Will take more than want

January 22nd, 2014 at 3:00 pm by David Farrar

The Herald reports:

Finance Minister Bill English says he wants Google, Apple and Starbucks and other multinationals to pay more tax and hopes the issue will be raised at economic talks this week.

One can want them to do many things, but they’re not going to. Of course they will locate their tax base in a country with a lower company tax rate.

The minister said this morning that getting corporates to pay their fair share of tax required international collaboration.

“We’re very keen to see them pay more tax. The tricky bit is that it requires combined international action,” he told Radio New Zealand’s Morning Report.

“A whole range of countries are going to need to agree on tax rules for companies like Google and Apple and Starbucks and any number of corporates that you can think of.

Yep there is no unilateral solution. But even multinational co-operation has its limits. It takes just one country not to agree, and that is the country where those companies will be established for tax purposes. It will be good if they can get agreement.

Although Google and other companies had local offices in New Zealand, their tax bills were believed to be out of proportion with their reported sales in this country.

That’s because tax is paid on profits, not sales. ‘ll use a good example.

The latest APN financial statement has revenue of $461 million. Their tax was $652,000. Their tax as a percentage of sales was 0.14%. This is clearly out of proportion to their sales, and APN should immediately pay a fairer proportion.

How about a fair “living tax” of 5% on sales? This would mean APN pays tax of $23 million instead of $652,0000 and Fairfax would pay A$100 million instead of zero. Isn’t this the logical outcome of repeated reporting by APN and Fairfax of other companies’ tax bills in relation to their sales instead of their profits?

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Gower’s Politician of the Year

December 20th, 2013 at 7:00 am by David Farrar

Patrick Gower writes:

English has had his hands on the purse-strings for five years now, and as expected, he signed off the year with the National Government on track to a sliver of a $86 million surplus in 2014/15 but growing to billions in the years after that.

In layman’s terms that means English is going to balance the country’s books – as National has promised.

By way of comparison, English’s Australian counterpart Joe Hockey opened his books too, and it was a shocker – $133 billion worth of deficits.

What a comparison.

English is an excellent economic communicator – his ability to talk “kitchen table economics” will be a real weapon for National in election year.

Key is 52, English is 51 – the prime of their lives in some senses. They are not going to hand over power lightly.

So English is “Bitter Bill” no more – it’s been “Raging Bill” this year.

Much is made of the fact that John Key is the totem pole that holds up the centre-right. The theory goes: take Key out – and take down National.

But that now applies to English too.

The political reality is that to take down National, the Opposition will have to knock out English too.

And that’s what makes Bill English Politician of the Year.

English vs Parker. I know who my money is on.

Patrick also rounds up the year in politics here.

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NZ 4th for open data

November 12th, 2013 at 9:00 am by David Farrar

The Open Data Institute has ranked NZ 4th best in the world for open data in its 2013 report. The top countries are:

  1. UK
  2. US
  3. Sweden
  4. NZ
  5. Denmark/Norway

NZ scored 82/100 for readiness, 65 for implementation and 90 for impact. The comments on NZ are:

The OGD initiative in New Zealand is part of a wider Open and Transparent Government Agenda, initially driven by the ‘Open Government Information and Data Re-use Working Group’ established in 2009, and later by the 2011 ‘Declaration on Open and Transparent Government’ approved by the Cabinet in August 2011. This declaration mandates public service departments, notably with the explicit inclusion of the New Zealand Intelligence Service, to “commit to releasing high value public data actively for re-use…in accordance with the NZGOAL Review and Release process”. NZGOAL is the New Zealand Government Open Access and Licensing Framework, based on the Creative Commons framework.

The New Zealand Government has put considerable effort into monitoring progress towards open government and open data, with Agencies asked to regularly report to Ministers on their progress, case studies collated on re-uses of open data, and an annual reporting process on adoption of the Declaration on Open and Transparent Government. New Zealand was one of the few countries in the Barometer where a significant emphasis on environmental impacts of open data could be observed, with a wide range of environmental datasets made available and seeing re-use, particularly in supporting coordination around extreme weather and geological events.

Bill English has commented:

“This is a real coup for New Zealand.  The Barometer is the first survey of global trends which ranks 77 countries on how they release their public data and the benefits those initiatives have for citizens and the economy,” says Mr English. 

“This is proof we are lifting the performance of the public sector through transparency and shared information. New Zealand was commended for its Declaration on Open and Transparent Government, its release of open data, in particular, maps, land ownership and census data and for regular reporting to Ministers.”

“The open government data work aligns with the Government’s better public service targets that New Zealand businesses have a one-stop online shop for all government support and can complete their transactions with the Government easily in a digital environment,” says Mr Tremain.

Bill deserves much credit for this. He has pushed open data from the very top, backed up with a lot of enthusiasm from many in the public service, and the wider community.

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Key and English on Q+A

November 11th, 2013 at 12:00 pm by David Farrar

A Q+A interview with John Key and Bill English:

CORIN Do you ever have any big disagreements though on direction in terms of whether you’re going far enough to the right or whether you should be pushing harder on something?

JOHN I’d say no. One of the big advantages is that we’re both central-right, so I think we’re smart enough to work out that if we want an enduring policy, then we need to make change that we can take the public with us. And over the course of the five years, we’ve demonstrated that. So if you look at the Business Growth Agenda, you know, that’s our economic framework. That is 366 individual changes that we’re making. None of them we would, in isolation, argue is going to turn the dial, but in totality, they are turning the dial significantly in favour of NZ being a higher-growth, competitive economy.

CORIN Do both of you want to stay on right through next term if you win?

JOHN Yep.

I think there is no issue that they want a third term. I’m not sure if they get a third term, that the PM would seek a fourth term.

CORIN You two don’t have a Brown-Blair agreement when it comes to potential succession?

JOHN No. And the truth is that we’ve got a broad caucus, and there’s lots of people you could point to that actually could come through, depending on the timing. I think there’s a range of people, both on the front bench and people who are emerging.

CORIN Could I pick you up on that? So we’ve got Steven Joyce and Judith Collins. They’re both frontrunners. Have you got any preferences?

JOHN Uh, well, a) it probably almost certainly wouldn’t be our choice. If you’re talking about the leader, it wouldn’t be my choice, because I wouldn’t be part of the caucus. The caucus would be making that decision, and if they were doing a coup, then they wouldn’t be coming to consult me on it, so we’re not too worried about that.

