Kiwiblog

The US Supreme Court has struck down part of the law which restricts private organisations from spending their money on election campaigns.

Cnet explains why:

The U.S. Supreme Court’s sweeping ruling on Thursday that invalidated large chunks of campaign finance law arose in part from an unlikely source: the emergence of Facebook, YouTube, and blogs, and the decline of traditional media outlets.

A 5-4 majority concluded that technological changes have chipped away at the justification for a law that allows individuals to create a blog with opinions about a political candidate–but threatens the ACLU, the National Rifle Association, a labor union, or a corporation with felony charges if they do the same.

The now-invalidated law “would seem to ban a blog post expressly advocating the election or defeat of a candidate if that blog were created with corporate funds,” Justice Anthony Kennedy wrote in the majority opinion (PDF). “The First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech.”

In NZ we don’t have a court that can strike down laws that breach the Bill of Rights. To get rid of the Electoral Finance Act, we had to sack the Government.

The court pointed out that the now-invalidated laws are more sweeping than the term “campaign finance” might imply–and amount to simple censorship. It listed these acts of political speech that previously would have been criminalized: the Sierra Club running an ad (close to the time of an election) disapproving of a congressman who favors logging in national forests; the NRA publishing a book urging a vote against an incumbent U.S. senator who supports a handgun ban; and the American Civil Liberties Union creating a Web site telling the public to vote for a presidential candidate because of that candidate’s defense of free speech.

This law was even worse than the EFA!

Joel Gora, a professor at Brooklyn Law School and ACLU lawyer who argued a landmark 1976 Supreme Court case, wrote at The New York Times’ Web site today that the justices “dismantled the First Amendment ‘caste system’ in election speech. Before today, the right to speak depended on who was doing the speaking: business corporations, no, unless they were media corporations; nonprofit corporations, maybe, depending on where they got their funding; labor unions, no.”

What happened of course was these groups formed PACs instead, and just donated to the PACs.

The left in the US are calling this an awful decision. This is ironic as the Obama campaign was the highest spending of all time – the first oen to turn down federal funding and an associated cap. They are not against big money in politics – just against other people’s big money!

I’m holidaying in Mt Maunganui, but somehow ended up being a photographer at the announcement of $27 million of government funding for extensions at Tauranga Hospital.

Tony Ryall with Simon Bridges making the announcement in front of the DHB Chair. Tony enthused about being Minister of Health, declaring it is the best portfolio you can have in Government – a sentiment not shared by too many of his predecessors!

See that sign in the background of Simon, being interviewed by the local BOP Times reporter? Yes it does say “We love you Simon”. The (as it happens all female) staff of the pathology lab put the sign up when they realised the announcement was outdoors. Simon didn’t even see it until a reporter pointed it out to him. He of course them popped inside to thank the staff for their sign! I don’t think Simon has to worry about his majority!

And if you wonder how Tony Ryall manages to get such good press – it is because he only allows National MPs to interview him!

Actually it is not as bad as it looks. The camera man was reading out the questions from the reporter (whose voice will no doubt be dubbed in later), but they needed Simon to hold the mike and stand where the reporter normally would, so Tony looks in the right direction.

Apart from my amateur photography, just been enjoying the beach and shops up here. The weather is lovely!

A very provocative move from Fiji, after the conciliatory move my McCully to try and get the relationship to an agree to disagree status. The Dom Post reports:

The Government is refusing to comment on reported plans by Fiji to send a high-ranking military officer to serve at its high commission in Wellington.

The move would test a New Zealand travel ban on members of Fiji’s military-led regime, and comes after an announcement by Foreign Minister Murray McCully that the two countries would seek to boost diplomatic links.

Both countries have agreed to post an extra counsellor to their high commissions, but the move has sparked calls by Amnesty International for the New Zealand Government to address human rights abuses in the renewed negotiations.

Fijian news website Fijivillage has reported that the permanent secretary for information and military spokesperson was nominated by the Fiji Government to take up a counsellor’s post in New Zealand.

The website reported that Lieutenant Colonel Neumi Leweni was now “awaiting word” from the New Zealand Government in response to his nomination.

I can’t think of a more provocative person to propose than Leweni. He has been a major figure in the coups, and very involved in the assaults on media freedom in Fiji.

