Sensible NZers
May 30th, 2006 at 7:10 am by David Farrar63% of NZers don’t believe Michael Cullen, when he says tax cuts are unaffordable. This is pleasing, even though the figure should be 95% as all but the most partisan pundits say it is obvious you can afford tax cuts with a $9 billion surplus.
Our beloved PM of course disagrees and attacks the polling company. Now it is true Colmar Brunton does tend to have National 2% or so more favourable than other polls, but when you have 63% stating a view, that can’t be explained away by such variances.
The Dom Post gets one thing wrong in its story. They claim:
The poll also debunked National claims that thousands would flood across the Tasman after tax cuts in Australia. Only 17 per cent said they were considering shifting.
The last time I checked 17% of four million is around 680,000.
Tags: Polls
May 30th, 2006 at 7:23 am
The Dom Post must be using Michael Cullen’s calculator!
Vote:May 30th, 2006 at 7:39 am
Of course, Clark has no problems with the Three/TNS poll that equally tends to favour Labour and minor parties – and even there, National and Labour are deadlocked. And what’s the cunning plan: Trot out the failed scare-and-smear tractics of the past.
Vote:May 30th, 2006 at 7:50 am
Thats exactly the plan Craig. Remember the leaked labour minutes. Make National look like the enemy of the people. They used to try to make National supporters out to be selfish over wanting Tax cuts but with 9 billion surplus even the most stupid person can see its affordable and that tactic no longer works.Remember socialists have no imagination which is why they cling to the ideas of the past.
Vote:May 30th, 2006 at 7:53 am
So the poll says that nearly one in five New Zealanders are now activly considering leaving their country and presumably taking their families with them and neither the Dom or the government see this as a problem?
Interesting.
Vote:May 30th, 2006 at 7:57 am
The election decided whether tax cuts for single taxpayers were desirable. Labour offered $6 billion for working families and won. National offered its cuts mostly to the rich and companies and lost.
Why are we now saying the voters do want national policy?. We live in a representative democracy where the voters decide the policy ( when a party sticks to its election policy and National has a big credibility gap here) and that is what happens.
Mr Farrar can argue that the voters were wrong, but please dont say Cullen should break its election policy
Vote:May 30th, 2006 at 8:06 am
Mcphee said “National offered its cuts mostly to the rich and companies and lost.”
Given that the highest tax bracket cuts in when you earn about 1.5 times the average wage that hardly makes one rich. Rich compared to a bludger perhaps, but not in any real sense. Rich means you don’t have to work. That you live off investments and passive income. Working fifty or sixty hours a week and making 70 grand are not the actions of a rich person.
Vote:May 30th, 2006 at 8:06 am
McPhee – I’m afraid you’re labouring under a misapprehension (yes, bad pun). I don’t recall voting on three years’ worth of budgets at the last election. The fallacy of your position is clear when we consider that, on your analysis, Labour should not dish out tax cuts EVEN IF the budget surplus reaches $50 billion (to use an extreme figure).
Are you going to sue Michael Cullen for broken promises given that as recently as last week he acknowledged that consideration could be given to tax cuts in the right economic circumstances?
Vote:May 30th, 2006 at 8:10 am
McPhee
Vote:There is the small matter of Lair-bour grossly misrepresenting the facts about tax cuts leading up to the election, even refusing to release treasury figures.
The chickens have come home to roost.
May 30th, 2006 at 8:11 am
That 17% considering going to Australia is frightening, as they are most likely to be mid-skill jobs and tradesmen – the people who actually do the work.
New Zealand will be left populated only with telephone cleaners, management consultants, hairdressers and the like.
Vote:May 30th, 2006 at 8:16 am
17% represents a lot of broken families if they decide to go and may even be critical mass for a lot more to go. Even the Labour Party is split on tax cuts with 45% saying yes they can be afforded and 47% saying no. That represents a big problem for Helen Clark. I am assuming they will act but it will be grudging, there will be much snarling about the rich (which pay way beyond their share), tax cuts Labour Party style.
Vote:May 30th, 2006 at 8:33 am
What a load of crock. The question is “can we afford tax cuts *and* to invest in the country?” Labour said what they were going to do (and yes it surely at least applies to one budget, and yes Graham, the voters did effectively vote for three budgets, or do you not understand what the implications of a 3 year term are?).
Labour has put together a Government based one the election result and they are implementing the policies they promised to implement. Somehow that is dishonest?
I find the moral relativism on this site astounding.
Under National people leaving for Australia went from 17,000 per year to 30,000 per year. It dropped in about 2001 and has picked up again. The drift of people from small economies to large ones is not going to change, what is remarkable is NZs continuing ability to replace these people with an equally well educated force so that net migration is positive.
You should be congratulating yoursleves for making this such an attractive country.
Vote:May 30th, 2006 at 8:53 am
I’m not convinced we are replacing them with an “equally well educated force” or people with relevant skills, certainly not tradespeople which are the backbone of the country.Tried to get a builder lately? Also new immigrants are by definition “new” and as such have not been immersed in our culture long enough to know what it is to be a “New Zealander”.Walking down Queen street just before the weight of the statistic struck me. One out of five people I walked past didnt want to be here. That is very serious and has drastic connatations for NZ.
Vote:May 30th, 2006 at 8:55 am
The Dear Leader and Sullen Cullen are starting to panic, lia bour has a bad case of gangrene from the top down to the bottom. No amount of antibiotics ( proparganda ) will save their sorry arses, may they sufferer a long and painful demise.
Vote:May 30th, 2006 at 9:02 am
david
“Walking down Queen street just before the weight of the statistic struck me. One out of five people I walked past didnt want to be here.”
Maybe you were the one in five…
This whole brain drain thing is ridiculous. Talented people will always go overseas – there a many and varied opportunities there, there are different cultures to experiences, different jobs to do. Tax cuts will not stop people leaving. Particularly not the $10 a week Australia is offering.
I plan to go overseas, but not because of tax cuts, because there are things I can experience there that I can’t in NZ.
The brain drain has been around for decades. It used to be called an OE.
Vote:May 30th, 2006 at 9:07 am
Why do the left persist in the lie that the electorate voted for no tax cuts when all the parties bar Labour had a policy of tax cuts?
They persist because they can’t help themselves, they are so tuned for lying now that they can’t do anything else.
Vote:May 30th, 2006 at 9:07 am
Just because you can afford something doesn’t mean you should.
Vote:Of course the government could afford tax cuts, but that in no way means its the right time to do so. If you cut it during the good times, then your’re not in a good place for the bad.
May 30th, 2006 at 9:08 am
Perth was lovely last week.
