Alex's politico-economic blogroll: Labour's death tax; Hypocritical Greens; Joyce's uses wrong spreadsheet for debt claims; Shipley's payday; Cartoons

Alex's politico-economic blogroll: Labour's death tax; Hypocritical Greens; Joyce's uses wrong spreadsheet for debt claims; Shipley's payday; Cartoons

Here's my blogroll for the week. Have a good weekend all.

From the left

1. Why is Shipley being paid so much? Idiot Savant at No Right Turn got the ball rolling on this story that made it to the top of mainstream media bulletins this week about how CERA advisory board members are being paid much more than it seems they should.

I was curious about how this appointment was made, so I asked about it, requesting all advice and communications about the appointment process using the Official Information Act. The resulting documents - a paper to the Cabinet Appointments and Honours Committee [PDF] and several letters - are quite revealing. They show that

  • Brownlee had decided who he would appoint before the law had even been introduced to Parliament;
  • The appointment process does not seem to have followed SSC guidelines [PDF]. It does not seem to have been advertised, even in the broad sense used by SSC; no long or short-list of candidates was drawn up [PDF]; no interviews appear to have been conducted to confirm the suitability of the candidates. It appears as if Brownlee pulled these names out of his arse, and then imposed them on us. The people of Canterbury, of course, were not consulted.
  • To add insult to injury, having appointed these people with no proper process, Brownlee then decided to pay them at triple the normal rate [PDF], on the basis that "it will not be possible to secure their services under the current fees range". No effort appears to have been made to find candidates who would do the work within the government's budget. This was agreed to by State Services Minister Tony Ryall [PDF].

2. Govt procurement policy should include Kiwimake provisions. Labour released a new procurement policy to little fanfare this week. Eddie at the Standard rounds it up.

The detail of Labour’s policy is here.

The logic of a procurement policy that compels government bodies to make decisions on more than a narrow commercial basis is obvious.

The new Auckland railcars could have been built in Dunedin, creating hundreds of jobs, boosting the economy, and ultimately bringing more tax into the government’s coffers. Instead, Kiwirail went for the ‘cheaper’ option: cheaper for it as a company in isolation but more expensive for the government and the country as a whole. Now, another 44 jobs have been lost at Hillside with 16 of the redundancies announced just before Goff arrived.

Kiwirail shouldn’t just be a company that we own, it should be about investing in and building New Zealand.

3. Joyce used the wrong spreadsheet. Stephen Joyce's claim that Labour's tax policy would leave a NZ$15 billion hole in the budget was a claim based on the wrong figures, Keith Ng explains at Public Address. Hilarious if this is the case. If the Associate Finance Minister doesn't know what figures and spreadsheet to use, how can we be confident in his own budget figures?

Joyce reckons that Labour grossly underestimated the cost of their tax-free threshold, and overestimated the revenue from their new top tax rate. Unfortunately, Joyce used the wrong spreadsheets. In particular, he missed the bit which said:

Larger changes require more complex modelling than is shown here.

But that’s just some nerdy ass-covering technical caveat, right? Well, Joyce punched in the numbers and came out with an estimate that costs will grow rapidly, doubling by 2025.

Let’s think about how this would work in the real world. Everyone earning over $5000/year would get the benefit of the whole tax free threshold. That’s pretty much everyone in the workforce. So if everyone already gets something, how would more people get it?

The cost of a tax-threshold only grows when new people enter the workforce.

So unless Joyce thinks he can create 3 million jobs (and find 3 million workers to fill them) in the next decade, this is a patently stupid and ridiculous result. Common sense would tell you that it is impossible.

This one goes firmly in Labour’s favour.

4. Republicans won't allow Treasury to default. US-based Kiwi Phil Quinn says the fact the Republicans are playing hardball during the US debt ceiling talks is what was expected for the show, but they won't let Treasury default.

This was bound to happen as it has, really.  Conservatives had their fun trying to bully Obama into linking big spending cuts to the debt ceiling vote and using the standoff to bleat their case.  

But the White House knows that, when the rubber hits the road, the GOP is not yet so beholden to its tobacco-chewin’, gun-totin’, Jesus-Lovin’ faction that it would allow the US Treasury to default. They therefore understood that, by drawing out the negotiations over a spending-cuts deal, they would hasten the moment that the GOP’s position would inevitably implode — but not before inflicting some serious internal damage.

It is quite beautiful to watch.