I like how the PM just talks openly about the reality that incumbent leaders normally don’t get a say in their successors. However that does change if the leader leaves on their own timetable.

CORIN Prime Minister, what about you? If you didn’t get across the line, is that it for politics for you?

JOHN Well, I don’t have a plan B. In other words, what happens if we lose the election? I’m totally focused on winning the election. But I’ve been reasonably upfront with people, saying that, you know, eventually, if you lose an election, generally there’s a change of leader. If there’s a change of leader, I don’t think it’s actually healthy to get in the way of the next leader. And most prime ministers that have lost elections haven’t stayed around long, long-term. But in the end, I hope we win, and I hope we get to stay there, because it’s very much unfinished business.

I don’t think anyone expects the PM would stay around if he lost the election.

CORIN The election next year; are we looking at a November election, essentially?

JOHN Uh, not guaranteed. I mean, we’re certainly picking an election at the back end of the year. There’s no reason to go early, but we’ll just need to think about that window of when it would make perfect sense. There are issues that we have to consider. Australia hosting the G20 at the end of the year, bits and pieces like that. So we’ll just sort of think that through, but, look, it’s in that window, I think, of sort of September to November roughly, but we’ll make an announcement sometime next year.

The G20 is mid November so that might discourage a November election. However we do not normally attend the G20. Maybe we will get a special invite as Australia is hosting it?

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The John and Bill team

November 7th, 2013 at 1:00 pm by David Farrar

Two interesting articles in the Herald. The first:

Prime Minister John Key has admitted he had to be persuaded to back off his bid to press the Reserve Bank into exempting first-home buyers from the banks’ new rules on loan-to-value ratios (LVRs) by Finance Minister Bill English.

Mr Key went into bat very publicly for an exemption for first-home buyers in June, during the bank’s consultation period on LVRs, which limit low-deposit or no-deposit mortgages by retail banks.

At the time he said he didn’t want the LVR to work for a “bunch of rich people and lock out a whole lot of first-home buyers.”

But in a joint interview with Mr English this week – marking five years in power for the National-led Government – he indicated that Mr English thought taking on the independent bank would be more trouble than it was worth.

“So I took a step back from that and said ‘yeah, okay, well fine’. That’s the way it goes.”

There is a line between advocating and directing. It is important the Reserve Bank is independent. Sadly Labour proposes ending that independence.

Mr Key also admitted he had been very reluctant at first to raise GST in 2010 but was persuaded fairly quickly about its merits.

“I’d be the first to admit I was a bit nervous about raising GST thinking can you actually politically sell all of that,” he said.

“Actually after we did all the modelling and we worked on it together, we were absolutely convinced it was fair and would actually work and it would deliver the sort of policy outcomes we wanted. And actually it’s definitely delivering results for the economy.”

The pair said they did not have arguments or rows.

Mr Key said the measure of any decent relationship was that you worked your way through all sorts of issues and respected each other’s views.

They are a hugely effective team.

Mr English made much of what he described as Mr Key’s instinctive ability to communicate with the public and maintain its support, and knowing how to set boundaries in terms of policy constraints.

They cited the example of state tenants’ entitlements.

Mr Key said successive Ministers of Housing and Housing officials had wanted the income that any state tenant received from boarders to be received to be counted as income in terms of calculating entitlements.

“But my view is well that would be seen as a step too far for large families or families that are trying really hard to make ends meet.

“And in the end if they are prepared to go the extra mile of having someone live in their home and cook them a meal, they are just good New Zealanders trying to get ahead.

“It’s like the carparking [dumped fringe benefit tax] issue.

“In the perfection of the IRD officials, we should have carried on with putting an FBT on those carparks – but that’s how you lose the public,” he said.

Mr Key also indicated that he had put constraints on labour market reforms.

You don’t get to implement much policy in Opposition. You fight the good fight on issues worth it such as the GST tax trade-off and the partial asset sales, but why take a hit on relatively minor issues such as FBT on car parks. No one will thank you in 20 years time for that one.

A second article looks at the John and Bill team:

The lingering question is how this pairing has avoided the pitfalls which have seen governments paralysed when the two pockets of power have stopped trusting one another and started undermining one another.

Told, the Herald wants to focus on their partnership before and after National was returned to power in 2008, Key turns and looks at English and exclaims “Okay, love” and laughs. English replies in typically droll fashion: “As a loyal deputy, I can assure you, it is not a partnership.” He means not that sort of partnership.

The humour, however, has an edge which leaves the listener wondering just how well the two men actually get along.

Very well, because they both understand which job they have, and Bill is not seeking a promotion (and in fact has ruled out ever standing for the leadership).

English’s tentacles certainly extend way beyond the confines of his finance portfolio. He was the one pushing hard for meaningful welfare reform. He has basically overseen the big changes in the housing of the poor. He keeps a watching brief on the public service and its adoption of new methods of delivering services. Given the almost-universal involvement of the Treasury in any reform, however, it is par for the course that the finance minister is involved.

Bill is constantly thinking about how to improve the performance of the Government as a whole. He has dozens of little pet projects on the go at any times ranging from championing open data to some funds for small local councils to do anti-truancy measures.

Bill on John:

• “(John) has more ideas than we know how to handle. My framework is a bit more conventional so I spend a lot of time just dealing with issues in a reasonably predictable way but the PM is always stretching the boundaries.”

• “He’s endlessly capable of everything, I assure you – catching fish, cooking pasta, making up policy, being friends with the Queen. There is nothing this man can’t do.”

John on Bill:

• “They are quite complementary skills. I do a lot of going around the country opening things and cutting ribbons and being the kind of face of the party that’s interacting with the public. And Bill is doing a lot of the long term thinking, heavy-lifting and policy design, all the things that involve ministers … I’m kind of the retail face.”

I wonder how David Cunliffe and Russel Norman or David Parker will work together, if they become Government.

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English goes list only, Heatley retires

November 2nd, 2013 at 10:00 am by David Farrar

Stuff reports:

Bill English is to step down as the Clutha-Southland MP next year after 24 years representing the electorate, but has no plans to retire from politics.

The deputy prime minister and finance minister, Mr English will remain in politics, and instead seek nomination for the National Party list at the 2014 election.

Mr English, who lives in Wellington, said representing the large Clutha-Southland electorate had required considerable travel and time away from his family, particularly after he became a minister.

With four of his six children having left home, he wanted to strike a better balance between family life and political commitments.

