That leaves A LOT of families the ability to claim

^i^

The NZ economy was suffering worsening macro-economic imbalances over time. Consumption of imported goods was far outstripping our ability to earn forex- as various segments of the export sector imploded. Household debt rose. Our current account worsened to levels not seen since the 1980s.

Labour came into power promising to treat high-income earners as their enemy and delivered on that. I had some consultancy work going on in Asia, but once my tax went up (thankyou 39c), costs went up when ACC was ‘re-nationalised’ and returns went down as the dollar rose. People earning half my income still had roughly the same household income, as Labour topped up their spending from mine.

I gave up on the consultancy- upskilling with learning new languages, developing networks etc- had no real rate of return. It was a better deal for my lower-skilled wife to get a low-wage job than for me to do anything extra at a higher-wage (or consultancy-rate).

You can imagine the hilarity in our household when Helen extolled NZer’s to engage more with business in Asia. Why- it’s damned hard work, I’m away from my family- and the return has been slashed. How dumb do you think I was?

You can’t sustain improvements in labour productivity when you design a tax-and-welfare system to kill the payoff on that investment by workers. When it pays a household to substitute low-productivity work at a lower wage than go for high-wage returns, you have a serious problem.

(Fwiw, I’m doing more work in Asia again).

I did not even think about the WINZ costs of WFF.

In addition to the costs to administer, there is a very real lack of incentive to earn more when you receive WFF. The marginal tax rates are in the region of 55%, and I complain that I pay 38% tax, how much more would I complain if I was paying 55% of any extra income.

I can see that is classic socialist redistribution. I do have to disagree though with your comment about it not being expensive to deliver. How can a payment system that requires all recipients to prepare a return, so over 380,000 pieces of paper (or maybe done on web) be efficient. Why not stop the families paying the income tax in the first place?

The IRD/MSD report shows that 45% of families were over/under paid WFF before their assessment was reviewed. So nearly a 50% failure rate. The system is so complex to handle that as a result of the 2008 budget changes the IRD agreed to write of over payments of up to $100 per family.

The IRD were given $180m to administer WFF. I am not sure if this was a one off cost or an annual cost.

Workingman don’t be surprised, I was working for Work and Income at the time it was rolled out. I was disgusted that during the training we were told that we were to get as many clients onto WFF as quickly as possible as it was one of Labours key strategies for winning the 2005 election. One of the things which I’ve never seen discussed how much additional cost this program caused. I know in my office (a smallish rural area) at least we had to hire a WFF focussed staff membe, a new car for their exclusive use (which ended up also being taken home each night and on weekends for personal use) etc.

My figures are based on 2006, so slightly out of date.

There are approximately 1.2m families in NZ. Of these 468,000 are couples with no children. So with my understanding of WFF that leaves 732,000 families possibly entitled to WFF. If 378,000 are claiming then over 50% of families are entitled to WFF.

What a horrendous admission of failure.

As some of these families are not working, does this mean they are not entitled to WFF, if so then the figure is even worse.

The view that tax cuts are a cost, is because people seem to think that it is the government giving them money back. Now that may be the case with WFF, but for income tax it is not the government giving you your money back. Rather they are not taking it in the first place. So this then means there is less income/revenue.

I do not think you will find accountants in the private sector saying that a reduction in income/revenue is a ‘cost’.

http://en.wikipedia.org/wiki/Opinion_polling_for_the_New_Zealand_general_election,_2008

In May 2006, the Budget appears to have had no impact on the polling trend.
In May 2007, the Budget coincided with Labour’s support stabilising – and even rising a little – after an earlier slide
In May 2008, the Budget coincided with the mid point of Labour’s last big slide, after which support rebounded.

Again the evidence betrays you.

burt – I’m not sure if I’m exactly the guy you portray. Certainly I’m the guy who thought Labour’s package delivering more to the people who needed it the most (income between 10k and 30k, and between 30k and 50k with kids) was a good idea. And I wasn’t quite so keen on National giving more to people who earn over $120k than Labour would have provided.

I possibly would prefer services to tax cuts, but only if we were getting value for money. I got an email from friend working in govt that included this:

>I made the mistake of saving $500,000 on a project but I’ve been told it needs to be spent by the end of June or we lose it.

From what I understand, if you work in government and save money on a project you’re told off rather than commended, because then they have to find a way to spend the money somewhere else or next year’s budget will be cut.
In effect this person could have saved us (the tax payer) $1Million: $500k from this project plus $500k off next years budget. In reality the department will be pulling out the stops to spend the $500k by the end of June.

The government doesn’t need more tax revenue, they need to cull out the career civil servants who have an ingrained culture of waste.

Were you the same person who defended no tax cuts for 9 years to now tell us how great Labour were for planning bigger tax cuts for high earners than National ?

1. “Please think it was only smacking”

Ah, but I never said it was only smacking, or indeed that is was only smacking, the EFA, and Winston (the “but three” I listed). I just don’t feel like sharing my own diagnosis of Labour’s loss in the comments section of Kiwiblog. Who could think why?

2. “Please think the public don’t want a balance of extra spending and tax cuts.”

Hey, wow, check out what Labour proposed, and I supported them in proposing. in 2008. Ohmigod – it was a balance of extra spending and tax cuts. Who would have thought? And in 2005 it was a balance of extra spending and tax credits. Holy crap!

[DPF: Rob by 2008 it was too little too late. By 2008 it was like asking the battered wife to give the husband one more chance - and they didn't. Delivering them two weeks before an election after nine years of waiting was just too much. Not that tax was the biggest issue - but Labour got punished in the polls every budget for around three years when they failed to deliver]

Yes indeed, “hundreds of governments all over the world,” sounds so much like “They did it too”. Rob’s a great defender of “they did it too” so how dare you use his lines.