From the right

5. The Greens should stop inviting journos to their Christmas Parties. David Farrar at Kiwiblog isn't too fussed about the NZ Debt Management Office being taken out to events by the banks.

The Greens say the jobs of the banks is to maximise the cost of debt and are oppossed to the Government wanting to minimise it. By that rationale no customer and no supplier should ever be hospitable to each other.

The Greens put on a couple of parties a year to which they invite the media, and even me. Now the job of the Greens is to maximise their party vote and the job of the media is to scrutinise MPs and hold them accountable. So by Green logic it is inappropriate for journalists to attend the Green xmas party.

At a certain level, hospitality can become inappropriate. But worrying about the fact the BNZ took the head of the debt management office to a children’s pantomime is ridiculous. That’s like worrying about who paid for the coffee.

6. Taxes are like acorns, they grow. Cactus Kate picks up on ACT founder Richard Prebble's comments on Backbenchers about capital gains taxes.

Prebble comes out firmly opposed to Capital Gains Tax. Prebble even reminds his old colleague Sir Roger of the nightmare that the introduction of GST and even income taxes has become. Prebble is a man who has grasped lessons from history. His quotes:

"If you could tax your way to prosperity the Soviet Union would have won the Cold War" and;

"Taxes are like acorns... they grow..when the Labour party brought GST in it was 10% and it was never going to be increased and it's now 15%" and;

"When income tax was introduced all the politicians said it was only going to be on the wealthy and of course now it's on all of us".
Rounded off with the grand finale:

"You have Capital Gains tax and it will be on your family home, I'm telling you".

7. Labour's death tax. That's what Adolf at No Minister says Labour's capital gains tax will be. Is inheritance income? Untaxed inheritance is one of the best ways to create wealth inequality I reckon.

If you are one of two or more siblings, upon the death of your last surviving parent, it is likely the executors of his or her estate will sell the assets in order to make a distribution according to the terms of any will. (Adolf has been though this drama in the role of executor and beneficiary.)

It is common practice to sell property and shares, using the cash sale proceeds as a simple and practical means of orderly distribution. From the day Labour is re-elected, God forbid, their rapacious administration will take a skim of 15% before the family starts to get a look in. Goff has conceded this point in recent clumsy interviews.

So we have on our hands a new campaign:-

STOP LABOUR'S DEATH TAX

They should sell the bus and buy a fleet of socialist hearses to take them round the country selling their funereal death taxes.

Economics blogs

8. Did Brash really change his tune on capital gains tax? Paul Walker at Anti-dismal delves a bit deeper into Don Brash's comments a decade ago about CGTs, and his recent opposition to them.

Let me add in more of what goes before the piece quoted by The Standard,

On the other hand, the interaction of inflation with the tax system penalises savers. As an illustration, assume inflation is zero and a saver is receiving 5 percent on his or her money. In that case, he or she pays income tax on that 5 percent. However, if inflation is 5 percent, then interest rates have to be 10 percent to ensure the real interest rate, after inflation, remains at 5 percent. Yet in that situation income tax is paid on the full 10 percent, even though the real interest rate has not increased at all. The real return hasn’t changed, but the tax bill has doubled, so the post-tax return has declined significantly.

With inflation, this perverse tax effect penalises interest-bearing savings and investments. I strongly suspect that one of the reasons why we are still paying such high real interest rates in New Zealand is that for much of the seventies and eighties the after-tax-and-inflation return on interest-bearing savings was substantially negative. New Zealanders are still very wary of being caught with fixed-interest savings again.

These biases against fixed-interest investment and in favour of borrowing, the absence of a capital gains tax, and the over-taxation of many types of productive investment (largely because of depreciation allowances based on historical cost), together mean that inflation creates a strong bias in favour of real estate investment and against investment in plant and equipment. Regrettably, real estate investment generally contributes little to increasing the economy’s output.

(Emphasis highlights the part of the quote used by The Standard)

So the point Brash was making is that in a world of high inflation the lack of a capital gains tax is just one reason that could result in a basis in favour of real estate investment.
But also note this comment from a 1998 Reserve Banks publication The Real Story – saving and investing now that inflation is under control:

On the flip side, because New Zealand does not have a capital gains tax, when inflation was high capital gains were particularly attractive. With inflation now low, capital gains are much reduced. The lack of a capital gains tax no longer matters so much when people are making investment decisions.