Despite the provocation, I think the NZ Government should allow him to be appointed. He’ll probably do less damage in NZ, than he does in Fiji. But more to the point is it avoids the Commodore being able to claim he is being bullied, and blame NZ for the lack of progress.

I think the Commodore wants NZ to turn down his offsider as High Commissioner. He will use it as propaganda. So don’t play his game, and allow it. It doesn’t mean you have to relax the travel ban on the military – diplomats can be an exception.

The one good thing from the ridiculously long period of waiting until 2014 for elections, is the Commodore will have no excuses left if he doesn’t have free and fair elections by then. So again, lets not give him a partial excuse.

The Herald reports:

Destiny Church leader Brian Tamaki has admitted being part of a group that sought legal aid to oust his marae’s trustees.

Even if it was not Tamaki, I’m not keen on legal aid being used by plaintiffs in disputes like this.It encourages people to litigate, rather than settle.

Mr Tamaki, who said he has “a mortgage like everyone else” and is “not a multi-millionaire”, told the Herald he was representing a group of whanau members, who sought legal aid to depose his marae’s trustees at Te Kopua, near Te Awamutu. …

In October, a former financial administrator for Mr Tamaki and his wife revealed to the Weekend Herald that he received up to $500,000 a year from church donations on top of his six-figure salary.

It would be an outrage for them to get legal aid. Tamaki is one of the richest 0.1% of NZ. He should be ashmed at his attempt to bludge.

I’m in Mt Maunganui for the weekend, and my phone/Blackberry is is Wellington (long story) so don’t call or text me if you want a response -e-mail is the only thing I’ll see.

My first Dispatch from St Johnnysburg is at NBR 24/7. An extract:

So why are things so good between the Obama administration and the Key administration? Is it the rapport between Obama and Key? Is it the wooing of Hillary Clinton by Murray McCully?

Nope. While both may be factors, the majority of the credit goes to Winston Peters.

My column this year is now subscriber content, so you need to be a subscriber to access it.

I’m angling for a Kenyan coffee this morning, and in the meantime, here’s a photo of one of the ‘enemy’.

As always, clicking the image will take you to the bigger version. It’s an Australian paper wasp- an invasive vespid wasp that arrived sometime in the 1800s. Wiping out their nests should be a guilt free experience

Appalled is my reaction to the decisions of APN and Fairfax to run photos of SAS soldiers at work in Afghanistan, which show their faces.  The reported defence is:

Herald assistant editor John Roughan said the paper stood by the decision to use the picture which, he said, had real news value.

“The soldiers were in a public street, in a major city, visible to anybody, wearing their uniforms, carrying their guns, photographed as the New Zealand SAS.”

For fuck’s sake, they are not in Kabul to go to the movies. They are there because they take part in some of the most dangerous operations possible against the Taliban and associated forces.

By all means, run the photo – but why the hell didn’t you black out the face of the solider? There are some things more important than news value.

The NZ School Trustees Assn (effectively the voice for parents) is getting sick of the union tactics:

The continued “shotgun approach” by the primary teachers union (NZEI) and the Principals Federation (NZPF) to the Nationals Standards issue is not helpful to anyone says the New Zealand School Trustees Association.

President Lorraine Kerr says the constant shifting of the ground, and arguments, hoping that one of the approaches will score a response with the school community, Boards of Trustees, and others, does not strengthen the unions’ case at all. Indeed, if they are not careful, there is a risk they may end up shooting themselves in the foot by way of an ever increasing credibility gap.

In other words, stop scaremongering.

The concerns appear to shift constantly, so it’s no surprise that many people find the whole debate somewhat confusing, and, in fact it is rapidly becoming quite tiresome, she says.

“I have every sympathy for those many parents/caregivers, who see nothing wrong with the idea that they should know how their children are doing in key areas, including literacy/numeracy, from wondering what the fuss is actually about,” Lorraine Kerr says.

And that is all it is about. Allowing parents to know how theri kids are doing in terms of meeting or exceeding the national standard for numeracy and literacy.

NZSTA has also struggled at times to identify what the issue actually is, but did get some clarity at a meeting in late 2009 when the president of NZEI stated that NZEI would have no problems at all with National Standards if the threat of league tables was removed.

Lorraine Kerr says that if that is the real driving concern, it needed quickly dealt with.

