Another billion demanded

November 18th, 2015 at 9:00 am by David Farrar

The Hikoi for Homes has demanded $1 billion a year more for pubic housing.

This brings the total of extra spending demanded by politicians and lobby groups since the May Budget to $9.4 billion per year.

To fund these demands we would either have to move the top tax rate from 33% to 77% or increase GST from 15% to 24%.

And that’s just to cover six months of spending demands from the left.

I’m hoping their demands will exceed $14 billion before 12 months are up, at which stage the top tax rate would need to be 100% to fund their demands.


Five months of spending demands are more than actual increase of six years

October 23rd, 2015 at 7:00 am by David Farrar

I blogged last week how various lobby groups and political parties had made $8.4 billion of spending demands in the five months since the Budget.

Well by coincidence that is just about the level of actual increases over the last six years. So five months of demands (and I probably missed some) are at the same level of actual increases over six years.

2008/09 core crown expenses were $63.7 billion and in 2014/15 they were $72.3 billion.  An increase of $8.65 billion. That is less than just the last two years of Labour which saw spending go up $9.95 billion.

The reasons we are back into surplus is because of six years of fiscal restraint.


A $140,000 TV!

June 19th, 2015 at 12:00 pm by David Farrar

The Herald reports:

A whopping $140,000 has been spent on a new display screen for the reception of the Ministry of Business, Innovation and Employment’s central Wellington building.

The hefty price tag follows controversy over revelations this month that the ministry spent $70,000 of taxpayer money on a stone sign for the building entrance.

MBIE spent $140,747 on the display monitor – a cost Economic Development Minister Steven Joyce was “slacked off” about, Radio New Zealand reported.

Taxpayers would not be happy about the spend, he told the broadcaster.

“No, I don’t think they’ll be happy about this one, in the same way they weren’t happy about the sign, and, frankly, I’m not happy either, but I would like to verify the information before I make any further comment on it.”

Staggering – $140,000 for a large monitor. How can anyone think that was a good idea?


A $70,000 stone

June 4th, 2015 at 2:00 pm by David Farrar

Stuff reports:

The Government’s business super ministry has admitted its controversial sign outside its headquarters cost almost $70,000, about 50 per cent more than it previously claimed.

The culture in MBIE is obviously not right, if no one involved in the project of moving offices flagged that this was a wasteful idea.

On Tuesday, MBIE said the sign was designed to be in character with the historic building it uses for its headquarters.

Many cheaper ways to do that.

A spokeswoman said the sign “was a one-off cost in a relocation programme projected to achieve around $40 million-$50 million in public sector savings over 20 years”.

The savings come from a cut in the amount of office space used by the ministry.

It’s good money was saved elsewhere, but a saving in one area doesn’t justify extravagance in another.

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Labour blames Govt for an NGO’s expenditure problems

May 19th, 2015 at 7:00 am by David Farrar

Grant Robertson has exclaimed:

The National Government has big questions to answer about how a provider of services to thousands of vulnerable New Zealanders is set to fold, Labour’s Finance spokesperson Grant Robertson says.

Relationships Aotearoa which provides support and counselling to families, individuals and survivors of domestic violence is set to shut its doors, minus any last minute intervention.

“There are thousands of vulnerable people and families who rely on Relationships Aotearoa for critical services. The government cannot leave them in the lurch.

“Like other non-governmental organisations, Relationships Aotearoa has been seriously underfunded in recent years. It has been asked to do more with less and the strain has clearly started to tell.

This is typical Labour. If an NGO has financial issues, then the answer is the taxpayer must throw more money at them. In the same breath they expect us to believe they would ever have lowered the deficit.

Let’s take a look at the latest accounts for this NGO:

  • Income of $9.8 million – mainly from the Government
  • Expenditure of $10.3 million
  • Central expenditure has doubled in one year from $984k to $1,957k
  • Equity of $1.5 million
  • Cash in bank of $3 million
  • Central salaries doubled from $551k to $1,065k

So the obvious conclusion from all this is it is all the fault of the Government – yeah right.

Does Labour ever find an issue, where the answer isn’t tax people more and spend more.

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Why not stop funding all music videos?

March 16th, 2015 at 6:59 am by David Farrar

The Herald reports:

A researcher is calling for curbs on taxpayer funding of music videos that contain violence after his group found “high levels” of violence in the music videos shown on TV.

I don’t think the Government should choose which music videos are worthy of funding, or not funding.

Instead I don’t think taxpayers should fund any music videos at all.