I note Michael Cullen went list only in 1999. Being Minister of Finance means an insanely busy workload, and balancing ministerial duties, electorate duties and family life would not be easy.

Phil Heatley announced his retirement this week also. Phil’s a legendary campaigner, and what was once an almost marginal seat has become rock safe thanks to his efforts. A damn nice guy, with a great sense of humour. I recall being excited in 1999 when we got an intake that included Simon Power, Katherine Rich and Phil Heatley (and others). A bit sad that they’ll all be gone by the next election but 15 years isn’t a bad spell.

The plus side is that National is showing how to renew itself while still in Government. This is quite critical. There’s going to be quite a few new National MPs in 2014. I hope the party organisation is working hard to make sure we get top quality candidates standing for both electorates and list.

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The tax system has got more, not less, progressive

October 23rd, 2013 at 7:00 am by David Farrar

Bill English has stated:

Lower income households are paying a smaller proportion of net income tax than they did in 2008, indicating that the tax system has become more progressive since the Government’s tax changes in 2010, Finance Minister Bill English says.

“This should contribute to improvements in income equality in New Zealand, contrary to the Opposition’s completely false claims that lower income households were disadvantaged by the tax changes,” he says.

If you repeat a lie often enough, people may believe it.

  • Households earning less than $60,000 a year, which total around half of all households, are generally expected to pay less in percentage terms towards total net tax in 2013/14 than they were paying in 2008/09.
  • Conversely, households earning more than $150,000 a year – that is, the top 12 per cent of households by income – are generally expected to pay more of the total net tax than they were paying in 2008/09.
  • And only 6 per cent of individual taxpayers earn over $100,000 a year, yet they pay 37 per cent of total income tax. This has increased from the 2010/11 tax year, when those taxpayers paid 29 per cent of total income tax.

Despite this, Labour persist with their rich prick envy tax insisting that those on higher incomes must pay 39% income tax as well as 15% GST!

Using data from the Household Economic Survey, the Treasury earlier this year estimated that this year households earning over $150,000 a year – the top 12 per cent of households by income – will pay 46 per cent of income tax.

But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 12 per cent of households are expected to pay 76 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.

12% of taxpayers are funding 76% of the net income tax take, and Labour says this is not enough! What do they want? 90%? 95%? 100%?

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Localism

October 3rd, 2013 at 3:00 pm by David Farrar

Brian Fallow writes in NZ Herald:

Local Government New Zealand and the New Zealand Initiative are calling for more public services to be provided by local government and funded by local taxes.

At least they would like to see a debate about whether the split between the responsibilities of central and local government is optimal.

NZ Initiative executive director Oliver Hartwich said New Zealand was an outlier among developed countries in having so small a share – 11 per cent – of total government spending undertaken at the local level.

The OECD average for spending by levels of government below central government was 30 per cent, he said, and only Greece and Ireland were more centralised.

We are unusual in having only two tiers of Government – central and local – no provinces or states. Now that I advocate that.

Local Government NZ chief executive Malcolm Alexander said a greater devolution of real authority to local government might encourage greater participation by the public, pointing to reports that in the local body elections now under way only 10 per cent of eligible voters in Auckland have voted so far.

The Swiss Ambassador spoke at an event last night on this topic. She mentioned that in Switzerland all powers started with the cantons etc and over time they decided what to hand upwards to the Federal Government, such as currency and military. In NZ all power rests with central Govt and local government is a creation of central government.

While attracted to the idea of local income taxes, Hartwich stressed that he was talking about re-allocating tax between central and local government, not an overall increase.

Absolutely. I have some attraction to the idea of taxes rather than rates to fund local government. Rates increases are only paid by home owners and businesses (directly) and any increases are often hidden by the fact your house’s value may have changed. I suspect it would be harder for a local Council to increase a local tax rate than it is to increase rates.

Hartwich has a paper on localism here.

Bill English also spoke last night and made some great points on the resilience of local communities and how locals care far more about local outcomes than officials in Wellington, and spoke about some of the pilots around the Waikato where some local initiatives are achieving great things.

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The Press on English

September 6th, 2013 at 9:00 am by David Farrar

The Press editorial:

But perhaps it should not have been because widespread respect for English, following his steady, careful performance as minister of finance through the worst financial crisis of the past 80 years, has been growing. A complimentary remark by a respected American economist on English’s performance at a conference in Sydney recently, was not untypical and it prompted a highly regarded New Zealand economist, Matt Nolan, to comment: “This is not the first time I’ve heard people overseas sing Bill English’s praises [it is probably in double-digits now] . . . we have a finance minister who understands the issues and tries to communicate them clearly.”

English came to office with an economy that had already been in recession for almost a year, when the global financial crisis hit. He had a measure of luck – there was no housing bust and although there were nervous moments, the New Zealand banking system did not buckle. But English responded to the crisis pragmatically and skilfully, avoiding severe retrenchment but focusing determinedly on reducing government debt and balancing the budget. Contrary to opposition propaganda, the government did not bring with it any dogma or hidden agenda.

A shock could, of course, upset things. The balance of payments deficit and overseas debt continue to be relatively high and to cause concern. But English’s overarching goal of getting the Government’s books in order, which looked hopelessly remote five years ago, now seems achievable, if only by a whisker, next year.

No surprise that I agree. Bill English has had the most challenging circumstances of any Finance Minister, and done very well. On top of that he is pushing a micro-reform agenda across Government that is making a difference.

While David Shearer was ultimately brought down as leader of the Labour Party by his woeful public communication, the role of weak, ill-thought-out policy in his downfall has probably been underestimated.

It is a factor the three contenders for the Labour leadership – Grant Robertson, David Cunliffe and Shane Jones – do not seem to have cottoned on to. In the beauty-contest meetings held so far, they appear mostly to have been diverted by essentially trivial issues such as the so-called “man-ban” or by seeing how far they can go in outbidding each other in implausible left-wingery.

The Labour leadership contenders have, in some areas, moved to the left of the Greens. That takes some doing!

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Capital Gains Tax

July 25th, 2013 at 2:00 pm by David Farrar

The Herald reports:

A capital gains tax on property makes little sense unless it also applies to the family home, says Finance Minister Bill English.

Speaking at today’s Mood of the Boardroom event in Auckland, English told the country’s top business leaders the government was maintaining its “clear position” on the capital gains tax debate.

“We’re not supporting the extension of the current capital gains tax,” he said.

