Kiwiblog

Treasury have given some examples of overall change in net income for various persons or couples. You can see which one may be closest to you. In order they are:

1. Foreign owned company has NZ subsidiary earning $8 million and interest expenses of $5.6m and net profit of $400k due to thin capitalization rules. Under new rules taxable net profit increased to $1.52m, so firm is $313K worse off.
2. Professional landlord with 25 properties earning $112,000 and depreciation of $52,000. $15k a year worse off as now pays tax on $112,000 of income not $60K
3. Business owner which makes $120,000 profit but pays salary of $48,000. Has spouse and two children. $8k a year worse off as no longer eligible for WFF.
4. Couple each earning $150K owning 10 properties costing $4m and now worth $6.5m. No tax paid on rental income of around $35K a year due to depreciation. Overall $5,600 a year worse off.
5. Unemployed person on dole pays $100/week rent and gets $36 accom supp. $53 better off.
6. DPB beneficiary with three children paying $300/week rent, $130 better off.
7. Student on student allowance and $100/week rent and $40/week accom supplement. Earns $9K part-time. $140 better off.
8. 19 year old on minimum wage pays $100/week rent. $330 a week better off
9. Retired couple own home, no mortgage or investments. $560 better off
10. Single superannuitant in own home with $10K a year investment income. $620 better off.
11. Sole earner earning $50K and $120/week rent. $830 better off.
12. Couple with two children, earning $80K and $40K with one investment property which generates $2,700 profit and $3,000 depreciation. Property has doubled in value from $300K to $600K. $1,225 better off.
13. Couple earning $50K and $26K with two kids and $300/week mortgage. $1,285 better off.
14. Couple saving for first home both earning $60K, $1,000 a year interest, $250/week rent. $2,100 better off.
15. Couple earning $100K and $40K with three children. $600 a week mortgage. $3,170 better off.

So of the 15 examples, four are worse off. The foreign owned company, the two professional landlords and the company owner who was claiming WFF despite their high income.

The student and the two beneficiaries are marginally better off by $1 to $3 a week. This reflects of course they are not generally (yet) contributing to the economy, but are a net cost on other taxpayers.

A 19 year old on the minimum wage is around $7 a week better off, and those on the pension around $10/week better off.

A sole earner on the average FT wage is $15/week better off.

And those who pay the most tax currently, are of course even better off. They get to keep more of their earnings.

The Government has done a very nice job of not repeating their mistake at the beginning of the year when they over-egged expectations and under-delivered – which had Phil Goff reading out in the House my “B” grade to the PM’s beginning of year statement.

The tax cuts in this budget go well beyond what media had been predicting with a huge drop in the second lowest tax rate, and also a welcome drop in the corporate tax rate from 30% to 28% at 1 April 2011. This will help attract investment to NZ and matches Australia. The tax package gets an A- from me.

The tax rate changes from 1 October 2010 are:

• Up to $14K – tax rate goes from 12.5% to 10.5%
  $14K to $48K – tax rate goes from 21.0% to 17.5%
  $48K to $70K – tax rate goes from 33.0% to 30.0%
  $70K+ – tax rate goes from 38.0% to 33.0%

Workers earning around the average full-time wage ($40K to $48k) will, over 18 months, have had their top marginal tax rate go from 33% to 17.5% – almost halved.

Two thirds of the “cost” of tax cuts goes to reducing bottom two rates and 73% of income earners will have a top tax rate of 17.5%. You keep 82.5% of every extra hour you work.

The table above shows the change in income tax for the various tax brackets. They’ve done a very good job of having the reductions fairly smooth across the board as a percentage of existing income tax paid. Those under $70,000 get the largest percentage decrease.

Note the table includes the IETC for non WFF recipients (80% of people). If you exclude that it does not change the absolute savings but the % savings at $30K is 16.4% and $40K is 16.5%.

This table shows the net savings after impact of GST (calculated at 2% CPI increase). As one can see, people at every income level are left no worse off which was the objective.