IMF on expenditure rules

March 3rd, 2015 at 3:00 pm by David Farrar

An IMF paper looks at expenditure rules:

Our findings suggest that expenditure rules are associated with spending control, counter-cyclical fiscal policy, and improved fiscal discipline. We find that fiscal performance is better in countries where an expenditure rule exists. This appears to be related to the properties of expenditure rules as compliance rates are generally higher than with other types of rules (on the budget balance or debt, for example). In particular, we find that compliance with expenditure rules is higher if the expenditure target is directly under the control of the government and if the rule is not a mere political commitment, but enshrined in law or in a coalition agreement. 

So the most effective type of fiscal rule is a binding expenditure rule.

Evidence of adverse side effects is mixed. The introduction of expenditure rules is associated with a decrease in public investment only in emerging economies. A possible explanation is that any adverse effects on public investment could be mitigated in advanced economies by welldesigned budgetary frameworks and procedures. Instead, the empirical analysis points to two positive side effects. First, expenditure rules reduce the volatility of expenditure, thus imparting a degree of predictability to fiscal policy and making it less destabilizing. Second, expenditure rules are associated with higher public investment efficiency.

I’d love NZ to have an expenditure rule, such as restricting core crown expenditure to 25% of GDP over say a three year cycle or restricting the growth in expenditure to say 1% after taking account of population growth and inflation.

Expenditure rules are currently in place in 23 countries (11 in advanced and 12 in emerging economies)

So we would not be alone if we did this.



Another IT blow out

March 3rd, 2015 at 11:00 am by David Farrar

The Herald reports:

The cost of implementing a new child support system has rocketed to $163 million – a blowout that dwarfs the bill for fixing the controversial Novopay school payroll system.

The new figure has been described as “gobsmacking” by a former top Government executive who was in office when the cost was originally put at $30 million.

The child support reform affects 134,000 paying parents and 138,000 receiving parents. The $30 million estimate was issued in 2011.

But implementation has been delayed until April 1 this year, to allow Inland Revenue time to change its computer system.

Further amendments to the 2013 enabling legislation were introduced to Parliament last week to make more changes. These, if passed, will take the cost to $163 million – $133 million more than first budgeted.

Robin Oliver, former Deputy Commissioner of Inland Revenue, says this is “gobsmacking”.

“I baulked at the $30 million, so $163 million on IT costs and administrative costs for simply changing little bits of the [child support] formula around is an enormous sum of money to be spending.”

Staggering amounts.

Taxpayers’ Union director Jordan Williams said the child support blowout was the biggest since his group was formed in 2013.

“This dwarfs Novopay,” he said. “$163 million is an extraordinary cost, more than $100 for every New Zealand household.” The changes in the formula are in fact the biggest since the current child support system was created in 1991.


A formula change should not cost that much to implement.

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Debt and spending

September 11th, 2014 at 4:00 pm by David Farrar

A reader asked if I could provide data on what spending increases have occurred under National and Labour, as Labour keeps blaming National for the increase in debt.

Considering that Labour have opposed basically every measure of spending restraint in the last six years, I’m amused they think attacking National for too much debt is a convincing strategy.

The reality is that Governments have relatively little control over how much revenue they’ll receive (short of major tax changes), but what they do control is spending. And the reality is once new spending is added on, it is very very difficult to get rid of.

So how much has spending increased in the last five years of National, and Labour before that.


In 2004 core crown expenses were $41.6 billion. Labour increased them by a massive 54% over just five years to $64 billion. Yes 54% increase in five years. This is from the party that claims they will keep to the same fiscal track as National!

From 2009 to 2014 (based on PREFU forecast) core crown expenses only rose a further 11.4%.

Do you think a party that increased spending by 54% in five years, will get NZ back into surplus? Even with all their extra taxes, I can’t see it happening.


$18 billion and rising

August 12th, 2014 at 4:00 pm by David Farrar

Steven Joyce points out:

Updated figures today show that Labour’s election-year spending spree is now up to almost $17.9 billion over four years – and counting, Associate Finance Minister Steven Joyce says.

“Labour’s own numbers show spending promises to date of $16.4 billion over four years,” Mr Joyce says.

“However, they have woefully underestimated the costs of introducing compulsory KiwiSaver, dismantling the electricity sector and paying a 12.5 per cent R&D tax credit.

“For example, Labour claims to be bringing 500,000 extra people into KiwiSaver from 1 October 2015, and would be paying them a tax credit that averages around $370 a year plus a $200 a year kick-start for the first five years. A simple calculation shows that the cost of this must be approaching $250 million in the first year, rather than $141 million as Labour is claiming.