“The overseas experts who tell us we need it all say that it should be comprehensive on all capital gains. And if you don’t do the whole thing then it probably doesn’t make much difference.”

I broadly agree with this. My position on Capital Gains Tax is this:

  1. We should have a comprehensive capital gains tax (many capital gains are already taxed, but not “incidental” ones)
  2. There should be no exemptions, including the family home. To do so will just encourage tax avoidence by giving each family member a home etc.
  3. Other tax rates (income and company rates) must drop by at least as much as the extra revenue a CGT would generate for the Government.

You need to do all three together, to get a broad based low rate tax regime – which is what is best for economic growth. What you shouldn’t do is bring in an exemption riddled CGT and use it as a way to screw taxpayers over for more money to fund extra spending – which appears to be Labour’s policy.

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Parliament Today

December 5th, 2012 at 4:30 pm by David Farrar

Bill talks on the Green Party photocopier!

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KiwiSaver to have auto-enrolment

October 18th, 2011 at 3:00 pm by David Farrar

Bill English has just announced that when the Government returns to surplus (in 2014/15), they will run an automatic KiwiSaver enrolment campaign for employees. This will apply in the same way as when you get a new job – you can opt out within a month.

The estimated cost (based on 55% of those auto-enrolled staying enrolled) is $550 million over four years. They will not do the auto-enrolment before the return to surplus as this would mean the Government is borrowing to pay for the savings subsidy, which mean overall national savings do not increase – you just increase private savings and public debt.

English has said National will not make KiwiSaver compulsory as some peeple prefer to save for retirement in other ways.

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Trevor joins the truthers and birthers

September 23rd, 2011 at 12:52 pm by David Farrar

The United States has mad conspiracy theorists on the right and the left. Those on the left are the truthers who are convinced Bush and Cheney blew up the Twin Towers and blamed it on poor old Osama. Those on the right are or were the birthers who were convinced that Obama was born in Kenya, and that his grand mother placed a fake birth notice in Hawaii in August 1961 just in case one day he decided to stand for President.

Back home we don’t have truthers or birthers, but instead the Labour Party Campaign Manager Trevor Mallard. He blogs:

Interesting disclosure from David Farrar yesterday. He, along with Matthew Hooton, and (waste of members money) PSA are bankrolling Bryce Edwards, one of the few remaining supporters of the Alliance, to provide the political commentary which mainly attacks Labour and the Greens from the looney left. The guy makes Margaret Mutu look like a well balanced academic.

As we all know the majority of Farrar’s income comes from the taxpayer via a “research” arrangement.

I wonder if Bill English signed the deal off or whether it was just a nod and a wink.

So Bill English secretly instructed me to secretly fund Bryce Edwards, so Bryce would attack Labour. With such insight, Trevor could apply to join either the birthers or the truthers.

First it is interesting to note his portrayal of Dr Edwards as more unbalanced than Margaret Mutu (who called for a ban on white immigration). This may come as a surprise to his many colleagues who have been interviewed by Dr Edwards for the OU Vote Chat series. His attack on Dr Edwards may remind readers of his attacks on Erin Leigh and others, and are perhaps a salient reminder of what awaits people if Labour gets back into Government.

I do wonder what Trevor’s colleague, tertiary education spokesperson Grant Robertson, thinks of Trevor’s attacking of an academic for his political views.

I should point out at this stage that Dr Edwards is what one would call left-wing. Like John Pagani, he used to work for the Alliance in Parliament around 10 years ago. It is of course very unusual for an academic to be left-wing. Almost unheard of.

Now let us get to Trevor’s discovery of this big secret, the sponsorship of NZ Politics Daily. It was a closely guarded secret until I revealed it in Stuff yesterday. Oh except for the fact that every single issues for the last few months has said:

New Zealand Politics Daily is produced independently by Bryce Edwards, Department of Politics, University of Otago, with the help of a research assistant who is paid for by the sponsorship of:
Curia Market Research – the place to go if you want to know what New Zealanders are thinking
Exceltium Ltd – New Zealand’s most successful corporate and public affairs consultancy
PSA – the public sector union advocating for strong public services and decent work.

On top of this daily disclosure by Dr Edwards, I blogged on the sponsorship back in June. The $100/week Curia pays doesn’t go to Bryce but to a research assistant who compiles the scores of stories included in the e-mail edition. I find the compilation incredibly useful as it lists every political story and major blog post for the day, and often discover stories I would have missed through it.

There is absolutely no input or influence over what Bryce writes as an intro summary to the daily bulletin. I would say I disagree with Bryce’s take on things probably twice as often as I agree with one! To give an example of some of Bryce’s recent summaries which in Trevor’s fantasy world Bill English is paying for:

  • This could be the year of the Greens – finally they might crack the 10% mark that has eluded them in every general election so far. And with the popular demise of Labour and the ideological confusion of Mana, the Green Party might end up being the real success story for the leftish side of the political spectrum.
  • With patience to delve through this analysis, anyone should be able see that the Police modus operandi and the Government’s attempts to help the Police out are rather outrageous.
  • The politics-free zone of the Rugby World Cup was supposed to deprive the Opposition parties of any significant media publicity in the main period leading up to the general election – but it might not quite work out as National intended. … Of course, the RWC opening night debacle has tarnished National’s competency reputation … Labour and the Greens are not just basking in National’s woes, however, but seem to be proactively attempting to get their messages out to the public while National has its mind on other things. During the last day or so, Labour and the Greens have been announcing all sorts of policies and campaigns. Labour’s policy on the Christchurch rebuild, in particular, might gain it some real kudos
  • There is no doubt that the National Government deserves the pressure that is currently being applied over the shambles of the Rugby World Cup opening night. …But the fiasco has certainly taken the shine off the National Government’s general appearance of competency. Murray McCully’s days as a minister suddenly seemed numbered.
  • National needs to be reminded that most people believe that we have governments and collective responsibility so people can feel protected from these bolts from the blue. 
  • Another chapter in the saga of malicious bungling by the Police has come to a ridiculous end with charges being dropped against 11 of the accused in the Urewera ‘terror’ case
  • Another chapter in the saga of malicious bungling by the Police has come to a ridiculous end with charges being dropped against 11 of the accused in the Urewera ‘terror’ case
  • The National Party list for the 2011 general election is disappointing and boring.
  • John Key hasn’t let the fact that he has not actually read Nicky Hager’s book stop him from voicing the same arrogant dismissiveness we saw in evidence in his initial handling of the Israeli spy allegations and the work of journalist Jon Stephenson on Afghanistan.
  • Apparently there will be a ‘welcoming committee’ there to greet the National Party ministers and thank them for all that they’ve done to start to rebuild the city. Unfortunately for National, this sarcastic ‘thank you’ will be in the form of a protest against the way that the city is being rebuilt

I don’t mind Trevor’s mad conspiracy theories involving me and Bill English. They are at least amusing, even if often copied from Whale Oil.