The unions need to recognise this is the Internet age. You can not prevent parents from sharing info on schools.You can’t prevent any number of people or organisations from doing comparison tables – just as you get in the health sector, the police sector, the finance sector etc etc.

Losing Massachusetts the day before his first anniversary as President makes it somewhat bitter for President Obama. But how has his first year gone?

Personally I don’t think Obama has done an awful job. I think his biggest mistake was the size of the fiscal stimulus, leading to a a truly horrible fiscal deficit. In his defence, Bush left him a huge deficit as it was – but he has made it worse.

On foreign issues, I don’t have huge gripes. He is not bolting out of Iraq, but decreasing troop numbers at much the same rate Bush would have. His surge in Afghanistan was the right thing to do. Like most of his predecessors he has made little progress on the Palestinian issue, but he has not become an Israel basher (I suspect his Chief of Staff moderates him here. Emanuel actually did volunteer service with the IDF duing the first gulf war).

He is showing some rationality with trade issues, as opposed to his pre-election rhetoric. And again Bush often went protectionist also.

His healthcare legislation has been a disaster. Even with massive compromises and watering down, it may not pass, and if it does pass it won’t solve the real problems.

I think Obama’s problems come down to three major things:

1. Expectations. On TV yesterday that had a live focus group of 40 Massachusetts voters. They asked them to raise their hands if Obama has met or exceeded their expectations, and not a single one did. And this is in a blue state.
2. Priorities. Obama’s fiscal stimulus did little bar increase the deficit massively, and turn the country into deficit hawks. Unemployment went well beyond his worst forecasts, and Obama was seen as too focused on other issues such as healthcare, cap and trade, foreign policy etc.
3. Experience. I said before the election that Obama was inexperienced as he basically had just two years of experience as a legislator, and no executive experience at all, and it is showing. Bush left him a mess, and the credit crisis occurred, but regardless the presidency of the US is always going to be pretty much the toughest job in the world, and Obama is coping about as well as any first time Senator would – not that well.

Now there is some good news for him. His poll ratings are averaging 50% approval to 44% disapproval, which is up from a month ago. They are still historically very low – the only ones lower were Gerald Ford and Ronald Reagan on their one year anniversaries.

He is still personally liked, if not respected, as AP reports:

But while nearly nine in 10 people like President Barack Obama personally, he earns decidedly mixed reviews in a new Associated Press-GfK poll judging his first year in office, a verdict darkened by a stunning repudiation of his party in the Massachusetts Senate race yesterday. …

Even three-quarters of Republicans say they personally like Obama.

The AP poll gives us net approval ratings for Obama on various issues:

• The economy -1%
• Iraq +10%
• Healthcare 0%
• Terrorism +15%
• Environment +22%
• Federal Deficit -16%
• Energy +23%
• Taxes -4%
• Immigration -6%
• Afghanistan +7%
• Foreign Relationships +26%
• Unemployment -1%
• Gas prices -4%

The mid terms are looking to be focused on the economy, the deficit and jobs. It is quite possible now that the GOP could retake the House. The Senate is most unlikely though.

Too early to speculate much on 2012. Obama may be a one term President, but these are in his favour:

• The economy should pick up
• He has three years
• The Republicans have to find an electable candidate
• Now they no longer have 60 votes in the Senate, they can blame Republican blocking tactics for lack of progress on some issues
• He may do a Clinton and head towards the centre more

What are the chances of the GOP taking the House in 2010? In August Nate Silver said it was a one in four chance, so probably more than that now. The Republicans lead in the generic ballot by 1%. However history has taught us that the party not in the majority normally does significantly better than its poll ratings a year out – so I’d say the chance of GOP taking the House is at least 50% now.

Further to my own hosting of a drink savvy party, a reminder that people can submit their own drink savvy ideas to win a trip for two to the Whitsunday islands. Entries are extended to 31 March 2010.

Those interested can also follow on social media – Facebook, Orkut or Twitter.

A lot of the debate at the moment is on the 38% tax rate. Now this rate was introduced in 2000 by Michael Cullen and has led to huge tax avoidance. Few on the right dispute that the 38% rate should go, or at the very least thre threshold for it increase massively.

But I want to focus also on the 33% rate. You see only should people not be paying a 38% rate, most FT workers shouldn’t even be paying the 33% rate. I’ve done a graph to make my point.