“It’s interesting that Labour’s costing of exactly the same policy in 2011 was more than two-and-a-half times higher than it is now in 2014, so it  looks like they’ve cut a few corners this time around.”

Mr Joyce says when you put more realistic costs on these policies it takes Labour’s numbers to $17.9 billion over four years.

“More will be added to this bill as Labour makes more desperate promises – and that’s not counting the big spending of their prospective coalition partners the Greens,” Mr Joyce says.

Bye bye surplus, hello deficit it will be. Which means that Labour will have to keep increasing taxes.

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The Ministry of Taxis

July 28th, 2014 at 1:00 pm by David Farrar

Stuff reports:

When it comes to walking the talk, it seems Ministry of Health staff would rather just take a cab.

Last year ministry staff took more than 1000 taxi rides for less than $10 – at the same time as officially advocating walking as a way to increase New Zealand’s low levels of physical activity.

In the 2012-13 financial year, staff based in Wellington charged taxpayers for 8645 taxi trips with 1076 of those for journeys costing less than $10. Another 1942 taxis were taken for $10 to $15.

The Star-Times took a $10 taxi in central Auckland to see how far it would take us. We travelled 1.7km. The return journey on foot, at a leisurely stroll, took just over 16 minutes.

That’s around four taxi trips a day of under $10. It is hard to get a fare for under $10. The initial cab hire and phone call is almost $5 so you won’t get to go much more than a km.

The Ministry of Health’s physical activity guidelines suggest people should be active every day in every way possible, doing at least 30 minutes of physical activity five days a week.

The ministry’s website says you should walk whenever you can. “Remember: Even small increases in physical activity can produce measurable health benefits,” the site says.

Do as we say, not as we do!

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$760,000 to study religion!

October 30th, 2013 at 1:00 pm by David Farrar

The Dom Post reports:

A university professor who left the priesthood after a year has been awarded more than $760,000 of public money to study Kiwis’ spirituality and religious beliefs.

Joseph Bulbulia, of Victoria University, is one of 109 researchers who will receive a total of $59 million from the Marsden Fund over the next three years.

Professor Bulbulia said religion was “intensely important” to him, but “as for an afterlife, or God, I have no idea”.

I thought God and afterlife tended to be a fairly important part of religion!

Well except for Scientology, which is really a money making scam.

He migrated to Wellington from the United States in 2000, having left the priesthood earlier in his life and then had a daughter before he was married.

He hasn’t been to church for 20 years, other than to please his mother, but said research showed that some events, such as the Christchurch earthquakes, renewed people’s religious beliefs.

Do we need to spend $760,000 to research this?

The full list of Marsden Awards is here. The grant for a study of religious belief is one of the largest, which surprises me. Many of the other grants involve physical science which tends to be far more costly. Some of the more useful physical science ones include:

  • Does the southern edge of the Hikurangi Plateau control Otago tectonics?
  • Unraveling the magmatic processes responsible for phonolitic volcanism using the Mount Erebus lava lake and magmatic system
  • Reconstructing complex ground motion effects in Christchurch during the Canterbury earthquakes: what does this mean for future ground motion prediction?
  • Does investment into seed dispersal alter with plant height and island size?
  • UV-B radiation as a master regulator of photosynthetic performance and leaf organ development in sunlight
  • Improving radiotherapy outcomes: Chain release of drugs to kill refractory cancer cells and inhibit metastatic spread

All of the above awards (except the cancer one) are for less than the religion one. Other fairly dubious ones include:

  • The Crown: Perspectives on a Contested Symbol and its Constitutional Significance in New Zealand and the Commonwealth $604,000
  • Territorial Disputes and Civil Society in Northeast Asian Democracies

University staff can and do research in all sorts of varied areas, as is their right with academic freedom. But I would have thought with a relatively small pool of contestable grants for research beyond the normal, they would be prioritized towards things of more direct relevance for New Zealand.

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Regional spending

October 9th, 2013 at 1:00 pm by David Farrar



This table comes from a just released Regional expenditure report by the Government.

What is interesting is that less spending by the Government occurs in Auckland than their share of the population. Wellington gets proportionally more direct Government spend, but apart from that most of the country is pretty proportional.


Real fiscal restraint

May 18th, 2013 at 12:00 pm by David Farrar

Issue 17 2013 graph


This graph from the NZ Initiative is an insightful one. It shows the massive increase in real spending per capita up until 2009 and the fiscal restraint that has occurred since then.