Vote:I gave notice on my job yesterday and I’ll be there in August.
As I left my Auckland flat this morning, outside was parked a removal van.
“Ausmove” it declared, “specialists in removals to Australia.”
Methinks they have a busy few years ahead.
May 30th, 2006 at 9:16 am
This pathetic Govt will give tax cuts in 2008, the pathetic Labour voters will think its great. How wonderful that Labour has stolen National policy just in time for the election. The sad thing is that by 2008 our GDP growth will probably be negative. But hey its not about being able to afford them, its about winning votes.
Australia is calling !
Vote:May 30th, 2006 at 9:19 am
“The last time I checked 17% of four million is around 680,000″.
Really? So we have 4 million NZers all capable of working? Try using the labour force figure, or more correctly those in paid employment, because I don’t think too many unemployed will be going overseas.
Vote:May 30th, 2006 at 9:47 am
Whatever way you look at it, 17% of the employed people considering leaving is a mass exodus. Labour’s policy of eliminating the talented people who are disgruntled with the steady slide into socialism is working. Perhaps it’s all part of the plan and this is why megabrain Dr. Cullen asserts that we can’t afford tax cuts. Tax cuts will be a non issue when NZ has 100% of it’s population on some form of welfare. I look forward to WFF advertising in 17 different languages.
Vote:May 30th, 2006 at 9:50 am
Noddy – I’ll resist your patronising tone and just offer a point of clarification: my reference to “three years’ worth of budgets” was not to the fact that we now have a Labour-led government sitting on the treasury benches for a three-year term. I was actually pointing out that Labour didn’t go into the election campaign with an unconditional blueprint for economic tranformation over the full three-year term. Michael Cullen himself is on record as publicly stating that Labour’s tax policy will depend on future economic circumstances.
Vote:May 30th, 2006 at 9:50 am
Try using the labour force figure, or more correctly those in paid employment,
Ross, what’s the point there? Nobody indicated that it was working population up until your comment
If we take the employed labour force only, do you think they’ll scarper across to Australia leaving their families behind?
And why wouldn’t an unemployed person head over – if they had a chance to get a job, make money and not be stuck on a social welfare benefit?
Edit: Getting a comment submission error. If this comes through twice, sorry. I did check the site to make sure it wasn’t there before trying again.
Vote:May 30th, 2006 at 9:57 am
Burt, You should check with Darren, he may have some spare space in his container. AUS would be a great place for whining selfish bleaters.
Vote:Good luck on your trip.
Long may more of you follow
May 30th, 2006 at 10:00 am
“Nobody indicated that it was working population up until your comment”.
Actually, DPF referred to the entire population. Personally I don’t think putting babies into work would be very productive.
However, I take your point that a large number of NZers could leave in the future. But there may be a variety of reasons for that, not just money. And let’s not forget that they are only “thinking about” going overseas. Many of these I suspect will actually remain here.
Vote:May 30th, 2006 at 10:00 am
“Nobody indicated that it was working population up until your comment”.
Actually, DPF referred to the entire population. Personally I don’t think putting babies into work would be very productive.
However, I take your point that a large number of NZers could leave in the future. But there may be a variety of reasons for that, not just money. And let’s not forget that they are only “thinking about” going overseas. Many of these I suspect will actually remain here.
Vote:May 30th, 2006 at 10:01 am
“Nobody indicated that it was working population up until your comment”.
Actually, DPF referred to the entire population. Personally I don’t think putting babies into work would be very productive.
However, I take your point that a large number of NZers could leave in the future. But there may be a variety of reasons for that, not just money. And let’s not forget that they are only “thinking about” going overseas. Many of these I suspect will actually remain here.
Vote:May 30th, 2006 at 10:30 am
Weizguy, it used to be OE because they came back. Now they dont. And I dont want to go anywhere, afterall our family have been here since 1839. I would rather stay and fix things so our country is better. I dont think Labour is the answer.
Vote:May 30th, 2006 at 10:39 am
“Really? So we have 4 million NZers all capable of working? Try using the labour force figure, or more correctly those in paid employment, because I don’t think too many unemployed will be going overseas.”
You might be right that unemployed people probably aren’t thinking about going overseas. If so, then they’re already counted in the 83% who asserted as much.
The inherent suggestion that skilled workers won’t be taking their unemployed partners and young children when they head overseas is likely also wrong. What about those people who don’t want to uproot their families? They too are among the 83%!
Also – thanks DPF for posting on the ‘real’ meaning of this statistic – I immediately thought the same thing as soon as I read the article.
Vote:May 30th, 2006 at 10:40 am
Noddy and others have pulled out the old “it’s tax cuts or investment” line. (1) Tax cuts are an investment in economic growth and (increasingly) retention of population, and (2) the tax cuts can come from the *surplus*.
Even if you try to argue with point 2 – that the surplus isn’t technically available cash and is forecast to decrease then: (3) why does Treasury say we can go to a 20% flat tax without cutting any expenditure at all? + (4) why not fund investment with a long term payoff out of long term borrowing like any sensible business or household would? + (5) see point 1 i.e. cut tax rates = boosted tax revenue within a few years due to increased economic activity. This should be done in ‘good times’ so it has a chance to payoff in time for bad times.
Vote:May 30th, 2006 at 10:54 am
Weizguy, it used to be OE because they came back. Now they dont. And I dont want to go anywhere, afterall our family have been here since 1839. I would rather stay and fix things so our country is better. I just dont think Labour is the answer.Sometimes beautiful scenary is not enough.
Vote:May 30th, 2006 at 10:58 am
JohnD. Like the party you support you have no idea what you are really saying. If I split the country, taking my immediate family with me, a business that employs 4 people will be shut down. My wife and I will no longer contribute approx $70K in tax between us each year. Two children who are both in the top 5% of their classes will leave and the funds already put aside for their university education will be spent in Australia. You, like the party you support have your head so far up your ass that you don’t actually care about reality. I knock Labour policy so I should leave right ?
Vote:May 30th, 2006 at 10:59 am
“let’s not forget that they are only “thinking about” going overseas.”
17% of people said they were thinking about moving overseas. People THINK about a lot of things. But moving country is not something you do lightly, it is a big change. It is not a thing you would seriously think about unless it is a realistic option. Most people who said they were considering moving would therefore be genuinely considering the move, otherwise they would have dismissed the idea quickly and answered in the negative.
Vote:May 30th, 2006 at 11:14 am
“17% of people said they were thinking about moving overseas. People THINK about a lot of things. But moving country is not something you do lightly, it is a big change. It is not a thing you would seriously think about unless it is a realistic option.”