The blue line is the threshold at which people reach the 33% rate, and the purple line is the average FT income. When the top rate was made 33% in 1986, the threshold for it was around double the average FT wage.

Now since then, the average wage has increased greatly, but the threshold has only been lifted four times. The end result is that where once you had to earn twice the average wage to pay the 33% rate, under Labour it go to the point where someone earning 80% of the average wage would be paying the 33% marginal rate.

The threshold stayed constant for ten years until 1996.  It then went up to around $34,000 and two years later to $38,000. Then it stayed constant for another ten years until a miniscule $2,000 increase in October 2008. National then increased it by $8,000 in April 2009.

So National has managed to get it back to around the level of the average wage. But it used to be at twice the level. So remember that if National does drop the top tax rate to 33c, so someone earning $100,000 has a top marginal rate of 33% – that back in 1986 someone earning the equivalent of $100,000 (being double the average wage) wouldn’t even be paying the 33% rate of tax.

The US Embassy has e-mailed:

U.S. Secretary of State Hillary Rodham Clinton will deliver a major policy address on Internet freedom live from the Newseum in Washington, D.C. January 21, 2010, 9.30am EST, Friday 3.30AM NZ time.  Secretary Clinton will lay-out the Administration’s strategy for protecting freedom in the networked age of the 21st Century.

Following her speech, there will be a panel discussion on this issue. To participate, either by watching a high quality video stream of the speech and panel discussion or by submitting questions and comments while viewing go to: http://netfreedom.state.gov. From here, you may choose the high quality video option or the interactive CO.NX room. As always, no password is necessary. Enter as a guest and type the username of your choice.

For further information please visit http://www.state.gov/r/pa/prs/ps/2010/01/135379.htm

Information is also available at America.gov’s feature page on Internet Freedom. You can also follow the speech on Twitter: http://twitter.com/us_mission_nz

When released, a transcript of Secretary Clinton’s remarks will be available at http://newzealand.usembassy.gov/

I will be very very interested to watch this. Not quite enough, to be up at 3.30 am, but once I get up.

Hat Tip: Clare Curran

Many people do not realise this, but Haiti is not an island state. It shares Hispaniola with the Dominican Republic.

I find this interesting, as it allows you to do a reasonable comparison of how different policies, quality of governance etc have gone in each country. It’s a bit like North vs South Korea, or East Germany vs West Germany.

So here are the basic states for Haiti first, and the Dominican Republic second:

Independence: 1804 vs 1865
From: France vs Spain (was briefly ruled by Haiti also from 1821 to 1844)
Area: 27,750 sq km vs 48,400 sq km
Population: 10.0 mil vs 10.1 mil
GDP PPP per capita: US$1,317 vs US$8,672

So the Dominican Republic (once a colony of Haiti) has wealth per capita a massive seven times greater than Haiti.

Why do people think this is the case?

No, it is not satire, but a couple of useful posts. First he rebuts a cliche:

Tax cuts for rich, paid for by the poor.’

That’s how Marty at The Standard (happy Lynn?) describes the working group recommendations. To me it looks more like tax cuts for the rich and middle class who pay income tax, paid for by the rich and middle class who use loopholes in the property and WFF tax laws to rort the current system. The working group recommends compensating low income earners for GST increases and I don’t think a lot of struggling families and beneficiaries are benefiting from, say, LACQ shelters or depreciation rebates.

Indeed. I think some (not all) on the left just hate the thought of the top income tax rate being reduced. Maybe Danyl’s other post quoting the TWG may convince them:

. . . out of an Inland Revenue sample of 100 of the highest wealth individuals in New Zealand, data indicate that only about half are paying the highest marginal tax rate on their income.

Tax Working Group Report, Page 27

The higher the marginal rate, the larger the incentive to avoid it. When Labour reduced the top tax rate from 66c to 33c in the 1980s, the amount of tax paid actually increased.

If National does reduce the top tax rate to 33c, that will only bring it back to what it was before Cullen increased it.

The Press editorial:

The compromise reached between National and the ACT Party on the so-called three-strikes regime for dealing with repeat violent offenders is a sensible one.

It eliminates flaws in the original bill and will produce a law that deals effectively with the worst of our violent criminals in a way that voters have shown they want. It reflects a policy on which both the ACT Party and National campaigned during the last election, but the substance of it is from ACT and thus represents another considerable political achievement for the party’s leader, Rodney Hide.