Imagine if the growth from 2002 to 2009 had continued? Wed be approaching Greece.

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Science funding grows

May 2nd, 2013 at 12:00 pm by David Farrar

Stuff reports:

The Government has announced a multimillion dollar investment into science and innovation to help combat the biggest science challenges facing New Zealand.

At the Auckland War Memorial Museum today Prime Minister John Key announced an extra $73.5 million in funding for the science and innovation sector.

It brought the total funding to $133.5m over four years for Budget 2013.

Key said the funding put science at the heart of much of the Government’s thinking.

Science and Innovation Minister Steven Joyce said the funding would go towards 10 “challenges” that scientist could tackle.

These included research around helping New Zealanders’ health at the beginning and end of their lives, research into natural disasters, helping promote and protect the country’s biodiversity including its marine reserve, and the southern ocean.

The advisory panel, led by chief science advisor Sir Peter Gluckman, received 200 submissions on the challenges.

Joyce said not all challenges would be solved overnight but some had refined research areas.

I quite like the idea of funding for some specific challenges or goals.

It appears the Government is on track to be back into surplus for 2014/15. They have stopped the previous runaway growth in spending across the board – but allowed some increases in a few key areas such as science, tourism and hospitals.

The 10 national science challenges announced today are:

+ Ageing well – harnessing science to sustain health and wellbeing into the later years of life;

+ A better start – improving the potential of young New Zealanders to have a healthy and successful life;

+ Healthier lives – research to reduce the burden of major New Zealand health problems;

+ High-value nutrition – developing high-value foods with validated health benefits;

+ New Zealand’s biological heritage – protecting and managing our biodiversity, improving our biosecurity, and enhancing our resilience to harmful organisms;

+ Our land and water – research to enhance primary-sector production and productivity while maintaining and improving our land and water quality for future generations;

+ Life in a changing ocean – understanding how we can exploit our marine resources within environmental and biological constraints;

+ The deep south – understanding the role of the Antarctic and the Southern Ocean in determining our climate and our future environment;

+ Science for technological innovation – enhancing the capacity of New Zealand to use physical and engineering sciences for economic growth;

+ Resilience to nature’s challenges – research into enhancing our resilience to natural disasters.


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NZ Herald on private sector

January 11th, 2013 at 1:01 pm by David Farrar

The NZ Herald editorial:

An economy does not work very well, many countries have found, if every worthy service is financed from taxation and none need to put some of their energy into raising independent sustenance. Many a worthy service is provided from the private sector for a profit. But some of those that cannot carry a charge and make profits can offer value to commercial sponsors and capitalise in other ways on their popular appeal, and it is economically healthy that they should rely on those sources as far as possible.

The misconception that any good and essential service deserves a government grant is not confined to those who are not seeking a profit. Commercial firms are no less susceptible to government hand-outs and no less reluctant to present a case for them.

A mixed economy prospers when as many as possible of its goods and services are financed by voluntary trade and the proceeds of taxation are reserved for those that are essential and could not otherwise survive.

Absolutely. I’ll happily donate money to good causes, so they need less taxpayer funding. We have a wonderful volunteer ethos in New Zealand.

The rescue helicopter gives good value to its name-sponsor, Westpac bank, and its well-publicised work is guaranteed to elicit a good response to any appeal for public donations. The same is true of the Starship children’s hospital and of some prestigious state schools that can command high parental donations. Consequent reductions in their public grants are socially and economically justifiable.

Far from complaining that they are being penalised for success, the fortunate should be quietly proud of their reduced dependence on public money. They should be praised and celebrated for the proof of value that voluntary finance provides, and for the public money their fund-raising success has left in the purse for the less fortunate.

I just hope the Herald remembers their own editorial when there is some controversy over government funding!

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State property costs

November 23rd, 2012 at 10:00 am by David Farrar

Jonathan Coleman announced:

State Services Minister Dr Jonathan Coleman says a new Public Service property strategy is likely to reduce the office space foot print in Wellington by the equivalent of three Reserve Bank buildings.

Dr Coleman says Cabinet has approved the start of a centralised negotiation for future public service office space in the capital with accommodation leases due to expire for five large government agencies.

The leases due to expire include the Ministries of Social Development, Health, Education and Business Innovation and Employment, and the Crown Law Office.