But I do think he owes Dr Edwards an apology for impuging his integrity.

Matthew Hooton is less kind to Trevor in his blog post, and Whale is his normal gentle self. Also Keeping Stock chips in.

Finally a video reminder of Trevor  at his finest, courtesy of Whale.

UPDATE: I’m relaxed about Trevor’s defamatory comments and have better things to do than talk to lawyers, But I understand others who were named are not so forgiving and have consulted their lawyers. No parliamentary privilege for Red Alert. Could be an expensive exercise for them as not only is Trevor liable but so is the Labour Parliamentary Party as the blog publisher.

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$1 a week more

September 27th, 2010 at 3:50 pm by David Farrar

Bill Engligh writes:

Labour’s unfunded policy to remove GST from fresh fruit and vegetables would deliver only $1 a week for the average Kiwi – and much less for low income earners, Finance Minister Bill English says.

The estimated $250 million cost of the new policy would have to be paid for by extra borrowing, pushing up already fast-rising public debt. …

The $250 million annual cost of the move, divided among all New Zealanders, is worth, on average, just over $1 a week – less for low income earners and more for high income earners.

“This puts the Government’s tax switch, which will leave the average income earner $15 a week better off, into perspective,” Mr English says.

But here is the real ripper:

“It’s also worth noting that fruit and vegetable prices have actually fallen by 11 per cent since National took office, having jumped 54 per cent under Labour.”

The removal of GST will have a relatively minor impact on overall fruit and vegetable prices and affordability, compared to normal price movements.

This is a point Danyl also makes at the Dim Post:

The real flaw with the policy is that its just a gimmick. I’ve written before about how the price difference between fruit and veges at the supermarket and the farmers market down the road is several hundred percent.

I predict that if Labour ever got to implement their policy, it would have next to zero effect on the uptake of fruit and vegetables.

Bill continues:

“Labour’s policy makes no sense and smacks of political desperation,” Mr English says. “Phil Goff must explain to New Zealanders why he is removing GST from imported, out-of-season raspberries and asparagus, but not from New Zealand frozen peas, which are a nutritious part of many Kiwi meals.

“People would be able to buy GST-free potatoes, take them home and make deep-fried chips. But at the same time, healthy foods like Weetbix, low-fat milk and wholegrain bread would be subject to GST.

Distinguishing between fresh and frozen vegetables is just the start of the stupidities that this policy would lead to.

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Doubletalk

September 27th, 2010 at 12:52 pm by David Farrar

Bill English has just done a press release (not online yet):

Ministers will have extra flexibility to consider a wider range of issues – including large-scale ownership of farmland – when assessing overseas investment applications for sensitive land, Finance Minister Bill English says.

At the same time, a new ministerial directive letter to the Overseas Investment Office will provide extra clarity and certainty for potential investors about the Government’s general approach to foreign investment in sensitive assets.

“In recent months, ministers have carefully reviewed the current framework for considering overseas investment applications – particularly in light of issues with respect to farmland ownership,” Mr English says.

“Overall, the measures I’m announcing today strike an appropriate balance. They increase ministerial flexibility to consider a wide range of issues when assessing overseas investments in sensitive land, while at the same time they provide extra clarity and certainty for potential investors and the Overseas Investment Office.”

Ha. In my experience wider criteria to decline an application on, will lead to less clarity and certainty for potential investors.

But I guess it will keep the NZ First potential voters happy. I understadn the politics, but don’t like the economics.

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Imperator Fish on South Canterbury Finance

September 10th, 2010 at 2:27 pm by David Farrar

Imperator Fish is a lawyer. He leans to the left, but has always been a fair critic.

He has gone through all legal deeds about South Canterbury Finance, which were posted on Red Alert. Trevor Mallard has shown his legal skills are as excellent as his diplomatic skills and concluded it is all Bill English’s fault, and Bill has cost the taxpayer $300 million.

If you wish to take your legal advice from Trevor, then can I suggest you hire him to negotiate your purchase of the Auckland Harbour Bridge, which I have exclusive sale rights to.

Here is what Imperator Fish has found and concluded:

The Crown unquestionably had a legal obligation to pay out New Zealand depositors. This is unarguable. When SCF went into receivership, Bill English had no choice but to write out a cheque. Had he not done so the Crown would have been sued en masse by investors, and would have lost and been ordered to pay costs. The same business commentators now savaging Bill English for paying out investors would then be calling him a fool.

Including Trevor no doubt.

Some in the media and blogosphere have suggested the terms of the guarantee deeds may have been breached, and that this meant payment didn’t need to be made. Some go on to say that the fact payment was made proves this is just National looking after its mates. Wrong. It’s quite possible that breaches of the deeds occurred and should have been detected, and that the detection of such breaches may have enabled action to be taken to limit the Crown’s liability. But prior breaches do not affect the Crown’s liability to pay.

Important to note.

There was no obligation to pay overseas investors, as Bill English has himself admitted. He has said paying them out enables the Crown to take control of the receivership. It may seem unfair that some people are getting the benefit of a guarantee not designed for them, but the alternative is to risk getting much less during the receivership. English’s position on this matter is at least defensible, and may in fact be financially prudent.

One may have ended up with years of litigation, if some investors were excluded. An extra $20 million, to gain full control seemed worth doing.

SCF had a number of obligations under the deeds, including the obligation to conduct its business and operations in a proper, businesslike, efficient and prudent manner, and the obligation not to engage in related-party transactions. Any breach by SCF of those obligations would give the Crown the right to withdraw the guarantee in relation to future deposits only.

This is what many people do not realise. Once the guarantee is in place, you can’t punish the investors for the sins of the company.

IF does want an inquiry though:

I stand by the move to pay New Zealand depositors, because legally any other position would have been utterly indefensible. The decision to pay overseas depositors can at least be debated, though I understand the reasoning behind the move.

But questions remain about the role of Treasury and others in this. Could SCF’s troubles have been detected earlier? Could the Government have avoided paying out some of this money?