Credit goes to Rodney and David Garrett for securing an agreement. And while it will take a few years to take effect, it’s going to be great knowing everytime someone gets convicted in court for a serious violent or sexual offence, that on their third strike they will be spending a long time in prison.

Under the proposed regime, a person who commits one of the 36 qualifying offences will be sentenced in the same way as they are now. That means that if the sentence is one of imprisonment, then only a part of this must be served in prison. But offenders will be warned that if they commit a second of the qualifying offences, they will receive the same sentence as they would now but will serve, in prison, the whole of any term of imprisonment they are given. On a third offence, the sentence will be the maximum for the crime and all of it will have to be served in prison. The only exception would be if it were “manifestly unjust” for such a sentence to be imposed.

And those who get to their second strike will know that if they seriously offend again, there is no real chance of just a short prison sentence, with early release on parole. If they rape they will do 20 years in jail.

But, more importantly, evidence from other jurisdictions clearly shows that similar laws elsewhere have deterred serious crime. The most commonly cited example is the three-strikes law in California. The California law was not well constructed and has flaws that the bill proposed here has eliminated. But, for all those flaws, academic studies have shown that the law, which has been in effect for more than a decade, has measurably deterred the crimes it covers, despite a rise in other offending.

Incentives work. But even putting aside that debate, if a serious violent or sexual offender is in jail for longer, then they are not able to menace the public as often.

While Phil Goff put out a press release welcoming the appointment, I’ve been waiting for one of the 40 or so Labour MPs who blog at Red Alert, to blog about Moore’s appointment and how pleased they are.

They managed to find newsworthy a blog post by Jordan Carter (the one I highlighted), the Mackenzie farming proposals, The Republican win in Massachusetts, the tax working group and some tale about how an MPs niece thinks the penguin in Madagascar reminds her of John Key.

But not a word of congratulations to Mike Moore. Never mind he joined the Labour movement in 1968, was elected to Parliament as a Labour MP in 1972 and served for 24 years, led them twice in a general election, and helped them avoid a crushing defeat in 1996 (before the rapprochement with Clark, Labour were polling at 14%).

He’s just been appointed to New Zealand’s most important diplomatic post, and none of his former colleagues at Red Alert can bring themselves to blog on it.

UPDATE: Audrey Young covers an interesting point:

Half a lifetime ago, in 1972, Mike Moore was the new young thing in politics, having won the marginal seat of Eden for Labour at the age of 23 – despite a vigorous campaign against him by opponents including the bearded 18-year-old Young National activist Murray McCully.

There were no hard feelings then – McCully ended up at Moore’s all-night celebrations.

Appointing the guy who beat you in your first election!

UPDATE 2: Denis Welch reminds us:

Ironically, when I interviewed him for the Clark book in November 2008, he was somewhat in the wilderness, having been passed over for appointments by the Clark government (he wasn’t even invited to the party’s 90th anniversary bash, which, rightly, rankled).

I’d forgotten they didn’t even invite him to the 90th birthday party. How petty.

I saw the finished Supreme Court building for the first time today. I’d been out of Wellington for a couple of weeks, and since being back hadn’t had occasion to going past it.

Now I had heard some pretty uncomplimentary things about it, so I wasn’t expecting to be impressed. I thought it would be maybe like Te Papa – bland and uninspiring.

But it is far worse than that. It is truly hideous. I don’t think I have seen a building before with no redeeming features. The exterior up top looks like barbed wire from a distance. The windows are dull. The pillars add nothing, and it is again just hideous.

In case I have not made myself clear, I do not think you could design a more hideous building if you actually tried to. If there was some global competition for hideous buildings, then the Supreme Court building would be a finalist beyond doubt.

The monstrosity surrounding the building is meant to be “a bronze screen depicting the strength, durability and stature of the pohutukawa and rata tree”. Only if you have taken P recently.

It is such a pity. I visited the Israeli Supreme Court and they have a magnificent building.

So I wondered what moron approved the design of this hideous beast, let alone $80 million of our money on constructing it.

What did Rick say at the time about the design:

“This is a building of great significance to New Zealand as it will serve our country for at least 100 years. The design incorporates the old and the new. Once constructed the Supreme Court will be an architectural legacy,” Rick Barker said.