So a capital gains tax may have a place when inflation is high but is not an issue when it is low. Thus the obvious response to The Standard is that as we now we are in a low inflation environment a capital gains tax isn't the issue it was when inflation was higher. Thus is Brash really a hypocrite? Or is has just noticed a drop in inflation and changed his view accordingly?

9. Labour's tax plan just silly. Seamus Hogan at Offsetting Behaviour isn't too fussed about Labour's NZ$5,000 tax free threshold policy. But he's not too fond of raising the top rate, or taking GST off fruit and veg.

The proposed increase in the top rate is silly. There is such a small proportion of the country’s income earned at those levels that the policy can hardly be expected to bring in a significant amount of revenue, but will surely lead to the usual tax avoidance games. It is hard to escape the conclusion that this is a purely symbolic policy designed to make people with incomes less than $150,000 feel good that those with more income are being taxed more. If so, it is appealing to a rather ugly side of human nature. 

The zero-rating of fresh fruit and veg might just about be the most appallingly cynical election bribe the country has ever seen. I am not saying that it would be the most costly election-bribe policy enacted; that mantle would have to go to either National Superannuation or interest-free student loans. Rather, I suspect that this policy would have the highest cost relative to benefits, with benefits defined according to a policy’s proponents’ underlying preferences. Consider first the costs of the exemption: of relatively small importance is the lost revenue that will need to be made up elsewhere. More important, is the additional transactions costs in compliance, enforcement, and definitions that the policy would introduce.

Much worse, is the erasing of the line in the sand that currently stands between a clean GST and one with messy exceptions; once we start on this slippery slope, there will be no clear line left to defend against creeping exemptions and tweaking of the GST system likely to be proposed in the future. Against this, are two putative benefits. First is the idea that the exemption will make the GST more progressive.

I haven’t seen any data on this, but I would extremely surprised if taxing fresh fruit and were not a progressive tax; if one wanted to use the tax system to redistribute from poor to rich, I suspect the proposed exemption would rank second only to high cigarette taxes as a method for achieving that objective. The second supposed benefit is the health benefits from eating more fresh fruit and veg.

The trouble is that nutritionists tell us there is no nutritional advantage to fresh over frozen or canned, so unless someone can show some convincing data giving a significant elasticity of demand for fresh fruit and veg that does not result from a substitution away from preserved fruit and veg, we would need to dismiss this benefit as well. 

Video

10. Talking John Birch Paranoid Blues. With all this Mossad hype doing the rounds at the moment, here's an old favourite written by Bob Dylan about being paranoid. The best version's on his live Philly album from (I think) 1964.

Have a good weekend.

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21 Comments

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Highlight new comments in the last hr(s).

 3) Minister Joyce - what a school- boy in economics !

Joyce not only mixes up spreadsheet, but also basic economic rules – he’s is saying proudly: We build more prisons, public transport and energy/ telecommunication needs - billions more NZinfrastructure.

Public transport, energy/ telecommunication needs are manufactured by foreign companies/ skilled workforce and prisons constructed for the jobless NZworkforce increasingly roaming the streets.

Read 2)

 Youth unemployment - a national problem.

The government and policymakers are so much out of touch with that one.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10740553  24.7.2011

Without a better economic strategy there is a risk of unemployment, especially among youth is going to be a national problem soon.

The NZpublic needs more and skilful job opportunity.

 Our new Skills for Growth programme gives young people a real chance at getting the skills they need for a career --- sounds great ???????

 http://www.beehive.govt.nz/sites/all/files/YouthEmploymentPackage.pdf

 ..and then where are the jobs PM – back to camps – army – Australia/ Europe – unemployment – **street - crime – prison ??

**PM - where are the positive, encouraging, educational programs on our national TV channels for the youngsters ?  I think it is too much for the NZpublic, to be confronted almost on a daily base and on prime time with crime/ violence and other stupid programs.

There is nothing coming from the government, which really goes hand in hand with a long term strategy - seeking real prosperity and wellbeing of the nation.

---

 Looking into current developments on many fronts – the world will never recover again, simply because among the powerful in societies ethic and moral requirements and standards don’t prevail.

Don't be a wally Walter...instead of biffing rocks at JK and demanding govt create jobs..go tell the lazy bums in Kaikoura about the potential employment and hefty income to be had if only they could shift off their arse.... http://www.stuff.co.nz/national/30846/Soaring-demand-for-possum-lifts-prices

 How was your trip to Obama with John Key as he’s personal friend and adviser - e extremely smiley I guess ?