However the above table only covers income tax and GST. There are also increases in superannuation, benefit adjustments, the changes to depreciation rules and the crack down on LACQs etc. Treasury has estimated the overall impact of tax changes as a percentage of the average disposable income. They estimate:

1 Households earning under $40K will be 0.7% better off
2 Households earning $40K to $85K will be 0.4% better off
3 Households earning over $85K will be 0.7% better off

Some of the other tax changes are:

• No depreciation claims on buildings with an estimated useful life of greater than 50 years
• LAQCs can not deduct losses at the marginal tax rate and pay tax on profits at lower company rate
• Changes to thin capitalization rules to limit foreign multinationals reducing NZ tax liability
• WFF eligibility to exclude investment and rental losses
• Remove the 20% accelerated depreciation loading for new plant and equipment

The property changes will see crown revenue increase by $2.5 billion over four years or an average $600 million a year.

$119 million of funding to IRD for increased audit and compliance is estimated to bring in $745m over four years or $200m a year.

Almost all of that extra $800m will come from higher wealth households.

This is why overall high income households are forecast to, on average, have only a 0.7% increase in disposable income – the same as low income households. One has to not just look at the income tax and GST changes, but the overall package.

And overall one has to conclude it has met the twin aims of both being fair and being good for economic growth.

The Herald reports:

If Labour were writing today’s Budget, it would spend more than National to ensure the recovery from recession remained on track, says finance spokesman David Cunliffe.

The Government spending more does not “ensure” the recovery remains on track. It merely ensures that taxes will have to increase in the future to pay back all the debt.

Labour leader Phil Goff has already sparred with Finance Minister Bill English over the tax changes expected today, with Mr English saying last week that Labour’s policies were a recipe for more debt and higher taxes.

How mean of Bill English to say that, just because it is true.

However, Mr Cunliffe told the Herald that his party, as “very prudent managers” of the Crown’s finances, would keep a tight rein on spending at present.

This would have more credibility if Labour had not called for billions of dollars of extra spending and borrowing.

“Right now, the country’s coming out of recession and well into recovery, and with growth rates forecast between 2.5 and 3.5 per cent of GDP this year and higher next year, this would not be the time that we would want to increase the amount of fiscal stimulus in the economy.”

I actually agree with that statement. We’ve just had the biggest fall in unemployment since records began. The economy does not need a fiscal stimulus.

Having said that, Mr Cunliffe believed an argument could be made that the $1.1 billion earmarked for new spending in the Budget “is quite contractionary given that around half of that will be chewed up by the automatic cost increase of health alone”.

It isn’t contractionary – it is disciplined. If one returns to the fiscal settings Labour had, then the deficit was projected to widen and widen, and debt to indefinitely grow until we have Greece like levels of debt.

“Bill English is behaving like an old-fashioned Treasury vote analyst pinching a few pennies here and there. Well that won’t solve the problem,” said Mr Cunliffe.

Increased savings, investment and exports were the keys to improving economic performance and those would be areas of focus for a Labour government.

So in one paragraph Labour argues they will be “very prudent” managers who will keep a “tight rein” on spending and then they dismiss said tight rein as  mean penny pinching.

I agree increased savings and investment is important – which is why I support increasing GST and reducing personal income taxes. Sadly Labour does not – they ran an axe the tax campaign against GST.

KiwiSaver, “a spectacular success” under the previous government whose growth had levelled off under National, would probably receive a tune-up.

More than $750 million. God no.

“We would say to the public service you need to be innovative, there’s no point in flooding Labour with the Budget bids that National turned down.”

Well at least there is a glimmer of hope.

As usual, I will be in the budget lockup today from 10 am. I expect to have posts appearing from very shortly after 2 pm.

I will also be on Radio NZ from 4 pm to 5 pm as one of the two panelists with Jim Mora. We will be discussing the budget for some of that time.

Sage at No Minister blogs:

A British scientist has been disciplined for sexual harassment by his Irish university for showing a female colleague a research paper about fellatio in bats, triggering an outcry over academic freedom.

Leading scientists and academics including Steven Pinker and Daniel Dennett have rallied to support Dylan Evans, after University College, Cork (UCC) placed him on probation for two years and ordered him to have counselling.

Supporters of Dr Evans, a behavioural scientist, said the university’s actions sent a dangerous message that areas of legitimate academic debate can be deemed off-limits if certain people find them offensive for personal reasons.

Who can be offended by fellatio amongst bats? Now if it had been a video of said activity I can imagine the upset, but a research paper??

While an investigation cleared Dr Evans of sexual harassment prior to his showing her the bat fellatio paper, it found that this incident amounted to a joke with sexual innuendo, though it accepted he had not intended to offend.

