A guest post/analysis from the Taxpayers’ Union:

Income Tax:

The government intends to reduce income taxes by adjusting tax brackets upwards slightly. This is how the changes would look: 

These changes would see the average earner on $66,196 paying around $15.30 less tax each week. This is topped up by an additional $10 a week with the Independent Earner Tax Credit being extended to anyone earning less than $70,000.

The income tax changes only return taxes to 2021 levels. 

There has been no commitment to regularly adjust tax brackets for inflation meaning ongoing stealth tax hikes will continue that see workers paying an increasingly high proportion of their income in tax. 

Key New Spending Initiatives: 

• $1.8 billion more for Pharmac to fund drugs
• $14.9 billion more for hospitals and health providers
• $2.7 billion more for schools
• $270 million more for tertiary education providers
• $190 million more for early childhood education
• $570 million more for the NZ Defence Force 
• Continuing $2.6 billion of climate change initiatives previously funded from Emissions Trading Scheme revenue.
• $1.1 billion in additional disability funding
• $1.2 billion Regional Infrastructure Fund
• $650 more for the police
• $181 million more for film and TV subsidies, along with a continuation of the gaming subsidy

New Revenue Initiatives 

• Removing the ability for the ability to deduct depreciation as an expense on commercial buildings – $580 million per year
• Taxing online casino operators – $50 million per year
• Increasing immigration levies – $130 million per year
• Digital Services Tax – $320 million over three years from 2025

Key Fiscal Indicators:

• Core Crown Expenses are expected to be $138.3 billion for the year from 1 July 2023 to 30 June 2024. This is up significantly from $127.5 billion the year prior. Core Crown Expenses are expected to continually rise to $156.3 billion 2028 but will shrink as a proportion of GDP after this year as economic growth boosts the economy as a whole. 
• Net Core Crown Debt is still on the up with no sign if it dropping in the forecast period. By June this year, it will be $178 billion and by 2028 it will reach $209 billion. 
• The Government isn’t projecting a surplus until 2028 where it is projected to be just under $1.5 billion. For the next two years, the government deficit will be larger than under Grant Robertson’s final three years as Finance Minister. 

Analysis:

Any hopes of unwinding the eye-watering growth in spending under the rein of Grant Robertson are long gone. Nicola Willis’s Budget today is promising to spend more both in real terms and as a proportion of the GDP. 

The Government has included in its tax relief the Independent Earner Tax Credit in its tax calculator to pump up the amount those earning under $70,000 will earn, without the financial cost of reducing taxes for those on higher marginal tax rates. 

Nicola Willis was careful to emphasise the fact that David Seymour played a significant role in identifying savings. This is likely an attempt to placate the ACT leader who no doubt would have wanted the Government to go further and faster in cutting spending. 

New Zealand First’s $1.2 billion Regional Infrastructure Fund will be a big win for their base. Framing the fund as one focused infrastructure investment appears to be attempt to differentiate it from the Provincial Growth Fund when the party was last in Government which saw widespread criticism as being a ‘slush fund’.

The continuation of corporate welfare in the film and gaming sectors will be a bitter pill to swallow for ACT who have campaigned against handouts to special interest groups. The funding is time limited until June 2026 to, presumably to keep the door open to scrapping it at a future budget. 

The increased investment in a number of areas like Pharmac, health and education will largely go down well, but for some targeted criticism where the increases in certain areas is less than had been forecast, even if not funded, by Labour.

Overall, there won’t be too many who are happy with today’s Budget. Those on the left will criticise the Government for the scale of the cuts while those on the right will condemn the projected increases in spending and debt for not going far enough. 

DPF: Just adding my 2c on, I think when both sides are unhappy, that shows the balance is not bad. Willis has delivered the first tax cuts in 14 years, and the first significant backroom spending cuts in many years, which are both significant achievements. Unfortunately the inherited structural deficit and recession means that the tax take is well down, and the deficit and debt tracks are higher than desired. This means that fiscal restraint can’t just be for this budget, but ongoing.

A jury of 12 has unanimously found Donald Trump guilty.

They have returned guilty verdicts on all 34 counts.

Liam Hehir provides an excellent factual take of what Labour claims is a tax cut for landlords. Read the whole thing. Some extracts:

What’s this “tax cut for landlords” business that I keep hearing about?