This needs a public enquiry. A huge amount of money has been paid out, and the decisions of those involved should be scrutinised. If it turns out they have acted entirely properly, then they will have nothing to fear.
I am not against an inquiry, but I think it is too early for it now. The SFO is still investigating Aoraki, and the Statutory Managers are also sorting through things. Possibly once both those entities have concluded their inquiries, then one can look at whether we would benefit from an inquiry into everything.
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Good advice from Bill

August 12th, 2010 at 10:00 am by David Farrar

Fran O’Sullivan writes:

Asked how Auckland ratepayers could make sure their flash new council doesn’t go spending too much on big projects, English replies, “Don’t elect a mayor who is nuts for a start.”

What excellent advice.

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Fiscal Discipline pays off

April 22nd, 2010 at 1:11 pm by David Farrar

Bill English has just announced:

In the Budget last year, we identified $2 billion of lower quality spending over the subsequent four years to redirect into higher priority areas.

In this year’s Budget, we will find another $1.8 billion of low quality spending between now and 2014 for reprioritising into higher priority initiatives.

$3.8 billion of savings is not bad. That is around $3.799 billion more than what would have happened under Labour.

I said in last year’s Budget that most Government agencies will receive no budget increases over the next few years. And in this Budget, I will say the same thing again.

Not because they don’t deliver worthwhile services, but simply because we cannot allow debt to escalate further.

And the private sector has had to cope with falling revenue. Staying constant is relatively a better position to be in.

And in the release:

“The Government will continue to weed out low quality spending. We will live within the $1.1 billion annual operating allowance for new spending we have set ourselves, and restrict annual increases in this figure to 2 per cent from 2011/12.”

Mr English repeated that most Government agencies would receive no budget increases over the next three or four years, as the Government moved to get back to Budget surplus as soon as possible.

This fiscal discipline is necessary so we can stop borrowing, and start paying off debt. Borrowing $240 million a week is not sustainable.

“I want to get the Government back into budget surplus as quickly as possible, because surpluses give us choices.

“For example, surpluses give us choices to invest more in public services; to pay down public debt; to resume contributions to the New Zealand Super Fund – or to do any number of other things.

“As long as we run deficits, we don’t have those choices,”

Exactly.

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How to pay 10% tax on $100,000

March 23rd, 2010 at 4:03 pm by David Farrar

Bill English has pointed out how the current tax system allows well off people to in fact pay less tax than low income workers. This is one reason why we should have a flatter system, with less loopholes.

Mr English highlighted in Parliament how the current system can allow a household earning $100,000 a year, with two dependent children, to reduce the tax they pay from $27,500 a year to less than $10,000 a year.

Three easy steps:

  1. Forming a company owned by another entity (on the current 30 per cent company tax rate), paying themselves a $48,000 salary and reducing their tax bill by $3000.
  2. Qualifying for Working for Families on this reduced salary with two dependent children, they would receive an extra entitlement of almost $8500 a year.
  3. Using an interest in a leveraged property investment producing, say, tax losses of $20,000 a year, their personal taxable income is further reduced to $28,000.

So what you then have as tax is:

  1. $52,000 @ 30c = $15,600
  2. $14,000 @ 12.5c = $1,750
  3. $14,000 @ 21c = $2,940
  4. WFF credit of -$10,726  (on $28k income)

That means a net tax bill of $9,564 on $100,000 or a 9.5% effective tax rate.

If National disallows offsets for property tax losses then the high income earner paying 9.5% effective tax will end up paying $15,990 tax, or 16%.

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A productivity commission

March 10th, 2010 at 12:00 pm by David Farrar

The Dom Post reports:

A productivity commission that will run the ruler over government departments has been given a cautious welcome by the public servants’ union.

Details of how the commission will work have yet to be thrashed out, but Finance Minister Bill English’s office said it would be based on the Australian commission that has operated since 1998.

That body covers the whole economy, but has a specific role in preparing regular reports on efficiency, effectiveness and service delivery in government agencies.

Public Service Association national secretary Brenda Pilott said a similar body in New Zealand would help monitor performance, but would need a clear definition of how state sector productivity should be measured.

Very pleased to see the PSA supportive. The Australian Productivity Commission has played a useful and significant role in growing the Australian economy and has bipartisan support.

The Government is poised to announce the creation of the commission – part of a confidence and supply agreement with ACT – this month.

Mr English’s office said it would support “the goals of higher productivity growth across the economy and improvements in the quality of regulation”.

It would “work closely with and be closely modelled on” the Australian commission, which is a research, advisory and performance monitoring agency that covers economic, social and environmental issues.

Prime Minister John Key said on Monday the commission in New Zealand would be mostly focused on the public sector, suggesting it will play a role in looming reforms. …

Ms Pilott said the commission could fill a gap in how public sector productivity was measured, something the PSA had been lobbying for.

Labour finance spokesman David Cunliffe said there was merit in having a commission, but Labour would want to carefully scrutinise what it was measuring and how.

The commission will not be hugely effective if it is seen as partisan. This does not mean both major parties have to agree with everything the commission does, but it means respect for its work.

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Key and English on GST

February 11th, 2010 at 12:16 pm by David Farrar

John Armstrong writes:

No politician enjoys confessing to having broken a promise – especially one made during an election campaign when credibility is very much the issue.

The Prime Minister has now shown himself not to be exempt from that rule of thumb.

Having flagged a hike in GST in the Government’s economic statement on Tuesday, John Key was yesterday hammered by Labour for having categorically ruled out such a move in the lead-up to the last election.

“National is not going to raise GST. National wants to cut taxes – not raise taxes,” he told an impromptu press conference in the 2008 campaign, the video of which is receiving heavy play on the internet.

Key could not have been clearer. But his response yesterday was to argue he had been talking at the time in the context of fiscal forecasts which showed the country’s accounts sinking into deficit for the next decade. What he had been saying, he insisted, was National would not raise GST as a means of reducing the Budget deficit.

Key should be asking himself why he bothered to mount this defence. No sooner had he done so than Labour dug up quotes from Finance Minister Bill English seemingly similarly ruling out increasing GST after receiving Treasury advice shortly after the election to do so and then clearly reiterating that position in a speech two months later.

Given Key and English were almost certainly genuine in their holding that view at the time, it would surely have been more advisable for the Prime Minister to have been straight up and down yesterday and instead argued along the lines of “that was then and this is now”.