Professor Michael Murphy, the UCC president, declared that the complaint of sexual harassment had been upheld, and punished Dr Evans by imposing a two-year period of “monitoring and appraisal” and requiring him to complete special training.

What an hysterical over-reaction.

David Garrett blogs:

have just had the pleasure of listening to retired California Judge Peggy Hora speaking on Drug Courts in that state. These courts were introduced about 20 years ago, and seem to have been a resounding success on a number of fronts, particularly financial – for every dollar spent on Drug Courts, twelve dollars is saved on police and corrections budgets.

Rather than imposing prison sentences, Drug Courts suspend sentences pending the completion of drug treatment programmes that are tailored to each individual offender. If the offender successfully completes his or her programme, then the court imposes no further sentence. If they fail, they are sentenced as if the treatment programme had not been attempted. The offender does not suffer any additional penalty for attempting but failing to “get clean”.

In answer to a question from me, Judge Hora made it clear that treatment programmes in the community were not an option for violent offenders – regardless of their drug status. The Judge also observed that current thinking among addiction treatment specialists is that compulsory treatment within prisons can in fact be effective. Like most people, I had been of the view that compulsory treatment could not be effective. Her Honour noted that if compulsory treatments were to be effective, offenders had to “engage” with them – and apparently most do – and there has to be more intensive monitoring of those persons when they are back in the community.

Treatment rather than punishment sounds a worthwhile idea to me. A pity the Government ruled out any change to the drug laws.

The Herald wants changes to the Super City:

The committee examining the bill is led by National’s John Carter, a pragmatist steeped in local government. He indicated to Local Government NZ that its concerns would be heard.

The committee should insert more explicit powers for the Auckland Council to direct, change, establish and disestablish, if necessary, CCOs and their functions.

It should make all the CCOs’ decision-making board meetings open to the public, not just Auckland Transport’s meetings when enacting bylaws.

It should reconsider the split of representation on these boards and the lack of influence from the Auckland Council’s executives and elected councillors on issues such as transport.

Support for uniting Auckland, which seemed strong at the time of the royal commission and its extensive public submissions, has weakened. It can be restored, if the committee hears the concerns of the people.

I expect the report to be out before long, so we will see the shape of the Council.

The Press and Dom Post both talk about the leaky homes package. The Press says:

It has taken months of wrangling between central and local government, but finally there is a financial assistance package on offer which should help to provide resolution to some of the New Zealanders with leaky homes.

The scheme will not please all, especially those ineligible for the package or who resent the costs which they still must bear. But in terms of finding a solution which is fair to both tiers of government, leaky-home owners and those who pay rates and taxes, this package is balanced and a distinct improvement on the original proposal.

And the Dom Post:

The leaky buildings fiasco and the Government’s proposed solution need to be put in perspective. If the package unveiled by the Government is accepted, the taxpayer will pick up about $1 billion of the price of fixing leaky homes in New Zealand. That is the same amount of money originally put in the fiscal envelope to spend on settling all Treaty of Waitangi claims. …

The temptation is to focus on who is responsible – and there are many. There are the politicians who loosened up the building code to allow materials and types of building that had already caused problems overseas – and who have dragged their feet on a solution since. There are the architects who designed buildings for the sunny Mediterranean, not a rain-soaked New Zealand. There are the developers who favoured cheapness over durability. There are the builders who did not do their jobs, either because they did not have the skills to work the new materials properly or because they cut corners. There are the local council inspectors who were not diligent enough in ensuring the buildings did not leak. And finally, there are the owners, who, like all buyers, must take ultimate responsibility for their decisions.

The reality is that not all who should be shouldering the blame are. Some developers, contractors and builders have accepted their responsibility. Others have vanished like a will-o’-the-wisp – the companies that carried out the work, and carried the liability, are long gone.

What is needed now is a workable solution that sees repairs carried out quickly. That is what the Government appears to be offering, though details, such as how the cost of repairs is assessed, will be important.

And they conclude:

As the result of a Court of Appeal ruling, the Government has every legal right to walk away from the problem. However, that would be the wrong thing to do.

The local authorities should take the same approach and accept the package, even though it will almost certainly mean rate rises in the most affected areas, including Wellington. They could no doubt wear down many of those in leaky homes through a battle of legal attrition, but that would not be the right thing to do either.

The solution may not be ideal, but it is workable. The alternative is more years of litigation in which the only winners are the lawyers. It’s time to end the nightmare.