I hope it doesn’t last 100 years. If we are lucky an earthquake will strike Wellington and destroy it. And the only architectural legacy it will leave behind is to teach design students what not to do in the future.

UPDATE: Oh my God. Rick Barker put out a press release this week boasting about how great the building is:

The new Supreme Court sitting alongside the refurbished Old High Court is a fine blend of the old and new, the Yin and Yang, says Labour Courts spokesperson Rick Barker.

“Each is an outstanding piece of architecture reflecting the different times in which they were designed and built. The architects have delivered a great refurbishment and a new building that will stand the test of time.”

The man’s mad. How can anyone look at that building and call it an outstanding piece of architecture.

Commenting on today’s opening of the new Supreme Court building by Prince William, Rick Barker said the original drafts he received when Minister for Courts were for a plain building.

Which would have been fine.

“But I wanted to see a new Supreme Court that personified the special place which our Supreme Court is and should be. I was prompted in this by travels in the United States where each town and city had two special buildings, City Hall and the local court house. They represented a clear statement of the value that the community placed on civic responsibility and the administration of justice.

“My brief was for a building that would stand the test of time as we are unlikely to build another in the next 100 years. It should be a reflection of the architecture expected at the beginning of the 21st century,” Rick Barker said.

Barker is actually taking personal credit for the hideous monstrosity. That’s like taking personal credit for shitting in the Harbour.

“It was to be a special place and a statement of the value our community placed on the administration of justice, with a courtroom that befitted the highest court in the country. I wanted a building of which a future generation would say — they did a fine job.

Future generations will wonder if the building was some sort of expensive practical joke. None of them will say they did a fine job.

It looks like the polls were right. With 63% of precincts counted, Scott Brown is leading 53% to 46%.

This is going to make it very hard for Obama to pass his healthcare legislation. His options are:

1. Try and get it passed before Brown is sworn in. That may be seen as somewhat undemocratic.
2. Renegotiate the package to get a liberal Republican in the Senate to support it, while not losing any Democrat votes.
3. Use a Senate process called reconciliation to pass it with 51 votes – however this means parts of it will be dropped.
4. Have the House pass the Senate version without amendment (avoiding the need for a new Senate vote)
5. Accept failure

The Democrats started the fnger pointing before the polls closed. As with most situations, the blame is both local and national. Coakley ran a bad campaign and was a bad candidate. But the healthcare legislation was also an issue, and Obama no longer had the clout to rescue the campaign.

UPDATE: Coakley has conceded. All over.

A guest post by Don Holden of INLAW.

Greatly encouraged by the success of similar legal advisory firms overseas, INLAW Group is planning an expansion in New Zealand, offering quality commercial and government legal services in-house, on demand and online as required. .

As overheads are dramatically reduced (by as much as 55%), those savings are passed on to business and government clients, who will receive a highly personalised, tailored service, from professionals with big-firm experience, business acumen and/or high academic standards.

It’s a “win-win-win” situation, says Don Holden, the founder of INLAW Group in New Zealand.

• The client receives on demand, in-house as-required advice, at up to a half of the normal rate,
• The lawyer can greatly improve lifestyle, and income, while working with a team of like-minded, focussed lawyers
• INLAW Group wins through increasing its quality skill base.

“Through having direct, cost-effective delivery of legal expertise, business and government can involve legal input in the vital planning stages of projects or problem-solving, using legal and business acumen to create new solutions while identifying and managing risk”, he says.

The concept can be used for banks, financial institutions, SME’s of all kinds, and larger corporates, particularly in project work.

INLAW’s modus operandi can have an excellent application in New Zealand Local Authority work, where there is often expensive duplication of advice across a range of legal topics. Real savings can be effected here if councillors and management can observe savings combined with high quality advice, and standardisation of many legal and quasi legal processes is introduced

“As already identified in surveys carried out here, Central Government could save $100m through better, more intelligent outsourcing of advice from business models like INLAW.

“Also, major savings can also be made through carrying out project/problem research through INLAW lawyers, then verifying solutions with the best lawyer available, who may be in any of the big firms, or elsewhere – in the not-too-distant future, with INLAW itself.. That’s the future vision, and warning, that Professor Susskind (Chief IT advisor to the Lord Chief Justice in UK, advisor to international law firms), has given the profession– see his latest book, “The End of Lawyers?”

