and save the rest of the world. We would see high technology societies with stable populations with longevity and health and a rejuvenated natural environment.

North West european socialism is just "generosity" on the back of Oil Money. Same as Saudi. Same as Qatar. etc etc. There is nothing magic in their system.
They are all now dipping further into the pot to pay the bills... to maintain their largess. They are all Venezuela in waiting.

https://knoema.com/vyronoe/cost-of-oil-production-by-country

This link gives a nice idea of how the reqd balanced budget price soon climbs for all those built in promises ... as income falls and the overhead remains

Nonsense ham n eggs. They managed to control population growth and were well on the way to sustainability and environmental rejuvenation.

They are still part of the current neoliberal ideaology unfortuntely. Sure a little more restrained, but that only affects the time it takes until if fall apart. It is a logical flaw to pull a non-rewable source of energy from the ground and invest the profits from that activity into financial assets that depend on the energy being infinite.

Heres Norway ...
http://www.bbc.com/news/business-35318236
"Looking out across the Oslo fjord, with its islands and sandy beaches, it is easy to forget that the Norwegian economy is in difficulty.
As oil prices have collapsed, it's become clear that Norway has caught what used to be called the Dutch disease - an overreliance on one industry, in this case the oil and gas sector."

Or perhaps you might want to watch their sovereign funds environmental "divestment" through Glencore ... stealing Africa? I think you need to stop listening to Mike Hosking
https://www.youtube.com/watch?v=WNYemuiAOfU

You're such a doom and gloom merchant ham n eggs as are the media a lot of the time because sensation sells. Norway will do alright. Did you know you hold extreme views that some would call kooky?

LOL Zachary - go back to Newstalk ZB - everythings fine - Mike says so.

"It is no measure of health to be well adjusted to a profoundly sick society. - Jiddu Krishnamurti

Zachary, it looks like ham n eggs has been defeated by your comment the minute he responded with LOL

Defeated - Yes - Zachary's complex argument that "Norway will be fine" is just too difficult to counter.

Zachary,

I love it. "Did you know you hold extreme views that some would call kooky?". That's a bit rich from a self-confessed Alt-Righter,whose views Many/Most would call highly distasteful.
I take that you do remember calling yourself an Alt-Righter just last week?

human nature 101. Shoot the messenger if the message undermines your core beliefs in any way. In Zachary's case, he wants to believe his housing portfolio guarantees him the good easy life here to eternity ...that there is an endless rainbow of resources to prop our lifestyles up . Unfortunately its why we get journalism with the depth of insight of Hosking
Hes like a townie complaining about dirty dairying ... over their (somehow purely sourced ) milk latte. Cognitive dissonance is a powerful thing.

Ham n eggs your "message" undermines our sense of the magnificent capability of the human spirit to resolve problems as we come across them. Time and again we have risen to the challenge and mastered nature. If a certain resource runs out we will find other ways to progress. We are likely to be even better off.

Linklater01 I would say I hold views that my forefathers held in common for many generations. So in that respect probably more old fashioned rather than kooky. As for Alt-Right, yes guilty as charged and I haven't hidden that as I mentioned it several times during the Trump campaign. Indeed support from this sector played a significant role in the Trump election. In reality I want to maintain a society where all views are acceptable and not de-legitimized out of hand. I don't want to banish anyone for their political beliefs although I want to preserve the right to reject them and call them kooky. The recent hooha at Auckland University where students were threatened with violence and admonished by the authorities for wanting to establish a European culture group (open to all I might add) was a wakeup call concerning the direction our society is heading and only increased my resolve to battle this where ever possible. We want to maintain freedom.
I would say that I am far from being the only one on this forum who wishes to see a return of the traditional Right for want of a better term. The Alt-Right is pretty broad and inclusive and would include people like monarchists and identitarian youth with a large web presence which is its main strength. It battles political correctness and fights for the right for people and groups to reject and promote things according to their own values.

Zach, have you read Strangers in Their Own Land? I just finished it yesterday and found it well worth the read, and think you may also find it worthwhile.

RickStrauss, no I haven't read it. I will check it out.

Seriously Ludwig, reading and comprehension is an art form that you are not meeting. Had I been able to use bold letters, I would have used them on "when we can afford it". Was that the part you did not like, being too close to what we have seen and experienced over the past nine years?