The ODT looks at town and gown:

Seven years ago, the University of Otago published some statistics that indicated this dominant economic force would soon be making a $1 billion a year contribution in its broadest sense to the Dunedin economy.

There cannot be doubt today that the city’s cultural, sporting, shopping and culinary landscapes would wither were it not for the university and, to a lesser extent, the polytechnic and college of education. …

It is noteworthy that the city now has a 25-year “vision” for the university as well as a 50-year “vision” for large parts of the reclaimed upper harbour basin.

The “Campus Master Plan” envisages the equivalent transformation of the north end, including the link with the Forsyth Barr Stadium and the university plaza.

Probably most immediately controversial is the consultants’ idea for the university to purchase the more run-down areas of student flats – the so-called “ghetto” – and to take responsibility for an accommodation upgrade.

Student accommodation so close to the campus proper is a major attraction and opportunity for the university and its students.

Long may the university grow I say!

I fell at the final hurdle. One of the answers prior to that had been a lucky guess also. Quiz is here. Took 1:10 but that was due to an effing slow Internet connection today, not me!

Stuff has a guest op ed from the Flouride Action Network:

In Wellington, sodiumsilicofluoride is added to the drinking water. We import this substance from Belgium where not only do they not have water fluoridation, they have banned the tablets. In fact, no country in continental Europe has water fluoridation any longer. Some did have it but stopped many years ago. When fluoridation was being promoted in these European countries they too were told that their water was deficient in fluoride. Just like the Americans, the Australians, the Irish, we in New Zealand are being spun the same line.

I’d be interested to know if this is the case with regards to Europe?

The first stage of this disease is identical to osteoarthritis and, considering fluoride accumulates in our bones, it is likely that many people in New Zealand are being misdiagnosed with osteoarthritis when in fact they have the first stages of skeletal fluorosis.

The last two studies in New Zealand on dental health (Auckland 2009 and Southland 2005) show that there is no difference in decay rates between children in fluoridated areas and children in non- fluoridated areas. The only difference is that 30 per cent of the children in the fluoridated areas have some form of dental fluorosis whereas only 15 per cent of children in the non-fluoridated areas do.

Again would be interested in verification of this claim.

In an ideal world, there would be two water supplies to each household, and the household could choose whether to have fluoridated water or not.

Martin Kay writes:

MPs are set for tax cuts of at least $57 a week in tomorrow’s Budget, but some with investment properties could be hit in the pocket by other tax changes.

The latest register of MPs’ pecuniary interests, issued yesterday, reveals 71 of Parliament’s 122 MPs have a concern in more than one property, including several who have investment properties.

Tomorrow’s Budget is expected to lower the top income tax rate from 38 to 33 cents in the dollar, bringing the lowest-paid backbench MP a tax break of $57 a week.

Some will be clawed back through the rise in GST, but Finance Minister Bill English is also expected to curb the ability to offset losses and depreciation from investment properties against other tax.

I’ve done a quick calculation of what the assumed changes will mean for an MP who has one (many have more than one) investment property.

If the improvements are valued at $200,000, then they will be claiming $4,000 depreciation which reduces their tax burden by $1,520 or $29 a week.

So that tax break is down to $28 a week. But what about GST. The TWG estimated GST on average is 5% of income for top decile earners, so for salary of $130,000 it is $6,500. If GST increases by 20% (from 12.5% to 15%) the extra GST will be $1,300 or $25 a week.

So an MP who has one investment property is projected to be just $3 a week better off, or $150 a year.

Remember that tomorrow, as some claim Government MPs are motivated by self interest in supporting a tax reform package.

John Hartevelt reports:

A $300 million tax dodge – by which half the country’s rich don’t pay the top tax rate – will be cracked by changes tipped for tomorrow’s Budget.

Prime Minister John Key said yesterday that tax-avoidance loopholes were being targeted.

The top income tax rate of 38 per cent has encouraged wealthy Kiwis to move their money into family trusts, which pay tax at 33 per cent, or into companies, which attract only 30 per cent tax.

An Inland Revenue sample of 100 of the wealthiest New Zealanders showed that only about half were paying the highest marginal tax rate on their income.

The Tax Working Group says sheltering of income in trusts cost the Government about $300m in tax revenue in 2007.

John Shewan, chairman of PricewaterhouseCoopers and a working group member, said trusts were “breeding like rabbits in the South Island”.