The Property Management Centre of Expertise based within the Ministry of Social Development has been delegated to lead the negotiation for the accommodation needs. …

A business case presented to Cabinet indicated a reduction of the office footprint in Wellington of 30 per cent will save $338 million over 20 years, which is a 20 per cent reduction in cost compared with the status quo baseline.

Sounds good to me. If that achieve that, there are benefits beyond the direct savings. The ever increasing size of the public sector in the 2000s saw office rental costs in Wellington CBD skyrocket. This imposed significant costs on private businesses. Having reduced demand from the public sector should see smaller increases in rental prices for commercial tenants.

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Can we do this in NZ please

September 11th, 2012 at 10:00 am by David Farrar

The Brisbane Times reports:

 A national public health body has slammed the Newman government’s “gag order” on community organisations, saying it will strip service providers of one of their vital roles.

Queensland Health grant contracts now included clauses preventing non-government organisations advocating for state and federal legislative change, a spokesman for Minister Lawrence Springborg confirmed last night.

“We’re making it clear that we want to fund outcomes but not advocacy,” the spokesman said.

We badly need this in NZ. I’m all for funding of public health groups that provide actual public health services. But we spend tens of millions of dollars on groups that take the money and use it to lobby MPs on what the law should be. It is quite wrong that bureaucrats hand out money to lobby groups, to try and dictate policy to MPs.

There is nothing wrong with a taxpayer funded health group doing select committee submissions and the like. But some health groups are 95% taxpayer funded and as far as I can tell spend 95% of their resources on lobbying activities.

The Newman government raised concerns about advocacy when it announced in May that it was stripping about $2.5 million from the Queensland Association for Healthy Communities, which Queensland Health had previously funded to target HIV/AIDS prevention among gay men.

The group, which has a focus on lesbian, gay, bisexual and transgender health, spoke up in favour of the former Bligh government’s civil union legislation and has recently criticised the Newman government’s plans to ban same-sex couples from having a child through surrogacy.

In an interview to mark his 100th day in office in July, Mr Newman argued the organisation had not improved HIV rates “and they had become an advocacy group [and] we’re not going to fund advocacy groups”.

That’s a good example. I personally favour same sex marriage and adoption. But I don’t think taxpayer funded NGOs should be campaigning for them. I’m not saying that has happened in NZ, just using the Queensland example.

A bill banning funding of NGOs that are greater than say 25% lobbying activity would be an excellent bill for a backbench National MP.

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$300m saved

August 9th, 2012 at 7:00 am by David Farrar

David Fisher at NZ Herald reported:

John Ivil is the $300 million man – that’s the amount of money he and his team of public servants have saved the taxpayer in two years.

The former army logistics officer heads a team of negotiators who have turned the Government’s approach to spending money on its head.

Government departments have always taken an individual approach to buying goods and services, with $30 billion spent by agencies, hospitals, local councils and schools.

Public servants need cars, flights and office supplies, and each agency will head out into the market to try to strike the best deal with taxpayer money.

Now Mr Ivil and his team of 30 people at the Ministry of Business, Innovation and Employment promote the Government as the “customer of choice”, using the combined purchasing power to drive costs down and secure discounts.

Instead of Government departments going looking for the best deal, they now have the best deal looking for them.

Mr Ivil said his team had made $293 million in savings over the life of contracts secured so far (five to seven years).

Good stuff. Some people think that you can not save money in government without cutting services, but this is a good example that you can.

CIS on think-tank funding

July 3rd, 2012 at 2:00 pm by David Farrar

Andrew Baker from CIS writes:

 One of government’s favourite ways to solve a problem is to throw money at it.  But what if the problem is a think tank or public policy institute?  The true value of a think tank is that they can say what they think – whether to the benefit or detriment to the government of the day.  When the government starts throwing money at think tanks, there is a real danger that they undermine their capacity to critique the government effectively and make a positive contribution to civil society.

I agree.

Unlike the CIS, many think tanks and university-aligned public policy institutes receive financial assistance from the Government.  This often takes the form of endowments, donations, corporate memberships or grants.  The latest example is the Gillard government’s $7 million contribution to refurbish the building that will house the Labor-aligned Whitlam Institute, the Whitlam Prime Ministerial Library and an art gallery.

Other examples include a $112 million contribution towards the Australian National Institute for Public Policy in 2010; the $30 million that the Brumby and Rudd governments gave to establish the Melbourne based Grattan Institute; the Centre for Social Impact’s $12.5 million endowment; the $7 million for the University of South Australia to establish the International Centre for Muslim and non-Muslim Understanding ‘under the leadership of former Prime Minister, the Hon Bob Hawke AC’; and the Howard Government’s $25 million endowment of the United States Studies Centre at the University of Sydney.

