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.

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.

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.

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.

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.

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.

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.

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%.

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.

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”.

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.

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!

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

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.

So I am not surprised Labour are upset:

Labour is crying foul over a TVNZ promotional advertisement in which Finance Minister Bill English appears as the poster boy for a series of programmes on the economy. …

The aim is to draw attention to a series of economy-focused programmes on Freeview Channel TVNZ 7 next month.

Labour’s finance spokesman David Cunliffe has questioned whether it is appropriate for the state broadcaster to use one of its shareholding ministers in what amounted to a party political broadcast. It also raised questions of editorial balance.

“It is not OK to give the Minister of Finance 135 minutes of free air time, completely coiffed and scripted, with no balancing comment.”

Even though they are advertisements, I can see Labour’s point. I doubt Nats would have enjoyed a couple of hours of ads with Michael Cullen.

He also queried whether it was appropriate for Mr English to have agreed to do the promo, given the need for ministers to adhere to strict conflict-of-interest rules. …

A spokesman for Mr English said he was invited to do the promo. He was not paid and had not scripted it himself, but had seen it and some minor adjustments were made for accuracy.

“We exerted no influence over the process.”

Oh it is silly to suggest Bill has done anything wrong. Hell what politician would turn down 135 minutes of free TV time. It would be like turning dowm Christmas.

A TVNZ spokeswoman, Andi Brotherston, said it was not considering pulling the advertisement, which is due to run until November 21.

She said the creative unit at TVNZ chose Mr English partly because of the pun on his name in the series’ title “Plain English”.

The promo went through internal approval channels, which “are set up to consider all aspects of programmes”.

When asked if it conflicted with TVNZ’s own editorial protocol, she said there was a clear delineation between news and promotions at TVNZ and the promotion had “nothing to do with news and current affairs”.

“We are not within an election time frame, so there isn’t a requirement on us to give equal time to specific parties.

“The other thing is while other parties might think it’s an ad for Bill English, if we consider it from the viewers’ point of view, they see it as the Finance Minister.

“The series is about demystifying the economy. Viewers might see it differently and they’re the people we have in mind.

“Those people may not care about the other politicians and the time they have on television.”

Yes the average person won’t care. Having said that, I do have some sympathy for Labour’s concerns. At the minimum you wouldn’t want this to become a habit.

Low-income earners would have to be compensated if GST was increased as a result of the current tax review, Finance Minister Bill English says. …

“Low-income earners, in particular, would have to be compensated for any increase in GST,” he said in a speech to chartered accountants in Auckland. “The tax working group will have to come up with some fairly compelling reasons to convince us of the overall benefits of further property-related taxes or an increase in GST.”

“We don’t want to go down the route of raising taxes,” he said. “The Government has a strong preference not to increase taxes to close the deficit. We prefer more efficient taxes over higher taxes.”

Most forms of income should be covered and, where possible, loopholes that allowed income to be sheltered from tax should be closed.

With one of the most mobile workforces among developed countries, New Zealand’s tax system must help attract and retain people, businesses and investment.

I of course agree that spending restraint should be used to close the deficit rather than higher taxes. But a more “efficient” tax system which contributes to higher economic growth is very desirable.

It’s time to leave Bill English alone. Labour and the press gallery have had a good run with it. Bill’s been embarrassed, he’s paid some money back and the issue will always slightly affect his credibility as Finance Minister. But enough is enough.

Bill’s home in Dipton has been in his family for 120 years. It’s on English Rd. It’s full of his stuff and he is the local MP. Some time ago he decided to have his family reside in Wellington so they could be closer together – his kids go to school there and his wife practices medicine there – it’s an honourable thing to do for someone planning a life in politics.

Bill has to maintain two residences because he has two homes, two rates bills, and everything else that goes with it.

Exactly. The regime is meant to neither advantage or disadvantage MPs. It would be different if Bill had sold or rented out his Dipton home, but he has not – as he says it has been his family home for 120 years, and will continue to be so once he leaves Parliament.

MP’s need to be ultra careful and conservative when it comes to what benefits and kickbacks they receive. The public mood for lynchings is high, especially after the British MPs’ expenses scandal which led to numerous resignations.

Labour does need to be careful. For example a (very) senior Labour MP has his adult daughter live with him in Wellington. Does than mean he should lose his Wellington accommodation allowance? I don’t think so, but if you apply the standards Labour has applied to Bill, then maybe there are some double standards.