Rather than getting a ribbing from Phil Goff in Parliament, Key could have turned defence into attack, arguing that raising GST was now necessary to remedy what English describes as New Zealand’s “lopsided” economy – one suffering from too much consumption by debt-ridden households at the expense of much-needed savings and investment.

The question is whether Labour’s highlighting of this broken promise really matters all that much. It is not in the same league as cutting national superannuation or selling state assets after promising not to do so. At stake, however, is the Prime Minister’s credibility.

Key’s trust rating is extremely high, judging from polls scoring such attributes. Tax hikes are never popular, however. Key has to overcome public suspicion that any rise in GST will leave people worse off.

I understand a 2.5% rise in GST will probably lead to a one off inflation increase of 2.0%. In recent years our inflation rate has been around 3%, so I’m not sure how much people will notice.

I think they key will be the details in the May budget, as to the “compensation” through tax cuts, benefit adjustments and WFF support.

The label of a “broken promise” may be the bigger issue, even though there is a defence around the context of the statement.  There is probably a lesson there about being careful with pre-election statements – it is tempting to rule things out, but often wiser to be more subtle and say things like “That is not in our tax policy” rather than “We will not do that”.

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English on the economy

January 4th, 2010 at 11:51 am by David Farrar

Bill English writes:

As New Zealand emerges from recession, the Government’s focus has firmly shifted towards significantly lifting our economic performance. …

Making changes that help permanently lift our economic performance will be the overriding focus of the 2010 Budget.

The tradeable side of the economy – exports and those industries that face international competition – has been in recession for five years, with output now some 10 per cent below 2005 levels.

That’s a great line – the tradeable side of the economy has been in recession for five years!

By contrast, the public sector has grown rapidly, but with poor productivity. That has lowered the economy’s overall productivity. Unless we can turn this around and create the right environment for businesses to compete on the world stage, we will not achieve the sustained increase in incomes the Government aspires to.

The rhetoric is spot on. We await the policies in the budget.

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Herald on Govt’s first year

October 31st, 2009 at 9:12 am by David Farrar

This weekend it is the Herald’s turn to do a big feature on the Government’s first year in office. Multiple article to quote.

John Armstrong starts with what I think is the most important aspect:

The first Herald-DigiPoll survey since last year’s election shows close to 80 per cent of respondents rated the Government’s performance in dealing with the effect of the global recession on New Zealand as good, very good or excellent.

Barely 20 per cent rated the Government’s response to the recession as not good or poor.

And this is the major issue voters have focused on. Not use of urgency, not the Super City, not RWC broadcasting, not any of the numerous beltway issues. Not to say handling of those issues is not worthy of focus, but they are not critical to the average voter.

In another article, Armstrong reviews Key himself:

Key’s sheer ordinariness has fooled opponents into making first impression assumptions that there is little substance behind the confident, smiley face he presents to the world.

Key would not claim to be an intellectual. But he is very bright. Those who have worked closely with him speak of a capacity to absorb mountains of information and a laser-like capacity to focus on what needs to be done.

I would almost call Key a data sponge. He loves soaking up information from numerous sources, and reflecting on it. He is constantly thinking, and analysing.

He is anything but ordinary. The chief executive of New Zealand Incorporated is nothing short of a political phenomenon.

As one Beehive operative of long experience puts it, Key is rewriting the rules of New Zealand politics. That is a sweeping statement. But it goes some way to explaining why public support for National – confirmed in today’s Herald-DigiPoll survey – has climbed to unprecedented highs for a ruling party in its first year of government and, just as crucially, continues to remain at that level.

The challenge for the Government is to build its own brand to complement Key’s strong brand.

Key cites his Government’s fulfillment of manifesto commitments and steering the country through and (he hopes) out of economic recession as crucial in consolidating support for his party. Cabinet ministers readily acknowledge, however, that National’s post-election dream run is overwhelmingly down to Key’s strong rapport with voters – especially females who shunned National in the past.

It is rare for a centre-right party to do well with female voters.

Labour Party insiders grudgingly agree, but with a subtle twist in the language: National’s popularity rests on Key’s popularity. When the latter starts to fade, the former will quickly evaporate.

As I said above, I agree with them that the popularity is largely Key. But that may change over time, as other Ministers become better known. Also the other Ministers have generally been doing quite well in their portfolios – what is lacking is more a coherent all of Government brand.

Or so Labour prays. Labour, however, has made a bad habit of underestimating Key.

And they still are.

One of the principal ways he is seen to be rewriting the rules is by applying a “will it work” test to policy proposals rather than first asking whether they sit comfortably with National Party ideology. Key’s willingness to search for ideas outside conventional boundaries is in tune with an electorate less hung-up about ideology than in the 1980s and 1990s.

Key has centre-right values and instincts, but he sees them as a guide not a straitjacket.

This may irk some colleagues who see the vast gap between National and Labour in the polls as a rare chance for National to adopt a more radical and right-leaning prescription. …

Key seems to have no difficulty with either proposition. However, he is extremely wary of breaching National’s 2008 manifesto. He believes it is vital that voters feel confident they can trust National in government.

I’m one of those who want to see the Government be more bold, and indeed use that vast poll gap while we have it. But it isn’t about being more “right”, it is about fighting battles that are important to our future such as tax reform, the union stranglehold in education, state sector reform etc. But I agree any reform has to be consistent with the election manifesto. But there are plenty of areas where initiatives were not ruled in or out.

Dunne also noted that “references to what happened in the 1990s, let alone what side one was on during the Springbok Tour or, heaven forbid, the Vietnam War are utterly irrelevant to the values of this new generation, as Helen Clark found out dramatically last year, and Phil Goff is continuing to find out”.

The battles of yesterday.

Though Goff is an effective communicator, Key operates on another level. Unlike some politicians, he never talks down to people. He instead likes to disarm his audiences – no matter how big or small – by kicking off proceedings with a witty anecdote. More often than not, the joke is at his own expense. And deliberately so. The self-deprecation helps to break the ice.

A typical example was a recent meeting with youngsters at a riding school. Praising their ambition to represent New Zealand in show-jumping at the 2016 Olympics. Key turned to their proud parents, telling them “and you’ll be able to watch it all on Maori television”.

Heh. More seriously I recommend anyone who has not seen Key do a Q&A, should attend one of his meetings. He really engages with the audience, and as John A says, never talking down.

Yet, a year on from the election, it is still difficult to discern the direction in which the Government is going. Presumably it knows, because it is a very busy Government. It would be useful if it told the rest of us.