Right. But you can think about realistic options without actually taking them. I’ve been thinking about moving out of NZ again.. well… since I arrived back in 2001, actually. I had originally planned to be here two years and then head off again, but I’m still here. It’s certainly still a serious option, but now I’m just looking at 2008 instead as I’ve got interesting things to do here still. So if you asked me I’d probably be part of that 17%, but it’s got nothing to do with tax.
Vote:May 30th, 2006 at 11:16 am
Lets say that of those 17% who are “considering” going, only a proportion actually do it. It would only take about 5% of those (thats 5% of 17%) to DOUBLE the number currently leaving.
Vote:May 30th, 2006 at 11:31 am
Indeed err. But there is no point trying to dismiss the 17% figure because not everyone who answered yes will be leaving next week.
Vote:May 30th, 2006 at 11:39 am
“Indeed err. But there is no point trying to dismiss the 17% figure because not everyone who answered yes will be leaving next week.”
Agreed. But I’d be interested to see a historical series on this particular question, which I suspect is unavailable. Without that context it’s hard to draw a lot of meaningful conclusions as to exactly how seriously the number should be taken.
Vote:May 30th, 2006 at 12:04 pm
“Most people who said they were considering moving would therefore be genuinely considering the move, otherwise they would have dismissed the idea quickly and answered in the negative”.
Not necessarily. It’s only a poll. It’s not like Who wants to be a millionaire? Those answering in the negative may have wanted to send a message that they are dissatisifed even though they may have no intention of moving overseas. Besides, those thinking about moving will want to know about indirect taxation (including property taxes), listening to people speak with a foregin accent, watching Australian sport, and a myriad of other factors. Of course, finding work for both partners would possibly be the biggest hurdle for many couples. Direct taxation is only one factor to be considered.
Vote:May 30th, 2006 at 12:07 pm
It would also be interesting to know how many of those 17% are Tory voters. The vast majority I suspect. That doesn’t make the poll invalid but it puts into some context.
Vote:May 30th, 2006 at 12:11 pm
There is a big difference between something being ‘affordable’ and it being a ‘good idea’. I could ‘afford’ to buy a new porsche, if I was prepared to revalue my house, use the difference as the deposit, and sign up for all that debt repayment. That wouldn’t bankrupt me, but it would be a bloody stupid idea. Even if I used all that equity to invest soundly it would still make my life a lot harder in the meantime.
Labour is not ‘forced’ to set tax at the current levels. They *choose* to, and should not be slightest bit ashamed about that, if there are sound plans for all that money. They are the recently elected government, after all.
Vote:May 30th, 2006 at 12:25 pm
Even if I used all that equity to invest soundly it would still make my life a lot harder in the meantime.
Vote:Thanks Ben for the classic demonstration of a Labour voters mindset. Unwilling to subject oneself to risk or near term hardship for the prospect of long term wealth or growth. Yours would seem to be the classic Unionist view that that workers are entitled to the means of production because they can’t be ass*d doing the real work or taking the risks to build them in the first place.
May 30th, 2006 at 12:29 pm
And sound plans would be ??????
Paying welfare to people earning twice the rich bastard threshold – not sound.
Build mega roads at a time when car use should be discouraged in favour of public transport – not sound.
Pouring more and more money into health with no measurement of outcomes – not sound.
Discouraging business growth through continued high taxation – not sound.
Holding onto the cash and scoffing at 17% of the population who (apart from paying that money in the first place) are disgruntled and thinking about leaving – not sound.
They do how ever seem to have a very sound policy for staying in power. It’s called targeted spending and the reciepients might call it sound but the rest think its shite.
Vote:May 30th, 2006 at 12:32 pm
Agree with Ben that Labour have “..plans for all that money”
Crux of the argument is the use of the word sound as in “sound plans”
We are getting a lot of sound but I’m damned if I like the plans.
Vote:May 30th, 2006 at 12:32 pm
Michael (right wing) – you forget that the telephone cleaners inherit / populate the earth…
Vote:May 30th, 2006 at 12:38 pm
Ben
Vote:Labour are not an elected government, they were simply the largest single party who were able to persuade 3 other parties to support them on confience and supply so Labour could lead a government.A significant number of those MPs being list were effectively appointed and have espoused very different policies in some areas to labour. They are choosing to support Labour despite this in some instances and the voters will have the choice of renewing or not their mandate. The big downside to the system irrespective of which party is in power is that mistakes that damage NZ are usually not a choice the electors would have made and there is no effective way of electors doing anything about it for some years.
May 30th, 2006 at 12:45 pm
Darren, glad you like Perth, sounds good if even more isolated than NZ at times. I hope you will give credit to the Labor (Liarbor) Government in WA that has invested so much tax payer money into making it such a great place. Look forward to your glowing reports.
Vote:May 30th, 2006 at 12:46 pm
Thanks Rumpole for beating me to my next point
All those people who keep bleating that we shouldn’t challenge Labours “mandate” for taxcuts – remind me how 41.1% = majority again?
I know your math is terrible because otherwise you wouldn’t be supporting such an obviously morally bankrupt party. Anyone able to make 1 + 1 = 2 saw their hypocrisy a long time ago.
Vote:May 30th, 2006 at 12:52 pm
As you count your way to a “mandate” for no tax cuts don’t forget that even Winston was promising tax cuts before the election:
Vote:http://www.nzfirst.org.nz/content/display_item.php?t=1&i=2093
Ex1:
Now we say that we should take GST off petrol.
Ex2:
This means we must lower businesses taxes to 30%
May 30th, 2006 at 12:54 pm
“Of course, finding work for both partners would possibly be the biggest hurdle for many couples.”
Hardly the biggest hurdle, not even a hurdle really. If both partners could find work in NZ, they sure as hell could find it in Aussie.
“It would also be interesting to know how many of those 17% are Tory voters. The vast majority I suspect.”
Well duh! You could turn this argument on its head. I would expect those that voted for Labour (and who feel they must defend each and every action of their dear leaders) would feel obliged to say they werent thinking about leaving. They might still be thinking about leaving, but darent say it.
Vote:May 30th, 2006 at 12:57 pm
If I go, taking my partner, our tax goes. Our children, who have great ambitions, carry them out someplace else. I can earn around $15,000 – $20,000 more per annum in Melbourne. Add in less tax and my partner needn’t work, so one of us can actually parent our children instead of leaving it all up to the state and others. The children will be near family and friends who’ve already bailed. Why stay? Money is tight, access to outdoors is almost impossible, there is way too much negative comment on anyone who dares not to be a tramper or mountain cyclist and the whole country seems immersed in a terminally inert state.