That is a key point to remember – many wealthy people are avoiding the 38% tax rate. And if they have rental property investments, they will probably end up paying more in overall taxation.

“And that’s what happens when you have silly tax rules that provide that incentive. The tax rules have driven people into using companies and trusts.

“People aren’t stupid. The shockingly poorly designed tax package of 2000 has caused all sorts of things to happen.”

Financial author Martin Hawes said he would be surprised if any of the richest Kiwis paid the top income tax rate and, if they did, it would be on only a tiny fraction of their worth.

The lower the tax rates are, the less people try to avoid them.

Mr Key said the Budget would include “a number of areas” in which tax liability was increased.

“You will see we’ve done quite a good job actually of closing down loopholes and making sure there is fairness in the system,” he said.

“We know that roughly half the people on the rich list actually didn’t pay the top personal rate last year, so [we're trying to] get some fairness into the system.”

Mr Shewan said “a great number of wealthy people” would end up paying more tax.

“There is political risk associated with increasing anybody’s tax and some people are not going to be happy with the statements that are going to be made on Budget night.”

Mr Hawes said business people and farmers were among the most common users of family trusts.

“On the tax side, the people who would be affected by any tax changes to trusts will be National Party voters.”

And again it is not about redistributing a small cake. It is about growing a larger cake. Less inventive to avoid tax through trusts and residential property investment. Greater incentive to earn more and save more and invest more in capital markets.

The Register is here. Some of the interesting parts:

• Jim Anderton still has his shares in the Commonwealth Bank of Australia. He forces taxpayers to fund Kiwibank while he invests in the evil Australian banks
• Jacnda Ardern had trips to Hungary, Thailand and Argentina as part of her role as President of the International Union of Socialist Youth
• David Bennett got free tickets to the Tua vs Cameron fight – lucky bastard.
• Cam Calder is a share holder in Vibration Technology International Limited – guessing this is not an offshoot of DVice?
• Ashraf Choudary part owns 21 acres in Pakistan
• Paul Hutchison has shares in South Pacific Star Cinemas Limited
• John Key’s gifts range from bottled water to Top Gear tickets to glass urns with gold embossing
• Wayne Mapp had presents from the Vietnamese Communist Party and the Chinese People’s Liberation Army
• Nicky Wagner has an interest in the Timelord Trust – is she from Galifrey?
• Pansy Wong has shares in the Christchurch Gondola

UPDATE: I missed that TVNZ paid for Darren Hughes to fly to the USA for the Breakfast show. An unusual decision!

As is usual, Sir Roger has done what is effectively an alternative budget. Here are some of the details:

• Cutting $3.1 billion of “wasteful” spending
• Increase GST to 15% ($1.9b)
• Reduce depreciation claims ($1.2b)
• Tax cuts of $4.2b
• Deficit reduced by $1.4b

The tax cuts package would be:

• 21% tax rate drops to 18%
• 33% and 38% rate drops to 24%
• Company rate drops to 24%

Now that would lead to investment!!

Sir Roger also proposes replacing WFF with a tax free threshold,which would be $41,600 for one child, $49,400 for two children up to $81,000 for six children. If a parent earn under the threshold they get a tax credit equal to the difference between their old WFF subsidy and this regime.

A key issue is whether there is $3.1 billion of waste to be chopped. Sir Roger has listed around 200 programmes he would chop ranging from the fibre to the home rollout to some of the research and science fund. The major ones are:

• $30m from public broadcasting
• $82m from energy efficiency
• $248m from broadband
• $53m from school staffing
• $100m from social services NGOs
• $330m from abolishing MED
• $470m from the ETS
• $530m from interest free loans

Now the Government got elected on the basis of keeping interest free loans, an ETS and a fibre to the home broadband package. If it abandoned those promises, I suspect Phil Goff would be Prime Minister next year.

However that does not mean the direction Sir Roger pushes is wrong. If we can at least slow the rate of increase in spending (I support Sir Roger’s idea of a capping it on a real per capita basis), then over time we would have the ability to get tax rates down to a level where economic growth will be bullish.