If Key has a major flaw, it is in not drawing the big picture often enough.

I agree. I don’t think it has mattered much this year, for it has been a crisis year – fighting the recession. But as that fades as an issue, people are going to want to hear more about closing (or at least slowing) the gao with Australia.

Key’s power is at its zenith. But how does he intend to use it? What legacy does he want to leave? The next 12 months will be true measure of his prime ministership, judged on what is done to get his promised “step change”in New Zealand’s economic growth.

I think the 2010 budget is very important, even more so that the 2011 budget.

Claire Trevett reports 78% of NZers back the series of cycleways.

Patrick Gower talks to Rodney Hide about working with John Key.

John Armstrong also reviews Bill English.

Claire Trevett talks to Tariana Turia:

Do you still have that level of trust in National?

Yes. What I’ve enjoyed the most is our ability to be upfront with one another and be straightforward on issues. I have never found that they’ve said one thing to me in a meeting and done another.

I recall what John Tamihere said about how Cullen used to treat coalition partners!

Have there been difficult choices?

When you can see value in what is being proposed but there’s always downsides to it. We’ve had to think really carefully about ACC, the Emissions Trading Scheme, and adult education courses.

For example with the ETS, it’s been difficult to try to balance the interests of iwi – whose major focus is forestry, fishing and farming – when on the other hand we’ve got really poor communities who are going to have to pay and they’re not the ones causing the problems.

There are very few policies that don’t involve balancing the trade-offs.

Jon Johannsson talks leadership:

I believe we are watching an unusual prime ministership take shape. Key’s skillset is vastly different from what we’ve seen before. We’d possibly have to go all the way back to the entrepreneurial Julius Vogel in the 1870s to find an apt comparison. Vogel put in vital and much-needed infrastructure to connect New Zealanders with each other and then with the rest of the world. Vogel’s legacy is a hugely significant one in our politics. If Key could affect a 21st century equivalent – meaning nothing short of major structural transformation to better position New Zealand during its transition to an information-age economy – his future legacy would be assured.

And Key has pushed hard on infrastructure. But the structural transformation is not there – however stuff like the fibre to the home initiative may be part of that.

Key has also grasped that our politics is going through a non-ideological phase, which explains why much of the criticism of his Government’s performance has come from ideologues on either side of the spectrum. His acceptance of much of Labour’s policy inheritance reinforces this judgment. Keeping its promises, which National has largely done, thereby establishing long-term trust with the electorate, has given Key the prerequisite platform needed for greater freedom of action in the future.

Absolutely. You have to earn trust, to then have greater freedom of action.

But to return to where I began, Key’s larger context; his political vision has been quite parsimonious in my view. There is no overarching narrative that tells us where Key intends taking us or what policy mix will best maximise our future progress and choices.

Transforming education (surely the best incubator for our future economic prosperity), leading our democracy (think: the electoral referendum, the Treaty, republicanism), and how to best protect water, our most valuable strategic resource, are being managed, not led, in an entirely ad-hoc fashion.

I think this is fair criticism.

Finally John Roughan:

The most impressive member of the Cabinet is a complete newcomer, Steven Joyce.

He is doing the infrastructure projects, notably the duplicate broadband network, as well as those in his primary portfolio, transport.

He’s done the little things, like the car cellphone ban on which the previous government dithered for years, and the big things like the Waterview connection, which I thought was wrong but he put me right.

I remarked to the Dominion Post for their review that I thought John Key’s best decision was probably appointing Steven Joyce to such critical portfolios. The fibre rollout was Key’s signature initiative, and speeding up infrastructure investment also a iconic issue for Key. And Steven indeed is no ditherer.

Of course I still think he is wrong on the cellphone ban!

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New official TVNZ t-shirt

October 28th, 2009 at 9:21 pm by David Farrar

ilovebill

Damien Christie from TVNZ7 models the new official t-shirt for Television New Zealand :-)

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Auditor-General on English

October 28th, 2009 at 4:23 pm by David Farrar

Am reading full report. The summary says:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.

Yes, this is the essence of it.

Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.

And:

For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.

So there is now no doubt that Bill retained eligibility for Wellington accommodation assistance over the years 2000 – 2008.

There is an issue over the Ministerial assistance:

Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.

In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.

This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.

At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.

What this basically says is the advice that the house could be leased as a Ministerial House was not correct. This means however that he would still be eligible for the normal parliamentary level assistance of $24,000 a year – however he has confirmed he will not be taking up any assistance.

This reinforces my position that it is much better if MPs do not directly on indirectly own the house they get assistance for. If Bill had moved into Vogel House, or Bolton Street, these issues would haver have occurred I suspect.

The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

The news system does sort out any conflict of interest issues.

UPDATE: The full report has more details on the trust issue, and where the advice came from:

He sought advice from the Registrar of the Pecuniary Interests of Members of Parliament on what amounted to a pecuniary interest in a family trust. The Registrar responded with advice that discussed generally what is a beneficial interest in a trust for the purposes of the Standing Orders requirements. …

The Registrar’s advice was based on the definition in Standing Orders of when a beneficial interest in a trust should be declared for the Register of the Pecuniary Interests of Members of Parliament. We have concluded that this was not the right test to apply in this situation, as it is a narrow definition of pecuniary interest for a particular purpose. In general, it is usual to regard an interest held by a spouse or close family member (such as a dependent child) as creating an indirect financial interest. In our view, Mr English has an indirect financial interest in his family trust, because of his relationship with the likely beneficiaries.

So he sought advice from the Registrar for Pecuniary Interests, but that advice was not applicable to the accommodation issue.

The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice. However, in our view, the advice was not directly relevant to this situation. We consider that Ministerial Services should have raised this with the Minister.

Again this is my point about both Bill’s situation, and the Greens Super Fund. Even an indirect relationship is undesirable.

This issue illustrates the different starting points of the two accommodation entitlement systems and that they do not fit well together. Having an interest in a property is not a barrier in the parliamentary system, and protections are in place to manage the risks created by the conflict of interest. The issue has only arisen in the ministerial system because Ministerial Services has moved to rent properties rather than own them and has worked to tailor the housing support it provides to the needs of individual Ministers, including sometimes taking over existing rental arrangements.

The upshot is that the owning the home through your trust was okay for parliamentary rules, but not for Ministerial rules. This really shows why the the two systems need to be streamlined.

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