Vote:May 30th, 2006 at 1:02 pm
A tax cut for the racing industry (Gambling) and increased welfare spending. Now that is a sound economic platform… Pass me a Tui will ya mate.
Vote:May 30th, 2006 at 1:15 pm
Yes Burt – but its one hell of a re-election platform…
Vote:May 30th, 2006 at 1:22 pm
Maybe you can all answer the question Don Brash couldn’t on Nat radio last night. What is the “correct” number of NZers migrating to Aussie? What target would National set? Was 30,000/year in the nineties too high or about right?
Oh, and trying to answer that question with something about breast cancer (FFS) won’t cut the mustard.
Vote:May 30th, 2006 at 1:30 pm
iig374,
I’m not a Labour voter and I don’t belong to a union. My business is quite risky enough without needing to invest in further risky assets, or to shackle myself with further debt. Many people are in this position, self employed or not.
I think my point is completely lost on you since you think everyone should run their personal finances like it was a business, and that government should do the same. Do you seriously think the average worker should risk bankruptcy constantly, just to get above average returns? What’s going to happen to all the bankrupts? And the people they owe money to? And what’s going to happen when the government goes bankrupt?
Taking on a lot of risk for return is something that I have no problem at all with private individuals doing. But to expect everyone to do it is ridiculous. What is a person nearing the end of their working life going to do if they go bankrupt? Starve?
Vote:May 30th, 2006 at 1:35 pm
Rumpole, you say:
“Labour are not an elected government, they were simply the largest single party who were able to persuade 3 other parties to support them on confience and supply so Labour could lead a government.”
That’s what elected means under our system. I know it’s hard to break the FPP mould, but do try, you’ll understand NZ a lot better then. All the same problems applied to the old system – it could claim to be ‘elected’ despite getting only 35% of the popular vote *and* less total votes than the other party. There were *serious* mandate issues then too, but that didn’t stop people from accepting that a newly elected government has the right to set policy.
Vote:May 30th, 2006 at 1:48 pm
Ben said: “That’s what elected means under our system. I know it’s hard to break the FPP mould, but do try, you’ll understand NZ a lot better then.”
Ben, MMP is only a minor extension to FPP. Labour campaigned with ‘Two Ticks labour’ at the last election. Are you suggesting Labour are also hanging onto FPP and therefore don’t understand NZ ?
Vote:May 30th, 2006 at 1:53 pm
“but that didn’t stop people from accepting that a newly elected government has the right to set policy.”
How does an argument against a policy get twisted into being an argument against our form of democracy? Simply because Labour is the governing party doesnt mean we have to accept their every whim.
The “Labour isnt the majority” point stems from an assertion that the people of NZ have voted NOT to have tax cuts. The truth is the people of NZ (as much as they can be said to have voted for any particular policy) have voted FOR tax cuts. The parties that campaigned on tax cuts (all – 1) gained more votes than those (1) that didnt. So if the mandate argument is going to be made at all, more than half of voting NZers wanted tax cuts.
Vote:May 30th, 2006 at 2:02 pm
Ah yes, times are hard, we’re packing up and leaving….What an odd bunch you all are. Things aren’t that bad here. I’m doing okay (and that, don’t forget, is the rightist ethos: I’m okay, that’s all that counts) and I am not considering moving to Australia. Then again, I’m one of those sneaky, “don’t know what it means to be a Kiwi” immigrants, so what do I know. Well, I know this: If what it means to be a Kiwi is constantly whingeing about how awful it is here, then thank Christ I’m not.
Vote:May 30th, 2006 at 2:03 pm
iig374, I should clarify my comment above. When I say “you think everyone should run their personal finances like it was a business”, I really meant:
“You think everyone should run their personal finances like they were a public company with demanding shareholders expecting above market returns.”
It’s unfair to say that most businesses are run in a highly risky fashion, quite probably a heck of a lot of very successful businesses have extremely conservative investment policies, refusing to indebt themselves any, building capital slowly, and eventually creaming it.
Most business owners that I personally know are like that – in general their cash goes straight in the bank or to pay off debt. These people are ambitious, but also patient and careful. Most of them, at some time or another, when they have been at it long enough, see a golden opportunity and take it, making their fortune.
They don’t expect above market returns every year, that’s just foolish and unlikely, like expecting to win on the horses all the time. And they certainly don’t run perpetual debt, preferring on the contrary to maintain cash reserves.
Vote:May 30th, 2006 at 2:06 pm
burt, I don’t get your point at all. Labour wants both ticks, sure. How is that FPP thinking? They want the electorates *and* the party vote. Not really hard to understand.
Vote:May 30th, 2006 at 2:18 pm
Kimble, you ask:
“How does an argument against a policy get twisted into being an argument against our form of democracy?”
It does this by being in your mind only. I don’t have any clue why you think that was my point. My point was that our system inherently gives a mandate to the government that it elects. If an election perpetuates the current government they have every right to think the population is mostly happy with their current policy and their promises. Not *all* the population, obviously. But definitely more than half. By ‘mostly happy’ I mean “they accept the compromise”, rather like I’m mostly happy with my car. Yeah, I’d like a ferrari, but I can’t afford it.
I don’t accept your ‘more than half wanted tax cuts’ argument at all. You’re trying to assert that some kind of voting majority voted for tax cuts? Why were they then unable to form a coalition of more than half of the seats? Tax cuts were not the only platform of most of the parties. You vote for a bundle of things when you vote for a party, so saying it’s all because of X policy is just false. I don’t even think most people that voted for National did it for the tax cuts. They probably like National’s policy on a number of things.
Vote:May 30th, 2006 at 2:20 pm
“What is a person nearing the end of their working life going to do if they go bankrupt? Starve?”
They would be less likely to go bankrupt if the government didnt take so much in taxes.
Are you arguing that government spending is less risky than individual spending?
That would only be true if you work on the assumption that the only outcome that matters is aggregate improvement AND that the government is the always best method of achieving that aggregate improvement. In other words, you have to assume that people acting in their self interest are incapable of providing more of an aggregate improvement in NZ society, than the government can. A distinctly anti-capitalist idea.
Vote:May 30th, 2006 at 2:24 pm
Bearhunter, the sum of your misconceptions about the rightist ethos could fill a library.
Vote:May 30th, 2006 at 2:26 pm
Ben – glad you clarified your position because the original wording was untenable as you saw.
However the original point was around the fact that you were portraying *any* borrowing for *any* investment purpose as being a bad choice. And indeed your final clarfication post still seems to take fairly close to this line.