 

Yes, how dare you question or criticise Saint John?

Wolly will often tell you that he criticises and despises all politicians, so long as they aren't National Party politicians. Wolly is Fair and Balanced.

Bash em all I say...flog them in the streets.

National made the error of promising to keep Helen's pork offerings...then found the country couldn't afford it...too late to change tune..they have been stuck as have we in that socialist shit since Queen Helen took power.

Fabulous news that Goofy et al have been daft enough to think their CGT would float more than 24 hours...gift for National for sure...end of Goofy...oh dear how sad...perhaps Queen Helen will provide. We all look forward to a Little fun as cunny the pretender makes a run to be top socialist.

But back to Possum fur...what is it now $200 a kilo....is that more than Merino....no doubt the pinkygreens will demand protection for possums...the red ones!

So in other words you want us to believe that National aren't as great as they could be because of the evil legacy of those bloody Labour socialists, and everything is the fault of Clark and "Goofy", whereas poor old Saint John is a great man - a saint, even - doing the best he can for NZ and his fellow Kiwis.

On the rare occasion when you grudgingly concede that National have somehow shagged something (in a bad way) you are quick to claim that it was not their fault, it was Evil Labour again. Every sentence uttered or written has to include "Goofy" in it somewhere. And never, ever, will you admit that Labour or any of its existing or former members ever did anything right or good. You just can't bring yourself to do it.

You're just like any of the drooling morons of Fox News; always shrieking about being "fair and balanced" while doing everything you can to talk up the right-wing conservative nutjob side, and trashing the rest.

Stop pretending to be objective and unbiased, Wolly, because you've fooled no one at all and just make yourself look silly. Come out of that closet and honestly express to the world your undying adoration of Saint John Key. It'll make you feel so much better.

 Yes, Wolly is always quick to make sure someone’s valuable contributions are ridiculed, but is hardly interested to continue the dialogue – but that’s what’s happening occasionally with small people.

 

 "Brownlee pulled these names out of his arse"...can he reach that far ?

So that's where Shipley was hiding out.....yuk!

 Yes Wolly – I reckon he’s in a strong position to do that.. 

I think she is quite tall and was sticking out a wee bit already – easy pick !

   He'll be in a strong position when he leaves the Beehive pig trough...future board level appointments!

 "Police are searching for a man who robbed a Bank in the Auckland suburb Ponsonby this afternoon." herald

ha.... I thought it read:

 "Police are searching for a bank which robbed a man in the Auckland suburb Ponsonby this afternoon.".....!

 

But in rare cases, they are far more sinister, because their underlying cause is a structural imbalance which cannot be solved by conventional means.

Such recessions, which tend to associated with catastrophic financial events, are dangerous because they herald a long period of economic dislocation and collapse. Their consequences stretch deep into the realm of politics and social life.

http://blogs.telegraph.co.uk/news/peteroborne/100098260/this-crisis-will...

 

The euro crisis will give Germany the empire it’s always dreamed of

 

 

When the crash came in October 1929, they felt thoroughly vindicated, and waited for the dust to settle. The following spring, when share prices had consolidated at around a third lower than the all-time high reached the previous year, they reinvested the family savings, probably feeling a bit smug. Then, on April 17, 1930, the market embarked on a second and even more shattering period of decline, by the end of which shares were worth barely 10 per cent of their value at their peak. Those prudent investors who had seen the Wall Street Crash coming were wiped out.

There was one crucial message from yesterday’s shambolic and panicky eurozone summit: today’s predicament contains terrifying parallels with the situation that prevailed 80 years ago, although the problem lies (at this stage, at least) with the debt rather than the equity markets.

 

 

amoundernesslad

Today 01:01 AM

Recommended by 
18 people

 

That is a simple case of EUSSR style rewriting of history to support wishful thinking, sailor_steve. England was never a European power. What happened in 1066 was that Norsemen from the north of what is now called France came across the English Channel and deposed the ruling Norsemen who had originated in the Scandinavian areas. The battles the English had in France were simply William the Bastard's, as he was originally known because of his illegitimate birth, descendents trying to hang on to the lands they owned in the tiny part of Europe in the north and west of France which were being overrun by the remaining nobles there. 