Regarding change of Govt, a group of voters and posters here indicate that why change when the next lot may be equally bad ?
My view is that even if this argument is accepted that new Govt may be equally inept even then change is necessary , firstly to send a message to politicians that their arrogance and indifference wont be tolerated and public will boot then out secondly new Govt may be more sensitive to public opinions , thirdly keeping same Govt in place even when they are not performing is insanity.
I voted for National but i am very disappointed and I am not stereotype typical labor voter.I am likely be taxed more if labour wins but it has to be more than just one s self interests.
It is self defeating to think of sticking with Left/right for ever , I do not care which one as long as their policies are for the greater good.
It is about time to have change of Govt.

FYI, the two of them went over the issue again in Question Time today...

https://youtu.be/AdyBlA8FC_s

Cheers

National in LaLa land. Business want them to continue so they can provide "more income"? Has Minister Joyce not seen the latest GDP figures? GDP per capita has reduced for the last 2 quarters. We are going backwards.

The pie may be a little larger, but there are a load more mouths to feed so we are getting smaller slices of pie.

If we vote National to continue this trend, people will be getting hungry!

Income tax cut, but offset with a new wealth or capital tax

Agree, neutral total tax take but move to capital tax. In New Zealand the wealthiest tenth own nearly a fifth of the country’s net worth, while the poorest half of the country has less than 5 per cent.

Wealth inequality continues to widen, as it does in other western nations, and introduction of minor wealth tax will overtime make major changes to distribution of capital. We have very poor information on wealth and having a wealth tax will help us truly understand wealth distribution and make political decision about it.

I would only support income tax cuts if there were compensatory wealth or capital taxes.
There's no way the country can lose tax revenue. Education and health, in particular, is under hugely growing pressures, not to mention that Auckland needs a large Government backed house building programme (Kiwibuild x2)
Do people realise how many more schools (and therefore teachers) Auckland will need in the next 20-30 years? And the teachers need to be paid a lot more, otherwise the city will face a drastic shortage. The teaching workforce is ageing, and young teachers are fleeing Auckland because they earn the same elsewhere and their cost of living is much lower.

I'm with you. These aren't really tax cuts - they are threshold adjustments and adjustments to transfers. They only make a reasonable difference in disposable income for those on large ($100K+) incomes.

The corporate tax take is in very shakey ground given the majority of that is paid by a handful of entities - NZSF, the Aussie major banks and to a much lesser degree, Air NZ - the former two in seriously precarious positions going forward. Inside a single year they could go from net tax payers to tax losses.

Major tax reform is to my mind urgent - a first equal election issue alongside freshwater quality for me.

come on - we need to address poverty in this country. If you're going to lower taxes then lower GST, or lower the tax on tobacco. That will benefit poor poor people and slow the growth of inequality. I saw the greatest piece of propaganda today in the herald. It went like this Question: Why is food so highly priced in New Zealand? A: because we don't have enough people in the country! seriously I'm not making it up see here.

Here is something I've been thinking about with regard to this debate.

If you give everyone an extra $20 in the current housing environment then they will just use it to bid up the price of houses/rents which no change to who gets the property. Nobody is better off because everyone maintains their place in the wealth order. Under this scenario society is no better off, no additional good or service is created.

However, if you use the money to provide public services then people get something valuable to them which improves their wellbeing - e.g. a hip replacement, a new type of medicine, improved transport, social housing, etc. Soceity overall is improved.

Now you might think you don't use public services and that these only benefit poor people who bludge of the government but you'd be wrong. Police, fire services, roads, health services, education, health, etc have a massive impact on our lives. Plus there are all sorts of user pays built in that screw the middle class.

So while I support tax increases sometimes, right now I prefer investment in public services.

Public services do not benefit the poor.....public services benefit those administering the system. Private enterprise struggles to pay the taxes required to pay for the public servants which pushes people into the poor bracket.

How many poor public servants do you see? None! And when the poor realise what has been happening they will not be very happy.

"Public services don't benefit the poor..."

I'm sorry, I didn't realise that hospitals don't benefit people, schools don't benefit people, police don't benefit people, social housing doesn't benefit people, etc.

People who have an axe to grind about taxes like to pretend that most public expenditure goes on administrators and managers, this is false. Most government expenditure goes on frontline services and costs. Take Health, the ministry of health gets less than $200M of $16B in health expenditure, that is 1.25%.

And so what if public spending creates good paying jobs. Doctors and nurses are important roles, we create more, they deliver more of what we need, boost the economy and pay tax, and we can use that to employ more of them. It's a virtuous cycle.