Yes over-indebtedness is a highly risky proposition, and one that NZer’s continue to do in the housing market. However for some reason we have a poor record of taking out modest levels of debt funding for *great* investment prospects. Or for that matter releasing equity to allow growth.
In both personal finances *and* business finances.
I find it interesting in your rebuttals the assumption that a Government should run its finances like a person (rather than business); and that a business should run its operations differently to a person. In all 3 cases they should really be operating to maximise the returns to the stakeholders.
And to correct your Socialist mindset on what I just said “returns” are not “financial returns”, and “stakeholders” is very different to “shareholders”.
Vote:May 30th, 2006 at 2:28 pm
Ben, read closer. I said that the argument that Labour has a mandate for their “no-tax-cuts” policy is false. In fact, if the argument had to be made it would be in the other direction.
Vote:May 30th, 2006 at 2:38 pm
Beth,
So where the bloody hell are ya?
Vote:May 30th, 2006 at 2:38 pm
Ben – reading your posts is always somewhat of a surreal experience; thank you! As a point of interest does that level of cognitive dissonance hurt or leave you in a state of bewilderment at any time?
Sorry – onto attacking the discussion not the man again:
You’re trying to assert that some kind of voting majority voted for tax cuts? You somehow seem to assert that the majority voted against them – despite your “packages” offered by every party bar one including tax cuts.
Why couldn’t they form a coalition – because Labour were willing to offer more to Winston to break his pre-election promises than National. Note I see this as being a bigger indictment on NZ First than Labour – this was just good bargaining on Labour’s side. But to try and argue that Labour had *any* kind of mandate from the public against tax cuts is ludicrous.
The only mandate that could be distilled is that tax cuts were wanted – but maybe not as big and immediate as promised by National.
Vote:May 30th, 2006 at 2:43 pm
I voted National mainly because Don Brash said he would hold an inquiry into the Peter Ellis case and I’m confident there were others like me (at least I hope there were). Tax was a minor issue.
Vote:May 30th, 2006 at 2:47 pm
Kimble,
I’m arguing that government spending *should be* low risk. As with an individual you have to look at the entire portfolio when you assess risk, so it’s not wrong to have *some* risky assets, so long as it’s not all of the portfolio.
I don’t follow your final paragraph. Not being difficult, it just doesn’t seem to follow from the previous one.
I don’t think the government is the best means of achieving aggregate improvement, nor do I argue that. For exactly that reason, I think the government should mostly concern itself with keeping its risk profile low, which means keeping debt down, tax take up, until it’s either debt free or making money to cover the debts.
I also thing aggregate improvement is not the only concern of government. Compassion for unfortunates is another primary role.
Vote:May 30th, 2006 at 2:57 pm
Kimble, you say:
“Ben, read closer. I said that the argument that Labour has a mandate for their “no-tax-cuts” policy is false. In fact, if the argument had to be made it would be in the other direction.”
Yeah, I got it, and argued that what you’re saying is wrong.
Vote:May 30th, 2006 at 2:57 pm
iig374,
I don’t think all borrowing is bad. Even some government borrowing is OK, so long as it’s for capital purchases that are worth as much as is borrowed and will grow in value. That’s the caveat though – predicting asset growth is difficult, so there has to be a really good case for government to take on this burden on our behalf.
You mistake my rebuttals. The clarification was important – I was referring to business as shorthand for ‘big business’. Slip that into your summary and see how it works now. I don’t think government should be run like big business. It should be more risk averse. And I *argue* that point, I don’t *assume* it.
Vote:May 30th, 2006 at 3:08 pm
iig374, kimble,
I suffer no cognitive dissonance. I simply have my own opinions rather than a party line.
The mandate is for the entire bundle of policies. I don’t agree that NZ First emphasized tax cuts particularly highly, nor did UF. Greens didn’t either. So I can’t see the mandate for tax cuts being anywhere near as much of a majority as you say.
Vote:May 30th, 2006 at 3:46 pm
Come on, I’m still waiting for an answer. If the Nats were in power what would a “successful” number of migrants per year going to Aussie be? Maybe you would like to impose migration controls just like Muldoon had to impose currency controls to meet your unstated targets?
Vote:May 30th, 2006 at 3:51 pm
Noddy, I have an answer and it paraphrases your glorious leader.
Two – you and the creature known as err….. Heck you could even team up with Ackers to form the Three Blousekateers.
Vote:May 30th, 2006 at 3:51 pm
Listen Ben, I am not saying that there was a mandate for tax cuts. I am saying that there wasnt a mandate for a no-tax-cuts policy, for much the same reasons as you just cited. But if you wanted to make the argument that there was a mandate for a no-tax-cuts policy, the numbers don’t back you up. If anything they would strongly support the opposite. But again I am not saying that there was a mandate for tax cuts.
You dont suffer cognitive dissonance, you obviously quite enjoy it.
Vote:May 30th, 2006 at 4:06 pm
Whatever noddy, your question is bullshit, that is why no one is answering it. You KNOW there is no perfect number, but you ask the question anyway simply so you can say that if no one answers it then you must be right in whatever you have said. Lazy.
You imply that the numbers of people leaving mean nothing. There can neither be too many or too few. Taking this to its logical end, if 1.5 million people left NZ, that wouldnt matter either because there is no successful amount.
“Maybe you would like to impose migration controls”
We want to make NZ a place where people WANT to stay, and it is pretty obvious that quite a disturbing number of people dont WANT to stay. Why is this? Why do these people want to leave?
Actually fuck this. The fact that you think that that question is at all relevant shows you have no understanding of this issue.
Vote:May 30th, 2006 at 4:21 pm
No Kimble
The question is important.
noddy wants to know what level a National government would be happy with if they were in government. If they don’t have a target, then the criticism has no substance.
Why isn’t the National Party saying: “we will aim for X migration”?
Because they can’t put a number on it.
“We want to make NZ a place where people WANT to stay, and it is pretty obvious that quite a disturbing number of people dont WANT to stay. Why is this? Why do these people want to leave?”
It’s not the lack of tax cuts (for most anyway).
What is a non-disturbing number? When would you be satisfied with Labour’s performance?
Vote:May 30th, 2006 at 4:38 pm
The question is a Herring Rouge. All noddy is trying to do is follow the Labour line that 17% is not actually a lot. From Labour’s perspective its probably too low, afterall its not Labour supporters that are leaving.
Noddy, if it’s so important, how about a starter for 10 from you. Give us a number and a reason why you think it is about the right amount.
Vote:May 30th, 2006 at 4:45 pm
The question doesnt have a fucking answer because it is entirely irrelevant! There is no perfect number of people leaving, there is no target, because people leaving is only the fucking symptom, you simpleton!