Wellington Airport have released their list of top ten suggestions, after backing down on the proposed Wellywood sign. They are:

• Lord of the Rings sculptures
• MIRAMAR
• WELLYWOOD
• Middle-earth or Frodo’s Land
• Absolutely Positively Wellington
• A film sculpture
• Wetawood
• WELLINGTON
• A wind sculpture
• A weta sculpture

The Dim Post comments:

Nothing says ‘film’, ‘global’ and ‘Wellington’ like a ‘MIRAMAR’ sign. And ‘Frodo’s Land’ made the top 10? What was number eleven? A word that burned out your retinas and made your eyeballs run down your face?

Have to agree.

My favourite is still a weta sculpture, and it even has a Facebook group in support of it, if you agree.

Of the ten suggestions, which are the better and worse ones? I’ll try and rank them in order.

1. A weta sculpture
   
2. Absolutely Positively Wellington
   
3. Lord of the Rings sculptures
4. Middle-earth or Frodo’s Land
5. WELLINGTON
6. Wetawood
7. A film sculpture
8. A wind sculpture
9. MIRAMAR
10. WELLYWOOD

What do you think?

Steven Joyce has announced:

The Government’s commitment to invest $250 million to support the KiwiRail Turnaround Plan will help increase New Zealand’s economic productivity and put us on the path to faster growth, Transport Minister Steven Joyce says.

The Budget 2010 appropriation is the first round of Government support for the objectives of the $4.6 billion Turnaround Plan.

The Government has committed in principle to a total package of $750 million over the next three years, with final decisions on funding subject to individual business cases.

“The KiwiRail Turnaround Plan is designed to see the rail freight business become sustainable within a decade by getting it to a point where it funds its costs solely from customer revenue,” says Mr Joyce.

“In fact, the lion’s share of the $4.6 billion will come from the business itself.

The Government really has little choice. One can’t sell Dr Cullen’s train set. No one would buy it.

The Greens complain not enough is spent on public transport such as trains. I guess they’ll call for even more than $750 million.

It will be interesting to see if KiwiRail can move towards break even. This subsidy should be regarded as full and final. If they can’t break even within a decade, then the for sale sign should go up.

Last Friday I attended a workshop of around 15 people, with the aim being to go through the Government’s Electoral Finance legislation and identify potential improvements. It was (I thought) a very useful meeting, and some of the output will flow through in submissions.

The attendees were a mixture of lawyers and academics, including some overseas experts.

Generally the workshop was not about pushing for policy changes to the proposed bill, but how to make it work more effectively and close down unintended loopholes etc.

However it did sometimes reach into policy areas a bit. When we were trying to come up with a definition of the regulated period that is not retrospective, but handles early and late elections, the consensus was that the best solution would be a fixed term of Parliament – like the US has.

Also the consensus (only one person not favourable) was that a four year term would be a significant improvement.

By coincidence Labour MP Iain Lees-Galloway has blogged today:

We’ve just passed the half-way mark of this term of Parliament. As a first-term MP I can tell you it has flown by and I can’t believe we will be back into election year next year.

A lot of people in my electorate have commented that our 3-year term seems incredibly short.

Most have stated a preference for a four-year term, but wouldn’t want to go as far as five years.

I guess under FPP we didn’t want to wait too long before we got to tell our MPs how they were going. But under MMP would we be better off with a slightly longer term?

No Right Turn is against, but the Dim Post is in favour.

I am a very strong supporter of a four year fixed term. I think doing so, would significantly improve Government decision making. It would also mean parties would not need to raise as much money privately, as elections would be less frequent.

In the US the House has a two year term, which means they are in near permanent re-election mode. Hence some badly needed laws (such as immigration reform) never get passed as the next election is always around the corner.

In New Zealand, only the middle year tends to be highly useful. The first year is spent implementing the manifesto, and the third year is spent doing as little as possible to upset people. The second year is the opportunity to implement policies and laws to deal with “harder” issues.

So a move to a four year term, would effectively double the amount of time Parliament has in dealing with issues that are not easy to deal with in sound bites.

I suspect Governments would tend to end up normally serving two terms of four years, rather than three terms of three years.

Now any changed has to be approved by the people, and in 1967 only 32% voted for a four year term and in 1990 it was only 31%.

However I think with a fairly popular Government in place, one could get a majority to agree – especially if the implementation was not immediate, but say from 2017 onwards for example.

The 1990 vote was take when the electorate was desperate to throw Labour out of office, and the last thing they wanted was another year before they could do so.

The 1967 vote was taken halfway though a Government’s third term of office – again not an ideal time.