I note your sarcasm, and that you're wrong.

Sure, public services benefit people. However, they often disproportionately disadvantage the poor.
The more you pump into these services, the less efficient they become by nature.

Higher education - why should minimum wage earners be paying to subsidise something they will never utilise?
Healthcare - The relative cost of PHO care is likely higher for poor people than it is for higher earners.
Roads - again, relatively poor people subsidise overuse by relatively rich people.

"And so what if public spending creates good paying jobs. Doctors and nurses are important roles, we create more, they deliver more of what we need, boost the economy and pay tax, and we can use that to employ more of them. It's a virtuous cycle."
You see, this is the fundamental issue with liberals and their simplistic ideals - public spending is spending taxes. The problem with constantly increasing that is that eventually you run out of highly productive people's money to spend.

So what's your solution? User pays for roads? We already do that through gas taxes but anything more granular would be problematic. Should we scrap subsidised doctors visits? GP visits prevent cost down the line. How about charging people to go to hospital? We can see how that works in the USA - lots of bankruptcies and the paying customers have to pay for the people with no money. We could charge people to send their kids to school, that would create all kinds of social dysfunction. And as for your higher education example which is probably your strongest point, I may have got a subsidised tertiary education but I've been a top tax rate payer for a decade, surely that evens the score.

We are discussing essential services here and I don't see any evidence the private sector is more efficient. How about private prisons and Sirco? For every example of public sector dysfunction there is one of private sector dysfunction.

"We can see how that works in the USA - lots of bankruptcies and the paying customers have to pay for the people with no money."
Isn't that exactly what we do here, though, but to a greater extent?

"And as for your higher education example which is probably your strongest point, I may have got a subsidised tertiary education but I've been a top tax rate payer for a decade, surely that evens the score."
Well, no, it doesn't.
The point is that your earning potential was subsidised by someone else. Someone else who will never capitalise on that benefit.

"We are discussing essential services here and I don't see any evidence the private sector is more efficient. How about private prisons and Sirco?"
True about prisons, but this isn't in question. Like police and defence, it is a true public good so therefore isn't really a good candidate for privatisation.

If you need evidence of the inefficiency of public institutions, you can look anywhere for anecdotal or empirical work.

"The problem with constantly increasing that is that eventually you run out of highly productive people's money to spend." Credit should be given to Maggie...

Public servants including your Dr 's and nurses are an elite group of overpaid people that through their existence are creating poverty for more and more people. As Winston Churchill claimed:
“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

All those billions that get transferred from productive enterprise into the State system create poverty for all other people.....here is an example a sole operator builder will not be able to exist in the current environment....by the time that builder pays all his/her taxes and business compliance costs there is nothing left for them on a $50 per hour charge out rate........for a builder to survive he must grow his business employing other builders, labourers and apprentice and then clip the ticket per hour off their labour. It doesn't matter whether you are a sole mechanic, a sole engineer etc......you cannot survive in business and support a family unless you employ more people and make a cut.......we are living beyond our means and the buck starts with those working in the public services as they will bankrupt private enterprise if we keep this up......or just maybe that is the plan......as one left leaning advocate stated well the plan is working well......the sooner we ring the necks of those in private enterprise the better because then the government can own everything and that is the way it should be.

It would be foolish to think you are helping low paid or poor people when long term the impacts will have NZ as a communist State.

actually,you sound like the very worst sort of economist who knows the price of everything and the value of nothing.
"Public services do not benefit the poor". So,presumably,you would privatise the entire health service and let the market dictate who would get treatment and who would not. Do you really believe that the less well of in society would gain from that? Of course every public service could be improved and run more efficiently,but I for one and I believe it's the view of the majority,want to see our public services remain just that.

Don't take extracts of my words to place them out of context!

Poor people are where they are because of the wealthy public servants.

Why does it all have to be one way or the other. Why not ensure everyone can have surgery when they need it instead of some people waiting over a year for something like a hip replacement which because they didn't get that surgery when they needed it they now need a knee replacement as well.......why have empty operating theatres and waiting lists? Nurses are paid less in private hospitals and have to work harder.......it is all about efficiency and effectiveness......

What do you do about it right now for those who are on a waiting list for surgery? Turn a blind eye perhaps because it is not your problem as there is a public system. Or donate to a charity hospital etc?