And again, if Labour and the media think it would be a bad thing if Bill had changed his trust arrangements to get a bigger taxpayer subsidy (something a QC has said did not happen), then where is the scruutiny over the practice of (at least) the Green MPs to have their superannuation fund purchase Welllington property on their behalf, as this increases what they can claim from the taxpayer from merely interest on a mortgage to full rent of up to $24,000 a year.

How much of a difference does this make. Well if the property has $150,000 on the mortgage and interest rates are 6%, the maximum you could claim off the taxpayer is $9,000. But by vesting the property in their superannuation fund, they can claim up to $24,000 in rent.

Now this is quite legal, but has escaped the same scrutiny.

Bill should have been more careful so deserves some of the criticism he has received. However, successive Speakers of the House, from both major parties, have signed off on his arrangements and the legal buck stops with them.

Indeed, Hunt, Wilson and Smith have all agreed he qualifies.

What’s more, his being in breach, if he is, is a technicality. He’s only in trouble because the allowance is called an ‘out of town MP’ allowance. If it was called the ‘MP’s who have a home in their electorate but choose to spend pretty much all of their time in Wellington’ allowance then there wouldn’t be an issue.

This has been the problem for Bill. Because the rules use the term “primary residence” he has been arguing Dipton is his primary residence, and the public have rejected the notion that the primary residence can possibly be a place you and your family don’t live in most of the time. It does not matter that under the rules, it can be – it fails the common meaning test.

At some stage in future the rule should probably be amended to just asking whether or not the MP resided outside of Wellington before they became an MP, and whether or not they still own a property outside Wellington, which is not rented out or used by others.

A very fair post by Jake. His co-blogger Jeremy Greenbrook-Held balances it up by doing the normal partisan rant. He hysterically demands Bill must resign or be sacked and also gets numerous facts wrong. Not even worth fisking it is so puerile.

1. He will not take up any housing allowance in future
2. He has not received an allowance since 28 July while the situation was clarified
3. He has reimbursed Ministerial Services for all of the housing allowances he has received since the election

Also he has a legal opinion from Stephen Kos QC that the changes to his family trust did not in any way affect his eligibility for the Ministerial housing allowance.

Bill has said:

“What I’m announcing today reflects a set of personal decisions I have made about my own situation. It is in no way setting a precedent for others although I make the point here that I believe Parliament does have to think how it can accommodate the families of long-term politicians.

“At all times my decisions have been driven by my desire to keep my family together and provide them with as much stability as possible. It’s now clear that the system has struggled to deal with my circumstances.

“This has been an unnecessary distraction. I now want to move on and focus on building our economy and ensuring that New Zealanders have jobs.

As I have said, the perception is often more powerful than the reality. I think it is clear Bill English had complied with the rules, but the perception is that he was rorting the system so he has done what is necessary to close the issue down.

I lok forward to the same level of scrutiny on the Greens renting of houses owned by their superannuation scheme to themselves, to maximise the taxpayer subsidy. They have done exactly what Mallard accused Bill of – using a trust or fund to maximise eligibility. If they owned the properties in their own names, they would only be eligible to claim the interest off any mortgage.

The time has come for Bill “Double Dipton” English to end the charade.

It has been apparent for a while that it is no longer tenable for him to stipulate his primary place of residence as being in his Clutha-Southland electorate when his real home has long been in Wellington.

I’m a bit surprised by the timing of this, as the Auditor-General is now making inquiries and presumably in time will advise whether or not Bill English has followed the rules correctly.

His highly questionable claim to be an out-of-Wellington MP – a status which made him eligible for an accommodation allowance while in Opposition and which entitles him to taxpayer-funded ministerial accommodation now he is in Government – has become unsustainable in purely political terms.

Of course there is a wider perception issue that goes beyond the rules. But I’m wary of the precedent that gets set if you punish MPs for having a family, and even worse punish them because they chose *at their own expense* to have some of their family live in Wellington with them while they are an MP.

English’s predicament has in part come about because of public expectation that MPs should reside in their electorates. That many don’t will come as a shock to many people. Those who don’t live in their electorates thus feel they have to perpetuate a fiction that they do, especially in large rural seats like English’s which feel isolated from and neglected by Wellington.

I doubt there were many people in Clutha-Southland who were unaware that during most of the year, Bill is in Wellington and his family are also. It was never a secret.