“There is a significant move offshore in legal circles to work out better methods of delivery of cost-effective services. The startling success of new firms like Axiom Legal in USA and UK, Keystone Law in London, and many others, is testament to this new movement.

“We’re simply selling brains, not baubles, and that may not endear us to the Establishment who cocoon themselves in large luxurious offices in hard-to-get-to places, with stunning views – as a means of convincing clients they are right.

There are no absolute guarantees on correctness, however.

Their fees have been termed “reassuringly expensive”, often acceptable to CEO who are, ultimately, not paying personally for advice.

Most legal solutions are now available online to us, from international legal publishers who offer well-researched and resourced, lawyer-friendly databases

“Although the big New Zealand legal firms may continue to make some lawyers unhappy for years to come, there’s real enthusiasm for the concept from some very talented lawyers.

We’re prepared to talk to both lawyers and potential clients, on a highly confidential basis, at any time”.

The Tax Working Group have released their final report. It is a readable 73 pages.

They first cite three major problems with the current tax system:

1. New Zealand relies heavily on the taxes most harmful to growth – particularly corporate and personal taxes on capital income.
   
2. Differences in tax rates and the treatment of entities provide opportunities to divert income and reduce tax liability. This disparity means investment decisions can be about minimising tax rather than the best business investment.
   
3. There are significant risks to the sustainability of the tax revenue base: Compliance is likely to be affected by perceptions that the system is unfair. International competition for capital and labour, especially from Australia, will impact on the sustainability of corporate and personal tax rates.

They have 13 recommendations, in order:

1. The company, top personal and trust tax rates should be aligned to improve the system’s integrity.
2. New Zealand’s company tax rate needs to be competitive with other countries’ company tax rates, particularly that in Australia.
3. The imputation system should be retained.
4. The top personal tax rates of 38% and 33% should be reduced as part of an alignment strategy and to better position the tax system for growth.
5. Base-broadening is required to address some of the existing biases in the tax system and to improve its efficiency and sustainability
6. Most members of the TWG have significant concerns over the practical challenges arising from a comprehensive CGT
7. The majority of the TWG support detailed consideration of taxing returns from capital invested in residential rental properties on the basis of a deemed notional return calculated using a risk-free rate.
8. Most members of the TWG support the introduction of a low-rate land tax as a means of funding other tax rate reductions.
9. The following targeted options for base-broadening should be considered for introduction relatively quickly:
   1. Removing the 20% depreciation loading on new plant and equipment
   2. Removing tax depreciation on buildings (or certain categories of buildings) if empirical evidence shows that they do not depreciate in value
   3. Changing the thin capitalisation rules by lowering the safe harbour threshold to 60% or by reviewing the base for calculating this measure.
10. GST should continue to apply broadly. There should be no exemptions.
11. Most members of the Group consider that increasing the GST rate to 15% would have merit on efficiency grounds because it would result in reducing the taxation bias against saving and investment.
12. There should be a comprehensive review of welfare policy and how it interacts with the tax system, with an objective being to reduce high effective marginal tax rates.
13. Government should introduce institutional arrangements to ensure there is a stronger focus on achieving and sustaining efficiency, fairness, coherence and integrity of the tax system when tax changes are proposed.

There is little in these recommendations I disagree with, and I hope the Government implements most of them.

The removal of the ability to claim depreciation on buildings as a taxable expense is long overdue, considering almost all buildings actually appreciate in value.

Some of the other recommendations such as a deemed rate of return on investment properties and/or a land tax will help prevent future housing bubbles.

And dropping income tax rates is of course highly desirable.

While I would like to see GST increase, I am not sure that a net revenue gain of just $200 million (after compensating lower income families) from going to 15% makes it worthwhile.

The TWG make clear that they all agree that the status quo is unsustainable and not an option. The Government has pretty much said they agree. So the question is not whether there will be some reform, but how much.

Of course the tax side is half the equation. Maintaining discipline on the spending side is crucial also, and there is more there to be done also.

1. Graeme Edgeler examines the Three Strikes bill.
2. Hot Topic responds to Poneke’s post on the Climategate e-mails.
3. Andrew Geddis looks at how Judges are sacked.
4. Whale Oil publishes his Politicianary of political nicknames for MPs and some of the press gallery.