Nymad
I suggest that you should firstly check the facts before making such categorical statements, just google the healthcare cost for USA, UK, France, Australia, NZ and other Scandinavian countries and compare outcomes , the private healthcare sector in USA that does not even cover all the entire populations cost a lot more.
There are many other similar examples provided you want to look for unbiased evidence as opposed to support a preconceived belief.

The reason it is so high in the USA is because of subsidised heatlthcare.
The figures you quote don't really mean anything anyway on an aggregated basis - that's the whole point of my comment.
It's like quoting anything on a per capita basis.

The tax cuts are shortsighted. There is a 3rd alternative: build a sovereign wealth fund.

As much as we like to believe that people will do the right thing with the tax relief we know that (1) we are poor savers and (2) that as automation replaces jobs, capital as a factor of production is becoming more important.

We need a sovereign fund which invests in equities in order to provide all citizens with dividends from capital and the associated tech improvements. Many petro countries are well positioned in this regards, see Norway's $1 trillion fund, but also others such as Singapore and China (although later considered a ccy fund).

In NZ, the wealthiest tenth own nearly a fifth of the country’s net worth, while the poorest half of the country has less than 5 per cent. This is getting worse not better.

we kinda do have a sovereign wealth fund, the Cullen fund which the government in their wisdom stopped making contributions to, thereby avoiding the greatest stock bull run in my living history.. Talk about snatching defeat from the jaws of victory!

I wonder though, does it make sense for a country perpetually running a current account defect to have a sovereign wealth fund? I suppose it depends on the ROI vs debt servicing costs. What actually is a countries real wealth? is it a large share portfolio, or is it the minerals & water in the ground from which you could derive revenue? Is it houses in Auckland which you can sell to wealthy foreigners and make money? Or is it perhaps the productivity of the population and their capacity to create things that the rest of the world wants to buy? Once you've decided what wealth really is then you need a long term strategy to materialise the latent wealth.

Yes, agree that it is tragedy we have not contributed more to that fund. Opportunity missed.
The reason I'm in favour of a second fund is that the Cullen fund is for specific purpose of funding aging population whereas the sovereign fund I see us needing is to ensure that as we continue to see the structural shift from labour to capital in the economy that returns on capital are used to hedge the associated declining return on labour. Working will provide less income and computers/capital more and therefore if we want income distribution to at least remain at current levels we need the wider population to have some capital ownership.

It makes sense to have govt debt and sovereign fund so long as the cost to service the debt is below the ROI of both the sovereign fund and infrastructure projects. It sounds like having a credit card and a savings account but the difference is that the credit card, govt debt, has low interest rate (govt bonds) and the sovereign fund has reasonable return. This should not be taken to extreme as high levels of govt debt can have destabilising effects (see http://www.interest.co.nz/opinion/55724/opinion-new-zealands-gross-debt-...)

Current account I do not see as an issue, what were your thoughts here? A sovereign fund returning dividends from offshore to NZ should improve this.

Our countries wealth does include value of land, minerals, etc however capital/technology is becoming the more important factor of production therefore we should not rely on our natural wealth to prop us up in the future.

The strategy could be as simple as global index equities, or we could go down path such as Harvard fund or Norway's sovereign fund etc and direct to specific industries. I would be thrilled if this was the topic of discussion but at this point what is crucial is starting to build the fund. With shortsightedness of current governments I am cynical. We should have started 10 years ago.

I am glad the PM made these comments as it starts a conversation. The bigger question is what role should government play in society? The PM said that people are better at spending their own money rather than the government. To some degree I think this is true but it would be good if the government applied this across the board. One example is the accommodation supplement - I would be a lot happier if the government abolished it and just paid higher welfare; this would create an incentive for persons to negotiate rather than a landlord subsidy.
As already mentioned above we spend $3,300 per person for healthcare. Are we getting the best bang for our buck? We don't have to look to countries like Singapore who spend less but get better outcomes - we could extend ACC to illness and have a much better model. ACC will then contract with healthcare providers and bring market discipline.

Complete the charts to see how much you know about New Zealand politics
http://insights.nzherald.co.nz/article/labour-vs-national/

Can anyone from Labour show me where the real differences are between their policies and the existing National policies ........... other than increases in taxation to pay for the nice-to -have things they are wanting ?

I am still waiting for them to explain how we are going to be able to buy newly built houses from the Government for $500,000 when you can barely get a newly serviced section for that in Auckland .

Explain that , and you are guaranteed five votes from our household