Would be great to have a private member’s bill for a referendum on the term to be held with the 2011 election.

The Herald focuses on leaky homes:

Many homeowners will now see their bill for repairs effectively halved – a quarter paid by taxpayers, a quarter paid by ratepayers – and the rest of the money made available through Government-guaranteed bank loans. That will be a relief to them, and who could argue with the need to help resolve the horror that has afflicted lives and families?

A horror that was dismissed by Helen Clark as a beat up by the Herald.

Some will find the Government contribution overly generous, as a Court of Appeal ruling found the Crown had no liability because its flawed building department did not have sufficient “proximity” to the actual house leaks. We have argued here before that local authorities so poorly regulated and managed the building practices that they should take more responsibility than central government. Yet their exposure has stayed around a quarter of the cost, while the negotiations leading to this package have seen the Crown up its contribution from a proposed 10 to 25 per cent.

It is generous, but sadly necessary.

National inherited this mess from a Labour Government which did not act swiftly or comprehensively to protect the rights of afflicted citizens. Yesterday’s package is the first time the Crown has put serious money on the table and committed councils to do the same. But in truth it addresses just two-thirds of the problem.

Better than zero thirds!

The Press talks community:

Too many residents of New Zealand cities believe that good fences make good neighbours. This fortress mentality might be thought to be inevitable as cities grow and become more impersonal, with neighbours not knowing each other.

But in several Christchurch suburbs there are now promising signs that this trend is being reversed and that a greater sense of community or an urban village approach is developing.

I was lucky. I grew up on Melbourne Road, Island Bay, where there was a great sense of community. All the kids on our section of the road knew each other and on any day we would be at any of the homes.

Only an extreme idealist could believe that New Zealand society could turn back the clock completely and return to those halcyon years when, it was said, everyone in a street knew each other by name and residents did not bother locking their front doors when they went out.

Not sure about the wisdom of not locking the front door, but I see no reason why one shouldn’t know all your neighbours – it is just a matter of knocking on doors and introducing yourself.

The Dom Post deals with the Rugby Union apology:

The Rugby Union apology to Maori players excluded from three All Black tours to South Africa bears the unmistakable stamp of a grudging public relations exercise. As recently as last month, Wayne Peters, the chairman of the union’s Maori Rugby Board, was dismissing calls for an apology as “simplistic”. To say sorry would be to show a lack of respect for past administrators of Maori rugby, he said. …

The exclusion of the likes of George Nepia, considered by some the greatest All Black, and Johnny Smith from All Black touring sides because of their race is a shameful episode in rugby’s history. The union should never have allowed another country to determine who should represent New Zealand.

Absolutely.

The ODT critiques science funding:

By the same token, years of indifference to adequately fund scientific innovation for the longer term – at least 10 or 20 years – has seen New Zealand gradually fall behind its competitors in the intellectual markets in which we compete for skilled thinkers, researchers and inventors.

There was some progress during the Clark government’s term in office, with its research and development tax credit and the $700 million Fast Forward Fund, and Labour has grounds for criticising the National-led Government’s announcement last week as not being sufficient or early enough.

The Government’s Primary Growth Partnership has, Labour says, not paid one dollar to its intended recipients and, further, business has received nothing from the Government for research and development for the 18 months the Government has been in office.

Still, even a few crumbs is better than nothing at all, and of the $321 million earmarked by the Government over the next four years, $225 million is “new” funding.

There are aspects of the arrangements which look promising, including a trial scheme to establish links between private companies and publicly-funded research organisations such as universities and Crown research institutes.

It would always be nice to be more, but again we are still borrowing $240 million a week.

The Dom Post reports:

Parliament’s security will be reviewed after a box of flies beat its new $8 million security system and sparked a bomb scare.

The parcel, with a note inside saying it contained a bomb, was delivered to the office of Agriculture Minister David Carter on The Beehive’s fifth floor, just after 8am yesterday.

My initial assumption was that the parcel was not directed towards the Minister but was sent by one of his political advisor’s exes for the said advisor. Statistically it has to be a realistic chance.

The scare forced ministers out of the Beehive as they were preparing for their weekly Cabinet meeting – sparking impromptu meetings in cafes around town.

Prime Minister John Key and Cabinet minister Steven Joyce got on with business at a local watering hole, The Occidental, with about 15 staff.

A popular decision with the staff I am sure.