That is a huge amount of money being spent.

recent report by the Institute of Economic Affairs in the UK illustrated this point well when it found that thousands of politically active charities only survived because of taxpayer support.  Government intervention in the marketplace of ideas distorts public debate and the organic growth of civil society.  Allowing ‘zombie’ ideas without popular private support to live on long after they are declared dead by the marketplace is not in the public interest.

For the last 36 years the CIS has relied on philanthropy, private donations and individual memberships to fund our research and advocacy for small government and free markets. This makes the CIS more productive and efficient, and we are more able to say what we think is right than similar organisations that take taxpayer money.  Only without financial assistance from the government can a think tank be truly independent.

It is staggering how many lobby groups are effectively funded by the Government.

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More taxpayer funded lobbying

June 26th, 2012 at 10:00 am by David Farrar

Last month I blogged on taxpayer funded lobbying. This should be of grave concern, because what it means is effectively you have Government Departments funding NGOs to lobby MPs on what the law should be.

I had a response from the Public Health Association, which was:

Hi David, We would like to respond briefly to your 14 May post about taxpayers funding lobbying. The Public Health Association (PHA) acknowledges you have a valid concern and would like to make it clear that none of the public money we receive is spent on lobbying or advocacy. It is part of our contract with the Ministry not to do so. Any lobbying we do is funded by membership fees, individual donations and fund-raising. Money we receive from the Ministry is spent only on activities such as supporting the public health workforce.

The reality though I believe is that if the vast majority of your expenses are staff, then there is no way you can say that no public money is spent on lobbying.

Now I do not advocate that a body which receives some taxpayer funding should not be allowed to express a view on issues. That would be wrong. But when a body is both primarily funded by the taxpayer, and the bulk of its work appears to be advocacy and lobbying – that is when I think it should not be allowed.

The PHA openly states “The PHA is a voluntary association that takes a leading role in promoting public health and influencing public policy.”, and over 50% of their income is from the Ministry of Health. Most of the remainder is their conference which is I believe 90% public sector funded. Actual voluntary membership fees are only 5% of their income.

I’ve also been sent examples in the alcohol area. An OIA from the Ministry of Health reveals taxpayer funding of Alcohol Healthwatch with $3.35m, the vast majority for “alcohol health promotion”.

Have a look at their website. It is all about lobbying MPs on the Alcohol Reform Bill.

The Health Sponsorship Council has a presentation on their website from ASH. Slide 16 is about how they must “Hold the Government to account”.  ASH is 89% taxpayer funded, and was saying this at a taxpayer funded conference.

This outbreak of taxpayer funded lobbying is not unique to New Zealand. The Institute of Economic Affairs in the UK has published a report called “Sock Puppets: How the Government lobbies itself and why“. It is a compelling read. They note:

For political parties, the benefits of supporting ‘sock puppet’ organisations extend beyond the short-term utility of progressing their legislative agenda whilst in government. Once the party loses power, these groups become a ‘shadow state’ using public money to promote the same political ideology. The new government must therefore choose between withdrawing the funding (which will prompt outrage from the threatened groups) and keeping it in place (which will mean funding politically hostile organisations).

I think the Government should apply a simple litmus test. No organisation which spends say more than 25% of their time or resources or lobbying should be eligible for government funding. They should be forced to split into totally separate organisations if they provide genuinely useful services which should remain funded, but this should not be used to have the bureaucracy use sock puppets to lobby Parliament and MPs on what the laws should be.

Lobby groups should be funded by their members and supporters, not by taxpayers.

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Spending transparency

June 9th, 2012 at 9:31 am by David Farrar

The Australian Taxpayers’ Alliance writes in the SMH:

It is a foundational principle of good governance that taxpayers should know how their money is being spent, and governments should be as open as possible. Taxpayers who wish to discover how their money is being used must trawl hundreds of pages of budget documents and submit time-consuming and costly freedom-of-information requests. Even then, information is scant. Ask any journalist. And these requests, as a Herald report showed on Monday, could be rejected in future as certain parliamentary departments are rendered exempt to FOI laws.

But it does not have to be this way. A transparency revolution is under way overseas, empowering citizens, opening governments to scrutiny, and transforming governance.