If it was simply that people are leaving then yes, a policy to halt immigration would be the solution. But the problem is that these people dont WANT to live here anymore. The number of people leaving has increased, 17% of people are considering leaving, New Zealanders are leaving New Zealand! WHY? THAT is the important fucking question dickhead! WHY ARE PEOPLE LEAVING?
You can spend all day listing things it probably isnt because of, but you still wouldnt have answered the fucking question. We dont know the answer, but at least we on the right are asking the question.
Do you fuckers even CARE that people are deciding that this isnt a country they want to live in? You go on and on about right wingers only caring about themselves but it is you dorks that are saying things like, “well i am happy here, if they want to leave then thats their problem”.
Vote:May 30th, 2006 at 4:50 pm
The numbers being discussed here are entirely red herrings. 17% are considering leaving? Is that a larger number than has been the case historically? Having lived in NZ on and off for the last two decades it’s been a pretty constant factor that many people around me have been “Considering leaving” for most of that period, I don’t see it being any more or less the case at present.
New Zealanders are a pretty internationally mobile people compared to some of our international peers, the fact that some of us want to go places shouldn’t be too concerning for us.
Now, if you want to look at migration numbers… well, they’re net positive. What exactly is the story here again? If you want to talk about popularity of Cullen’s budget that’s one thing, but just throwing out a random statistic on numbers of people considering leaving without either context or any suggestion of the rate at which this consideration converts into people actually leaving… pardon me if I choose to ignore it.
Vote:May 30th, 2006 at 4:58 pm
Hey err… if you were running a business and one in six of your customers said they were thinking about changing suppliers, you would be concerned wouldnt you? I mean, these are people that have been using the product/service, their opinion matters right?
Vote:May 30th, 2006 at 5:00 pm
Kimble, you seem to be saying mandate arguments don’t work. Seems like an odd position to me. If the government hasn’t got a mandate for it’s promises, then I guess we can’t really complain when they just do any old thing.
Vote:May 30th, 2006 at 5:04 pm
I would worry about the intelligence of my customers if they never thought about changing suppliers. Considering options is just intelligent behaviour.
Vote:May 30th, 2006 at 5:16 pm
But you would want to find out WHY they are considering changing suppliers, wouldnt you? You would want as much information as you could get to find a way to keep those customers, wouldnt you? You would want to know what they liked and didnt like so you could makes changes to your current product to attract more customers, wouldnt you?
You wouldnt dismiss them and their opinions out of hand. You wouldnt deny that there was any real basis for their decisions.
Vote:May 30th, 2006 at 5:39 pm
Ben, YOU said the mandate argument doesnt work because people dont vote on individual policies.
“You vote for a bundle of things when you vote for a party, so saying it’s all because of X policy is just false.”
But if you must make that argument (and I am not) you must assume that all the votes for the party are for one specific policy. Only then would you be able to say that Labour has a mandate to do a particular thing. But if all votes were ascribed to a single issue then the election would be have been a referendum, and if this was the case then more people voted for tax cuts than against them.
Once again you seem to be equating the objection to a specific policy with a denial of Labours right to set policy. Labour has the right to set policy, but that doesnt mean it has a popular mandate for this or that specific policy.
Everything Labour does can’t simply be excused by saying that it is what the voters wanted them to do. Because, as you said, even the people that voted for them might not have been voting for that action. (And don’t forget, the only reason Labour is able to do anything is because Winston Peters allowed it.)
Vote:May 30th, 2006 at 5:49 pm
It’s always interesting, but not necessarily a cause for concern. There are quite a lot of customers that aren’t worth hanging on to. The most demanding ones, particularly, and the stingy ones. They can cost more than you get out of them, in every way.
Similar statements go for staff too. You often find some staff aren’t worth having either because they are too useless, or too expensive. And no matter what you do you can’t keep some people – they just want to move on, have other priorities.
Mass emigration could be a problem, but it doesn’t seem that that is happening. I’ll get concerned when it does.
Vote:May 30th, 2006 at 5:55 pm
I’ve read the whole stupid thread, re-hashing the same old arguments….and not one right-winger is willing to answer the same old questions:
1. Is the OBERAC surplus the same as the Operating Cash Surplus? Can you actually quote the two different numbers?
2. If you determine to spend all the OBERAC number on tax cuts, then what services and projects are you going to cut?
3. If you are going to fund the difference from borrowing, then what is the total cost of doing this over the lifetime of the loan?
Repeated failure to answer these basic questions simply PROVES that Natioanl is willing once again to mortgage the country’s future in order to get back into power…Muldoonism all over again.
These are really simple questions… I have yet to see an answer.
Vote:May 30th, 2006 at 6:00 pm
Kimble, just because parties are not elected on individual policies doesn’t take away their mandate for their bundle of policies. In fact that’s the only right to power they have, that I can see. So the ‘no tax cuts’ mandate really only applies in conjunction with the other policies, which they have to deliver on.
I think mandates are always weak under any representational system. But under MMP they are less weak than FPP. You can at least say that the majority of people voted for a party that is in power.
Incidentally, I don’t think even Labour said ‘no tax cuts’. My memory was ‘lame tax cuts years away’. But that’s a mere quibble.
Vote:May 30th, 2006 at 6:11 pm
Logix, yuck. You really want get all accountant on us? We were really just discussing the difference between “63% of NZers think tax cuts are affordable” and “63% of NZers want tax cuts”. If you’re asking if “63% of NZers know what OBERAC stands for, and how it differs from Operating Cash Surplus”, I’d say “No, but at least 63% of NZers couldn’t care less!”.
As DPF said in the blog, I’m surprised 95% of people wouldn’t be willing to say tax cuts are affordable. I think they’re affordable. That doesn’t mean I want them any more than that pink dress that I can also afford.
Vote:May 30th, 2006 at 6:19 pm
Ben
Of course the details are “yuck”. That is why Brash and Key refuse do discuss it. But you know money is like that…it is accountants who count the damm stuff…right down to the last cent. And every dollar of income that the govt relinquishes through tax cuts is a dollar not spent somewhere, or paid for twice over through borrowing.
Vote:May 30th, 2006 at 6:31 pm
DPF has answered question 1 about half a dozen times, go look for one of those answers.
“2. If you determine to spend all the OBERAC number on tax cuts,”
Who said that? Even National wasnt saying that. Do you think the reason National hasnt been answering your urgent queries is because they AREN’T determined to “spend” (jesus christ) the entire surplus on tax cuts?
Kind of makes the rest of that question irrelevant, and the whole of question 3 too, so why have you been wanking on about this for months?