Dave Burgess at the Dom Post went begging:

Powerful yet unexpected emotions struck me just minutes into my stint as a beggar. I was feeling like a low-life who would surely be ignored, abused or humiliated by passing pedestrians.

It didn’t help that the people walking past towered above as I sat forlornly on the ground. They were largely reduced to a mass of knees and feet but held the moral and physical high ground.

While depressing messages were crashing around in my head, the reality presenting itself was surprisingly uplifting.

People really cared and showed a huge amount of compassion and generosity to someone who had apparently hit rock bottom.

By caring people, I mainly mean women, of all ages and races. Over the combined four hours’ begging I received $126.20 from 32 people – but only five donations came from men.

The IRD said my begged money is considered a gift and does not attract tax. That is unlike street buskers, who are supposed to declare their earnings.

$126.20 over four hours is a very nice $31.55 an hour. And that is tax free. But with the donated food it comes to $164.70 or $41.18 an hour.

But if you compare it to pre-tax income, to see how much one would have to earn to receive the same amount in the hand, it equates to $60.01 an hour or an equivalent annual salary of $125,000 a year.

So maybe next time you see a beggar, you should ask him or her for a donation!

Work and Income deputy chief executive Patricia Reade says Wellington case managers have visited beggars on the street about 20 times over the past six months to find out if they need help.

“The majority of beggars have refused to speak to us and in fact only one person accepted an invitation to discuss their benefit entitlements.”

I’m impressed WINZ are proactive and regularly seek out beggars to see if they need help. The fact that almost none ever take up the offer of assistance confirms that their presence on the streets is not a matter of poverty or necessity – but normally a reflection of mental health issues and/or addiction problems.

AP report:

The siblings of a man who died more than a year ago must exhume his body so his head can be cut off and cryogenically frozen, a US court has ruled.

The Iowa Court of Appeals has sided with Alcor Life Extension Foundation, which sought to dig up the remains of 81-year-old Orville Richardson. Richardson had signed a contract with Alcor in 2004 and paid $US53,500 to have his head placed in cryonic suspension after his death.

Ummm, I’m not sure placing the head in cryonic suspension 15 months after death is going to achieve anything apart from really scaring the kids.

The Dom Post reports:

Prime Minister John Key is urging Kiwis not to be jealous if the rich get more from Thursday’s Budget tax package – because the rich are crucial to the economy.

The top 10% of taxpayers pay 76% of net taxation. Yes 10% pay 76% and 90% pay 24%.

But it is expected to deliver little more than $6 a week extra to low and middle-income earners as across-the-board personal tax cuts are clawed back by a rise to 15 per cent in GST and extra tax from property investors.

Once again – the tax changes are not about redistribution. They are about changing the incentives so there are greater incentives to work, save and invest overall and less of an incentive to invest in property beyond your own home.

Those earning more than $500,000 a year would get a $481-a-week tax cut, and even taking into account their extra GST payments, they will be more than $300 a week better off.

Why choose $500,000 a year – a salary level probably 50 people are on? Why not $800,000 or $1.2 million a year if you really want to get the envy going.

Anyway, some facts:

1. The higher the tax rates, the more it will be (legally) avoided. Hence why only half of the wealthiest 100 NZers are even paying the top tax rate. That NZer on $500K a year may in fact end up losing money through the tax package if his or her income comes through a trust at 33%, as they will have extra GST to pay and no reduction in trust tax.
2. Those who will be hardest hit are those owning multiple residential investment properties. These are not low income people. They will be people in the top tax brackets. They will end up paying more tax overall.
3. Someone on $500,000 a year will still be paying almost $160,000 in income tax and $25,000 in GST. If they shift to Australia that is $165,000 less tax available to fund welfare etc.

The Herald reports:

The Government could face rising costs of borrowing and increased scrutiny of its debt as a result of the sovereign debt crisis in Europe, a global fund manager has warned.

Gerard Fitzpatrick, a bond portfolio manager for Russell Investments, said Europe’s €750 billion ($1.3 trillion) bailout had stopped the immediate liquidity crisis but there were still concerns about sovereign debt. …

However, he said there was a risk of debt being repriced which could make it more expensive for the Government here to borrow money internationally.

“That will put more pressure on the New Zealand budget.”

Maybe this may cause a bit of hesitation in the economic geniuses in Labour who demand that the Government increase its level of borrowing, so it can put more money into the Cullen Fund.