In 2006, in the US, the senators John McCain and Barack Obama co-sponsored the US federal funding accountability act. Its premise was simple: that taxpayer expenditure be placed online in an easily searchable database, so all taxpayers can find out how their money has been spent.

I have long advocated this for New Zealand.

Since then, the City of London, the European Union and 38 US states have enacted similar online portals – many with no thresholds, so every cent of taxpayer expenditure is publicly available. In some cases, literally every expense of government is made public after being entered into a database.

The benefits are obvious: not only are taxpayers empowered, but also savings can be easily identified, waste exposed and unethical behaviour discouraged. Those who want spending to remain hidden might argue that informing people is too costly, that it just cannot be done. But international experience proves this to be false. The website, which provides the details of all US federal government expenditure of more than $US25,000 ($25,800), cost less than $1 million to set up – and the software is now available free of charge in the public domain.

This means it could be implemented in New Zealand very easily. You just need each government agency to exports its payments data into it.

Citizens have been searching these websites in record numbers. In Missouri, with a population smaller than NSW, 15 million hits were reported in the first year. Millions in savings have been identified. To use just one example, Texas reported $8.7 million in savings directly attributable to their transparency website in just the first year of operation.

Opening the government books to an army of online citizen investigators has uncovered waste and duplication, and made junkets or pork-barrel spending near impossible. Corruption and rorting cannot occur when the records are freely available – sunlight truly is the best disinfectant.

Another reason to support it.


Where your taxes go

May 31st, 2012 at 2:00 pm by David Farrar

Worth checking out Where are my taxes. It details and shows graphically how much money per capita is spent on various activities. Some big items:

  • Superannuation $2,328
  • Primary schools $639
  • Family Tax Credits $480
  • Secondary schools $469
  • Tertiary Education $459
  • Domestic Purpose Benefit $413
  • Land and Transport $401
  • Student Loans $373
  • Early Childhood Education $313
  • Invalid’s Benefit $300
  • Accommodation Assistance $282
  • Unemployment Beneift $200
  • Sickness Benefit $177
  • Student Allowances $137
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Taxpayer funded lobbying

May 14th, 2012 at 2:00 pm by David Farrar

This is an issue that should be investigated by the Government or the Auditor-General. Yet again we have evidence of taxpayer-funded groups using their funding to lobby the Government for specific law and policy changes.

This is an extremely bad thing. The Government should not be effectively paying people to lobby Parliament and the Government a specific way.  Just as Ministries are forbidden to lobby, it is equally wrong for them to contract other groups to lobby.

This was first exposed in 2003. Then ACT MP Rodney Hide revealed that Action on Smoking and Health (ASH) and five other NGOs were receiving taxpayer money from the Ministry of Health to help lobby MPs on the Smoke-free Environments Amendment Bill (the one that banned smoking in bars and cafes).

The Director-General of Health then ordered a State Services Commission investigation into the matter (the Hunn/Brazier inquiry). Hunn and Brazier considered that the advocacy and lobbying clauses in six contracts were unacceptable under public service standards and in their view could compromise the political neutrality of the Ministry of Health. They recommended that future agreements with NGOs explicitly exclude lobbying activities.

The Treasury’s most recent guidelines (2009) for contracts with non-governmental organisations also make it clear: “Government agencies should also be careful to ensure that contracts do not breach public service standards of political neutrality”.

However, the Health Ministry is still funding the “advocacy” and “awareness raising” that these organisations engage in. The Ministry still funds ASH and other organisations like the Public Health Association – it is just more careful about what it puts in the contracts.

The current ASH contract allows it to “liaise with government and private health agencies, the media and any other appropriate organisations to raise public awareness of tobacco related issues and developments”. It says it will “prepare and distribute media briefings, commentary and releases on key tobacco issues. This will include maintaining relationships with key media.”

A quick look at the ASH website makes it clear it is a lobby group, but a lobby group that gets 89% of its funding from the taxpayer. I am all in favour of taxpayer funding quit smoking initiatives, but not funding a lobby group. One of its values is “A dedication to influencing public policy and social norms to tobacco related harm.” It has a page on its current campaigns, of which seven are about law changes, only one is actually about quitting smoking,

The current ASH contract provides for it to receive $578,000 p.a of taxpayer money in 2012. I’d say the vast majority of this goes on lobbying and media activities.

The Public Health Association received $311,967 from government grants in 2011, $305,843 in 2010 and $323,498 in 2009. In its financial statements it lists an item of income as “Advocacy/Healthy Public Policy”, as well as “Informed Debate/Communications”.