Vote:May 30th, 2006 at 6:42 pm
kimble,
DPF has answered question 1 about half a dozen times, go look for one of those answers.
So I look at DPF’s original post and what do I find?
as all but the most partisan pundits say it is obvious you can afford tax cuts with a $9 billion surplus.
DPF categorically state that the “surplus” is $9 billion. In other posts he has given calculations of how much each NZ family might receive in cash if ALL of this number over a period of years was spent on tax cuts. DPF makes NO attempt to identify that this $9b is in fact just an accounting number. If there is somewhere in this blog that DPF identifies the actual Operating Cash Surplus as about $1.9b, then I would be happy to see you quote it.
Vote:May 30th, 2006 at 7:15 pm
logix, once again you are a bigger fool than you try and make out.
I’ll say it slowly so you can understand.
NZ does not run a cash accounting system.
There, was that so hard?
Shall I repeat it for you, just to be sure:
NZ does not run a cash accounting system.
We moved to accrual accounting in 1989.
Talk of cash surpluses is a POLITICAL smokescreen. Even the OBERAC was invented to try and disguise (sorry clarify) the fiscal position of the NZ Government.
If you are taken in by it, thats really your problem, but don’t turn up hear spouting your holier than though propaganda.
If you don’t believe me, perhaps you should ponder on why a “cash” number is anything more than just an accounting number if NZ operates on accruals?
A further concept you might wish to consider:
“surplus”
def: amount taken over expenditure
Now Logix, even in your screwed up little mind how does returning a surplus represent cuts to any level of service?
or were you just hit repeatedly with the stupid stick when you were growing up?
Vote:May 30th, 2006 at 7:30 pm
Nigel dearest,
I am pleased to note that you normally resort to sneering silliness whenever you reply to me. No further proof of the weakness of your argument is really needed. Nonetheless a moments google monkeying gives me the following definition:
In accrual basis accounting, income is reported in the fiscal period it is earned, regardless of when it is received, and expenses are deducted in the fiscal period they are incurred, whether they are paid or not. In other words, using accrual basis accounting, you record both revenues and expenses when they occur.
Or:
It’s important to understand the basics of the two principal methods of keeping track of a business’s income and expenses: cash method and accrual method (sometimes called cash basis and accrual basis). In a nutshell, these methods differ only in the timing of when transactions, including sales and purchases, are credited or debited to your accounts. The accrual method is the more commonly used method of accounting.
Under the accrual method, transactions are counted when the order is made, the item is delivered, or the services occur, regardless of when the money for them (receivables) is actually received or paid. In other words, income is counted when the sale occurs, and expenses are counted when you receive the goods or services. You don’t have to wait until you see the money, or actually pay money out of your checking account, to record a transaction. Under the cash method, income is not counted until cash (or a check) is actually received, and expenses are not counted until they are actually paid.
Nigel…are you trying to tell me that the difference between the OBERAC surplus of $9b and the operating cash surplus of $1.9b is just timing?
I note also the continued bluster that the right is routinely substituting for substance whenever I ask what is a very simple question. Am I not posing questions of high ethics, or disputable philosophy, all I am asking is for straightforward answers to a straightforward accounting problem.
Vote:May 30th, 2006 at 7:59 pm
Sigh Logix – you keep pushing economic myths.
“1. Is the OBERAC surplus the same as the Operating Cash Surplus? Can you actually quote the two different numbers?”
No they are two very different things. The OBERAC or operating surplus is the one used by every other OECD country as the true surplus. Only Dr Cullen argues otherwise. The cash surplus is a fairly meaningless figure as it also includes cash for long term capital works.
“2. If you determine to spend all the OBERAC number on tax cuts, then what services and projects are you going to cut?”
I do not advocate spending all of the OBERAC surplus. I advocate that one can have tax cuts to reduce the OBERAC surplus (after accounting for Super Fund contribution) to 1% of GDP. This will not need any cuts in services.
“3. If you are going to fund the difference from borrowing, then what is the total cost of doing this over the lifetime of the loan?”
Wrong question. It’s should capital expenditure be funded entirely out of operating surpluses. Of course not. It’s like saying one can’t buy a house until you can pay cash for it.
Vote:May 30th, 2006 at 8:24 pm
David,
As much as I hesitate to rely on wikipedia, here goes:
The initials OBERAC stand for: ‘operating balance excluding revaluations and accounting changes’. The government of New Zealand uses OBERAC as an indicator of current cash flow.
The OBERAC is not an accurate indicator of what the government has to spend, i.e. it is not the cash surplus. Instead, the OBERAC includes capital expenditure, State Owned Enterprise retained profits, capital gains and many other minor issues.
http://en.wikipedia.org/wiki/OBERAC
If you have any quibbles with that very simple definition then let me know.
So how does the difference between $9b and $1.9b arise? I assume because much of it (not all I accept) is being used to fund capital expenditure on direct public works, such as motorways, the on-going funding of State Owned enterprises, the reduction of public-sector debt and the on-going investments in the Super Fund. If you want to spend all the OBERAC number on tax cuts (which is what you have repeatedly called for), then either these expenditures are cut, or the money is borrowed.
Last time I looked, for the average person when they repay say $250,000 mortgage over say 25 years at, lets assume a very modest 5% interest rate P&I..the total repayments are $440,000. If I borrow $1billion to build a motorway, the actual cost at the end of the loan is closer to $2billion. Effectively doubles the cost of the project, with the bankers getting half.
Now on a house this is vaguely supportable because most of us only live in one house (excluding investment properties of course that generate cashflow). But a country does not have just one motorway to build, by contrast a country has on-going public works and enterprise to fund…a policy to borrow to fund it all, effectively over the long-term doubles the cost of it all. If you think this is smart economics then I suggest your real career lies in financial services.
Vote:May 30th, 2006 at 8:54 pm
Logix, it is certainly possible for borrowing money to pay from motorways to ‘pay off’ for NZ, if we get that motorway many years sooner. But what I think the taxcuttosauruses are less than honest about is that it may *not* pay off too. There is a lot of risk in borrowing, and it is the country that shoulders the risk, not the people making the decisions. It only takes a rise in interest rates, or a lull in the economy to turn a return bearing proposition into a big liability. Then we have to sell the asset, probably at a big discount.
You could see it as a cunning plot to privatize state investment, or just irresponsible, depending on your level of paranoia.
Vote:May 30th, 2006 at 9:12 pm
Ben,
Well if we just look at motorways for example. Transit usually insists on a benefit ratio of 2:1, ie if we spend $1b on building the motorway, then on paper $2b is returned to the users of the motorway by way of reduced costs. A form of taxcut?