But this is not a new issue, and in fact one that the Electoral Act has been quite explicit about since at least 1956. First we have s 72(6)(b):

The place where, for the purposes of this Act, a person resides shall not change by reason only of the fact that the person is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament

Now this is for the purposes of electoral enrolment, but it shows that long long ago it was recognised that MPs would be forced by their job to reside outside their normal home, and that it was undesirable for this temporary relocation to be deemed a change of primary residence.

We also have s72(10)(a):

In the case of a person who is appointed to be a member of the Executive Council, or who is the spouse, civil union partner, or de facto partner of any person so appointed, the following provisions shall apply notwithstanding anything to the contrary in this section, namely so long as he or she holds that office he or she shall be deemed to continue to reside at the place of residence in respect of which he or she was registered as an elector of an electoral district (in this subsection referred to as the original district), notwithstanding his or her absence therefrom at the seat of Government or otherwise, unless and until he or she duly applies for registration as an elector of another electoral district of which he or she is, apart from the provisions of this paragraph, qualified to be an elector.

This is why both Bill and Mary English (the media have incorrectly reported she is enrolled in Wellington – she is enrolled in Clutha-Southland) are residents of Clutha-Southland for electoral purposes.

Now the electoral district enrolment is not the only test for primary residence. The Auditor-General in 2001 laid out a series of factors. Now these are not black and white in that you must tick 11/11 or 9/11 to be deemed to live in Place A or Place B. Ultimately the Speaker decides on the totality of the factors. They are:

(a) the extent of the MP’s parliamentary duties, and the amount of non-parliamentary time available to the MP to return “home”;

It takes around ten hours return (five hours each way) to get from Parliament to Dipton. And in the last decade English has held senior roles in Government and Opposition with duties around the country. I doubt there is much dispute on this factor that he has little time to return to Dipton, even if his family had stayed there.

(b) the locations where the MP spends most of that nonparliamentary time;

During most of the year it is Wellington, but during the summer break it is Dipton, as I understand it.

(c) the locations where the MP’s current spouse or partner and family live, and where other dependent family members usually live (including where they spend most time, work, or attend school);

And this is clearly Wellington.

(d) the person in whose name (whether the MP, the MP’s spouse or partner, or some other individual or legal entity) each property is owned or rented, and the utilities (e.g., electricity, telephone) are supplied;

I’m not sure but think the Dipton property is in Bill’s name and the Wellington property in the name of the Endeavour Trust.

(e) the level of the MP’s financial commitment to meeting the financial outgoings on each residence, including property maintenance;

Same for both I guess.

(f) the type of accommodation available to the MP at each residence (e.g., boarding, flatting, or full occupation), and who else lives there (other than the MP’s family);

Both are fully available.

(g) the availability of each residence for use by the MP at any time (e.g., whether it is rented out in periods of absence);

As far as I know Dipton is not rented out, during periods of absence. This is a key factor in my eyes. The provision of accommodation in Wellington is designed so that an MP is no better or worse off. If you were renting out your electorate home, then you would be gaining money.

(h) the nature and extent of the MP’s ties to each local community in which he or she has a residence;

I have little doubt Bill will have stronger ties to Dipton than Karori.

(i) the residence where the MP intends or expects to live should he or she cease to be an MP;

Bill has said he will return to Dipton when he is no longer an MP.

(j) the residence where the MP and members of his or her family are registered for electoral purposes; and

Bill and Mary are registered in Clutha-Southland. The children of voting age are enrolled in Wellington Central – as required by law.

(k) for electorate MPs, the location of the electorate.

Which is Clutha-Southland.

Now as I said there is a degree of subjectivity involved, as it is not just a case of ticking all 11 boxes one way or another. You can reasonable argue the merits.

This is why I think it is absolutely correct the Auditor-General is investigating. This is not a bad thing. This is a desirable thing.

Now John Armstrong is right that there is a wider issue of perception, and political judgements have to be made with that in mind. But personally I think it would be desirable to wait for the Auditor-General to report back before rushing to any decisions.

Deputy Prime Minister Bill English’s use of his taxpayer-funded accommodation allowance is to come under scrutiny from the auditor-general.

Following a complaint fro Progressive MP Jim Anderton to Auditor-General Lyn Provost about the finance minister claiming out-of-town accommodation expenses, the Office of the Auditor-General confirmed today it would make “preliminary inquiries”.

I’m delighted the Auditor-General has agreed to investigate. It is entirely appropriate she does so as questions of propriety have been raised.

I actually think the Auditor-General should have been asked to investigate much earlier on. In fact it would have been smart politics for Bill English himself to have asked them to investigate a month or so ago.