Free Press, ACT’s regular bulletin

act-new-zealand

Mon Nov 28 2016 13:00:00 GMT+1300 (New Zealand Daylight Time)

Free Press, ACT’s regular bulletin

Monday, 28 November 2016, 1:30 pm
Column: ACT New Zealand

Tax Cuts Endure Earthquake

News of the Kaikoura Earthquake has only temporarily derailed what will be one of the biggest issues in election year. Early estimates of $3 billion in recovery costs won’t come close to absorbing $20 billion of surpluses coming down the line over the next four years. The yesterdays of Labour, the Greens, and New Zealand First inventing things to spend enormous surpluses on are back. They will campaign on spending enormous amounts of money – yours.

Early Attempts

The Greens have already started. Gareth Hughes suggests that taxpayers should pay the interest on tertiary graduates’ student loans while they save a mortgage deposit. Students would be left with a student loan, a mortgage and higher taxes. There is no free lunch and banks would take these things into account when setting deposits and interest rates, leaving graduates no better off aside from having the interest expense temporarily met by the taxpayer.

Back of Envelope Costing

Total student loan debt is $15 billion dollars and the Government’s cost of borrowing is just under four per cent. Anyone with a student loan would be mad not to take advantage of the scheme, and it would cost the taxpayer $300m if half of them did. Using taxpayer money to bribe the most privileged groups in society is pork barrel politics at its worst.

Faulty Envelope

In case anyone doubts this is pork barrel politics, the Greens even produced a handy online calculator to see how much you would ‘save’ by deferring interest payments. It seems they didn’t understand that there are no student loan repayments due on the first $19,084 of income, something they corrected after ACT helpfully pointed out the error to Newstalk ZB.

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Tete-a-tete

In this week’s Sunday Star-Times column, David Seymour argued for cutting taxes: “the New Zealand Government spends $17,000 a citizen a year. $85,000 on a family of five. There are lots of ways that Government could do things smarter, but the argument it could solve all problems if only it had a bit more money is wearing thin.”

ACT’s Approach

ACT would like to seriously flatten taxes and reduce spending, but we know we live in an environment of MMP. We also know that fiscally conservative voters have an eye on Government debt. A sensible policy for dealing with a surplus would be 1/3 tax cuts, 1/3 debt reduction and, as a compromise, 1/3 new spending. Normalising such a rule would be a powerful long-term hand brake on taxes.

In Case You Missed It

Every four years the Treasury publishes its Long-term Fiscal Outlook. The Outlook forecasts likely Government finances with demographic changes and the like forty years out. The gist, if nothing changes the New Zealand Government debt will be 206 per cent of GDP, worse than present day Zimbabwe (203 per cent) Greece (179 per cent), Italy (133 per cent) and Portugal (121 per cent). Unless we start dealing with such problems there will be no tax cuts for about 40 years.

Surely Not?

The Prime Minister has rubbished the report, saying Treasury gets everything wrong, but why pay them to produce the report if there’s no value in it? Will he amend the Public Finance Act so that Treasury doesn’t have to produce a Long-term Fiscal Outlook?

Looking into Our Future

ACT believes politicians have an obligation to look into the future and confront hard challenges rather than avoiding them. The most obvious adjustment to current policy would be to raise the age of entitlement for Super. Most developed countries are responding to demographic changes by raising their retirement ages. Young people know the settings will change eventually, and are tired of not being able to even talk about it. See David Seymour’s full piece on the report here.

3 Strikes at Work

Figures suggest that ACT’s Three Strikes law is deterring reoffenders, but it has also just passed its toughest test. One criticism has always been ‘what if someone commits two serious crimes, is sentenced, then commits a less serious crime leading to a maximum non-parole sentence?’ As Three Strikes only applies to violent and sexual offences it is difficult to commit a strike offence that isn’t serious.

Someone Managed It

The first person to get a third strike pinched a prison warden’s buttock, not to be minimised, but at the lower end of sexual assault offences. In the event, the judge applied the law’s manifestly unjust clause, meaning that the offender is eligible for parole after the normal one third of his sentence. All of the doomsayers on this law will have to get used to the idea that it works.

Bureaucratic Injustice

Last night’s episode of Sunday featured Cliff Robinson who, in his 80s, continues to care for his two disabled adult children. Despite being best-placed to act as carer, the Government won’t pay him the same way they’d fund an outside carer coming in to do the same job. This kind of arbitrary bureaucratic injustice is cruel treatment for a father who has saved taxpayers enormously by bearing responsibility for his children instead of walking out (as, sadly, many others in his situation would do). Cliff is making the best of circumstances beyond his control. If he doesn’t deserve a safety net, then what are we paying taxes for?

Electoral Deals

Last week Free Press confidently predicted that James Shaw would stand in Ohariu, creating a three way dogfight with the National candidate and incumbent Peter Dunne. The theory was subsequently reported by the sages in Wellington gossip sheet Trans-Tasman, and Richard Harman’s very good service Politik. Sadly the Greens have let all of us down, with Shaw now standing in Wellington Central.

Marital Terrorism

Last election in Wellington Central, National polled 15,000 party votes, the Greens 12,000, and Labour 9,000. National’s candidate had a weak showing and most Greens voted for Labour’s Grant Robertson who polled a healthy 19,000 electorate votes. With National considering a new and ambitious candidate in Nicola Willis, and Shaw now being a co-leader of the Greens, it is quite possible that enough voters will give their electorate vote to their party’s candidate, handing Wellington Central to National. Of course the party vote matters more than the electorate vote, but what does it say about the Labour-Green marriage that they are doing this to each other?

ends

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