On the other hand if the money to build it was borrowed, then over time that benefit is pretty much eliminated due to the cost of the loan.
Oh and further to the OBERAC question. To June 2005 the SuperFund alone enjoyed a capital gain of $760m. This year it is likely to grow further. The State in fact owns numerous assets that are growing in value on paper. Is anyone suggesting that these sums are available as cash to be dispersed as tax cuts?
Vote:May 30th, 2006 at 9:14 pm
Fascinating thread – all the usual tropes, tribes, illogixalities, poisson rouge and the odd verde and smelly one.
But DPF’s original assertion (‘member that) was that somehow 2 out of 3 earnest citoyen have got it into their heads that, going against every collectivist fibre in their WFF-funded bods, they themselves would much prefer responsibility for spending some of their income, than leave it to be taxed away and then hosed up against the wall by assorted Gummint schemes.
And no amount of Econ 101 arguments matters – the core feeling out there is – hey, that was My money first!
It was, after all, a Survey, not a Uni tutorial question.
Vote:May 30th, 2006 at 9:18 pm
waymad,
Which “Gummint schemes”?
Vote:May 30th, 2006 at 9:20 pm
Sorry to interupt the debate on Finance Fundamentals 101 but I’ve just read Darren’s earlier comment that he’s moving to Perth – surely someone’s going to run the Muldoon line? No, oh well. Good luck out West Darren…
Vote:May 30th, 2006 at 9:43 pm
Perth’s nice. Good luck, don’t let the sheepshagging jokes get to you. Ozzies just wouldn’t understand what a nice sheep is…
Vote:May 30th, 2006 at 10:47 pm
Well, y’all did ask for examples of instances where Gummint schemes hose our hard-earned money against the nearest wall:
- hospitals which consume GDP at a rate of knots not exactly commensurate with outputs, and which encourage rational consumers to use non-tax-deductible private health insurance in order to service basic health needs: a double tax if ever there was one. Hospitals which, as a matter of top-down ideology, are not permitted to outsource services to said private sector.
- crusades against personal choices (obesity, speeding) which direct resources away from core State responsibilities of health safety-nets and personal security/public safety, respectively.
- seen-to-do-something Departments and regulators (e.g. MWA, Families Commission) which have no discernible outputs
- anything Cindy Kiro dreams up (microchipping and databasing children seems to be the fad du jour)
- generally, encouraging questionable behaviours by paying for them (a good chunk of welfare acts as a Perverse Incentive Scheme and us taxpayers wear the behavioural and economic results.) Talk about externalities!
Now, how’s about listing some things that should happen but don’t:
- non-politicised policing
- energy resource development (hydro schemes and windmills, anyone?)
- non-purchased elections
The real issue here (and remember the thread is about personal choices as to location and taxable income) is that taxpayers tend to vote with their feet, but tax consumers don’t. When this goes too far, watch out below, because welfare recipients suddenly placed on short rations can become slightly antsy.
Suggested remedial reading: Theodore Dalyrmple, “Life at the Bottom”
Vote:May 31st, 2006 at 6:52 am
Funny you should pick up on the “debunking” comment too DPF. I used their “Your say” section on stuff.co.nz to remind them that 17% is not insignificant! Maybe we should all have “Your say” and give the journalist and the paper a reminder to keep their opinions valid and real.
Vote:May 31st, 2006 at 7:41 am
“- crusades against personal choices (obesity, speeding) which direct resources away from core State responsibilities of health safety-nets and personal security/public safety, respectively.”
Speeding is not a personal choice, it’s a breach of common rules designed to keep other people safe. Even WITH heavy speed enforcement there’s still plenty of idiots who feel the need to overtake into oncoming traffic, despite the fact that the car in front was “only” doing 110kph…
Saying that speeding is a “personal choice” is a bit like saying that throwing litter out of the car window is a personal choice. It’s not, it has clear and obvious impacts on other innocent passers by.
Vote:May 31st, 2006 at 9:14 am
Thanks for the good luck comments from Paul, Burt , Ben, and others.
Vote:I’ll still be keeping tabs on NZ through this blog and others and the dreaded MSM. I still have two months in NZ.
And yes, Ozzie sheep aren’t as nice as ours.
Coming from Yorkshire and having lived in Cumbria for 4 years, I know a good sheep when I see one
May 31st, 2006 at 10:22 am
Ah, so you’re originally from the mother country? So you’ll be getting sheep shagging AND whinging jokes? Never mind, you’ve always got the old ‘At her Majesty’s pleasure’ comebacks.
Enjoy Perth, nice place, good choice. Watch out for sharks, snakes, spiders and jellyfish…
Vote:May 31st, 2006 at 1:19 pm
Nigel…are you trying to tell me that the difference between the OBERAC surplus of $9b and the operating cash surplus of $1.9b is just timing?
You do realise Logix that the difference between AirNZ making a profit of $138 million and a loss of $600 million was exactly that, a matter of timing?
http://iiq374.blogspot.com/2006/05/air-nz-troubles-caused-by-accounting.html
To be specific for those too lazy to read more in depth solely timing around recognition of deferred taxation.
So yes – it is very believable that the difference between $9 billion and $1.9 billion is a matter of timing.
Almost anyone who understands investment and accounting could assert that. But I suppose that is the problem with having history teachers running the finances – they can only understand the cash in wallet arguments and just can’t quite grasp that NPV thingee…
Vote:May 31st, 2006 at 1:26 pm
But what I think the taxcuttosauruses are less than honest about is that it may *not* pay off too. There is a lot of risk in borrowing, and it is the country that shoulders the risk, not the people making the decisions.
And what the other side is less than honest about is that there is also risk in *not* borrowing to invest as well.
By allowing inefficient roads to be used, by not investing in rail networks and stifling growth, by not giving tax cuts and chasing a “Sam Morgon” offshore. There is a lot of risk in not borrowing, and it is the country that shoulders the risk, not the people making the decisions.
Vote:May 31st, 2006 at 1:32 pm
For the analogy:
It is risky for a business to put off a server replacement purchase for another 2 years until they can fund it “organically”, instead of taking on the risk of debt funding it now.
Saying debt funding is risky belies the fact that it is just a different risk to that made by delaying the investment. The process needs to be a recognition of and balancing of the risks.
Vote:June 2nd, 2006 at 11:18 am
We compete in an international labour market and don’t we expect, even encourage, people to move around? New Zealanders have been going to Australia and cleaning up, for years (shearers). But if we can’t maintain our relative place we will loose out and end up like so many countries a nice place to visit the parents back at home. So what happened to getting back into the top half of on the OECD table?
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