The PHA says that it “takes a leading role in promoting public health and influencing public policy…Our goal is to improve the health of all New Zealanders by progressively strengthening the organised efforts of society by being an informed collaborative and strong advocate for public health.”

On its website it has a letters to the editor guide.  It says: “Do you feel strongly about a public health issue? Write a letter to the editor using our simple letter writing techniques, list of email addresses and examples of sample letters (alcohol, housing, tobacco, oral health and preventing family violence).”

Smoke-free Coalition

The Smokefree Coalition ( says it is “committed to preventing the uptake of smoking among young people and reducing the smoking rates of all New Zealanders” and it has published a road-map for how to make NZ smoke-free by 2025. It received $167,213 in 2011 and 2010 and $179,890 in 2009 from government. This represented 98%, 96% and 95% of its funding in each of those years.

Those are just three examples where there is over a million dollars a year of government money going to NGOs for lobbying.

Another example is  the Turanga website (a government funded anti-smoking research initiative) has posted a page listing “3 ways to support a tobacco tax increase.” One of the ways is to write to MPs. The website directs readers to in which readers can fill in their name and write a personal message to Key, Ryall, English or Turia. Readers can select from a range of sentences that they have written for them.

Now I personally support an increase in tobacco tax. But that is not the point. Government money should not be used for NGOs to campaign for what the law should be. It is the thin end of corruption.

The second way of supporting a tobacco increase is: “ASH have some tax postcards to send to John Key, Bill English, Tony Ryall and Tariana Turia. If you would like a batch please email ash via their website with your postal address and let ASH Director Ben Youdan know how many you need.”

That is also explicitly political lobbying.

As an individual taxpayer I’d be quite happy to donate some of my money to anti-smoking groups. But the Government should only fund anti-smoking groups which actually provide stop smoking services or genuine medical research. They should not fund advocacy groups to influence public opinion on future law and policy changes. ASH and the PHA should have their public funding removed, and they should rely on donations like all the other advocacy groups out there have to.

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Government Expenditure

April 17th, 2012 at 9:00 am by David Farrar

The left have been trying to push a meme that this Government has not been spending enough money. That if only we did not have the tax cuts, we would be able to have extra spending. Putting aside the fact that National’s tax packages have had less of a fiscal impact than Labour’s proposed tax cuts, I thought it would be useful to look at actual spending by term. Has National really been slashing spending? If only. First let us look at total expenditure.

The dark blue line is total government expenditure for each term of Government (from 1 July after each election). So total government expenditure increased 21% under National, from Labour’s last term. If you compare to the last term of National’s 4th Government it is a whopping 131% higher. It is also 92% higher than Labour’s first term.

Now next let us look at it in terms of real or inflation adjusted expenditure, which the red line. Ideally inflation should be 1% or so, so the impact is minimal, but that has not always been the case. Real expenditure is 11% higher than from the previous term, and 69% up from the 4th National Government.  It is 50% higher than in Labour’s first term.

Now total expenditure includes SOEs and the like. A more common measure is the core crown expenditure, which excludes this. In nominal terms this increased 19% from Labour’s last term, 83% from Labour’s first term and 105% from the last National Government. This is the green line

To take account of inflation we also have the purple line of core real expenditure.  Well this term National’s core real expenditure was 9.6% higher than the last term of Labour. It is 43% higher than Labour’s first term and 51% higher than the 4th National Government.

Finally we have also had population growth. I don’t accept that all government expenses should increase per capita, but to take account of this we have the light blue line which goes on the second axis. It shows National is spending in real terms per capita 6.2% more than the last term of Labour. It is 28% more than Labour’s first term, and 32% more than the last National Government.

It is interesting to look at the real increase per capita for the last four Governments. The 1st term of Labour saw this increase a modest 2.5%. The second term of Labour saw it increase 6.2% – the exact same increase as under National. The outlier is Labour’s third term is when it increased 13.8% as Labour was so embarrassed by the size of its surpluses it invented all sorts of new spending schemes.

So Labour trying to portray National as mean and stingy, and cutting spending to fund tax cuts is just bonkers. If anyone should be complaining, it is fiscal conservatives who think government spending shouldn’t increase in real per capita terms (something the Government has now agreed to in principle, thanks to ACT).

People may be interested in the real increases from Labour’s last term to National’s first term. They are:

  • Health +11.4%
  • Education +8.3%
  • Law & Order +7.9%
  • Defence 5.0%
  • Welfare +9.2%

Remember those when someone claims National has slashed education or health funding.