One it was decided that those attempts were no longer worthwhile, during the time of Henry VIII, we no longer had any interest in permanent links with any part of Europe, even with our oldest European ally Portugal. 

Since that period the only times we have involved ourselves in Europe was when one of the Western European Nations, Spain in Elizabethan times and more recently France under the Louis and Napoleon and then Germany under the Kaiser and then Hitler were either becoming so powerful that it looked like one or the other of them could take complete control of Europe or were attempting to interfere with our trading with the rest of the world. 

Britain has never been interested in being a permanent part of Europe either politically of economically until we were fooled into entering what we were assured was simply a trading area without trade barriers and with no political aspirations. We were lied to, pure and simple, as is the EUSSR’s stock in trade. Since Elizabethan times any European wars we have become involved in have been when first France and then Germany made war in Europe in order to create a total European Empire. We would make alliances with whichever of them was weakest and with the smaller European countries which were unable to defend themselves individually. Once such threats had been resolved, we in Britain, would remove ourselves from the European scene and leave the european Countries to get on with it. 

Being involved in Europe has never been an English, or even British, interest and, in truth, still isn’t for the majority of the population. We have shared no long term ties with any country in Europe, except possibly with Portugal our oldest ally, and have shared no long term common political objectives. We have never really been interested in tiny little Europe or with it’s petty squabbling, we have always been more interested in the big wide world outside of Europe and only in the last four decades when we became further and further ensnared into the spider’s web of the EUSSR that we have become ever more isolated and cut off from the billions of people in the world we once counted as our trading partners and, indeed, friends and allies who stood with us through thick and thin when the Europeans abandoned us. 

We were better off during the centuries when we distanced ourselves from Europe and would be far better off, and indeed a more free people, if we did so now. Personally I have no wish to become an inconvenient add-on to a Franco-German Greater European Empire with whom I have nothing in common and no historical ties. I can cope with them as next door neighbours but certainly have no wish to be forced to live in the same house as them.

http://www.rollingstone.com/politics/blogs/taibblog/holiday-in-scambodia...

 

 

Corporate Tax Holiday in Debt Ceiling Deal: Where's the Uproar?

Taibblog

by: Matt Taibbi

 

 

http://www.guardian.co.uk/commentisfree/2011/jul/20/scandal-exposed-scal...

 

 

If it were not for the uncovering of this cesspit, the Cameron government would be preparing to nod through the outright takeover of BSkyB by News International, taking its dominance of Britain's media and political world into Silvio Berlusconi territory. But what has been exposed now goes well beyond the hacking of murder victims and dead soldiers' families – or even the media itself. The scandal has lifted the lid on how power is really exercised in 21st-century Britain – in which the unreformed City and its bankers play a central part.

Errrr....hey maybe the pinkygreens and carbon freaks have got it back to front with this greenhouse fear....

Seems according to one  Milutin Milankovitch....we are heading into an ice age...it could be just one thousand years away...don't laugh you hear....this is serious stuff...we gotta prepare now....we need to pump up the CO2 level to keep the temps up and it could take all that time to make a difference....

 http://www.marketoracle.co.uk/Article29447.html
 

Woll - just stick to what you're good at.

Low-level put-downs, using shallow rhetoric, of politicians long departed.

Leave Milankovitch to those of us who have studied such things - although if you want to become less ignorant, Bryson's 'A Short History of Nearly Everything' might be a good start.

Greek bailout splatters up the walls...!

"Jens Weidmann detailed his concerns in a statement issued after European leaders agreed the latest €159bn (£140bn) plan to stem Greece's debt crisis and contain it before it spreads to Italy and Spain.

"By transferring sizeable additional risks to aid-granting countries and their taxpayers, the euro area made a big step toward a collectivisation of risks in cases of unsolid public finances and economic mistakes," Mr Weidmann said.

"That's weakening the foundations of a monetary union founded on fiscal self-responsibility. In future, it will be even more difficult to maintain incentives for solid fiscal policies."

Mr Weidmann, a council member at the European Central Bank, added that it was "decisive for monetary policy" that additional risks were not transferred to the euro system and that the dividing line between monetary and fiscal policy was not "blurred any further".

His comments contrast with the views of the Chancellor, George Osborne, that last week's bail-out represents "a small step on the road to further fiscal integration for the eurozone".

 

 http://www.telegraph.co.uk/finance/financialcrisis/8656989/Eurozone-debt-crisis-Greece-bail-out-is-a-risk-to-EU.html