The coalition government promised to restore interest deductibility for residential property investors. This allows them to deduct mortgage interest expenses from their taxable rental income This is in line with general taxation principles for most businesses. 

Will all landlords benefit from the move?

No. The extent to which landlords benefit depends on their individual financial situations, such as the size of their mortgage and the interest rates they pay. Those with mortgages will be able to deduct their interest costs when working out their taxable income. Landlords without mortgages (for example, Christopher Luxon) will see no benefit from this policy change.

Does this mean landlords are getting a tax cut?

No, landlords are not receiving a tax cut. Restoring interest deductibility allows landlords to deduct mortgage interest expenses from their taxable rental income, aligning with standard business practices. This deduction acknowledges that interest is a legitimate business expense, ensuring landlords are taxed on their true net income.

But they’ll be paying less tax won’t they?

Yes, many landlords will pay less tax as a result of restoring interest deductibility, but this does not equate to a tax cut in the traditional sense. It is instead recognition of the cost of financing business operations, ensuring taxes are assessed on true economic income. That is why it is a standard feature in most tax systems.

Isn’t that just a semantic quibble?

It may seem that way, especially to those unfamiliar with tax details. However, the distinction is crucial. Calling it a “tax cut for landlords” has Trump-like, populist appeal but implies undue favouritism. In reality, landlords are currently subjected to unfair treatment, and the reform will simply restore equal tax treatment, aligning them with other businesses.

He also does a good analogy:

Okay, so how much will tax revenues be reduced as a result?

The restoration of full interest deductibility for landlords will reduce tax revenues by $2.9 billion over four years. This cost is $800 million higher than originally planned due to an accelerated implementation agreed upon by National and Act. 

Is that material in the scheme of things?

The $2.9 billion cost of restoring full interest deductibility for landlords over four years is significant but manageable in New Zealand’s overall fiscal context. It’s a fraction of the total budget. However, it is notable given the deficit and overall economic pressures, the government will need to balance this policy with its broader fiscal strategy to get debt under control.

Can you explain this in rugby terms?

The team is trailing by 27 points. Banning interest deductibility is like cheating to get a penalty kick. At best it closes the gap by 3 points, which is noticeable but not game-changing move. 

Allowing interest to be deducted means playing fairly according to accepted standards of conduct but missing out on the 3 points as a result. The team needs to find other ways to make up the difference.

What Labour did would be equivalent to National passing a law saying that organic farmers can’t claim staff costs off tax.

This table shows how much of a tax cut earners get at each income level. Those on $60,000 do best with an 8% reduction in the tax they pay. Those earning over $150,000 get only a 2% reduction, and those over $230,000 a 1% reduction.

The Taxpayers’ Union released:

The Taxpayers’ Union can reveal that taxpayers are forking out at least $871,484 each year for MBIE staff to do union work on taxpayer time.

The secretive arrangement – the creation of which MBIE did not have any correspondence with Ministers – includes two full-time roles paid at least $101,911 each and 125 other roles where employees are able to take between 8 and 64 hours a month off work for union activities.

Taxpayers’ Union Campaigns Manager, Connor Molloy, said:

“This is nothing short of a scandal where taxpayers are being forced to fund the operations, and growth, of one of the country’s most powerful lobby groups that regularly engages in overtly political campaigning.

“If the Government was found to be giving paid government positions to groups pushing for smaller government and less wasteful spending the unions and opposition parties would rightly be in uproar. Taxpayers should not be paying for the government to lobby itself.

“If a PSA union membership offers worthwhile benefits to its members, they should have no issue with funding their operations solely from membership dues – instead taxpayers are being forced to pick up the tab to fund the union’s dirty work.

This is outrageous. Taxpayers fund union staff through their taxes. This gives the union more money to fund the CTU and this gives the CTU more money to run campaigns against the Government.

It’s bad enough that MBIE has handed over more than $600,000 to the CTU directly to engage them on various projects, but now they are also paying for PSA staff to work for the PSA but be funded by taxpayers.

Chris Bishop released:

The coalition Government is investing in social housing for New Zealanders who are most in need of a warm dry home, Housing Minister Chris Bishop says.

Budget 2024 will allocate $140 million in new funding for 1,500 new social housing places to be provided by Community Housing Providers (CHPs), not Kāinga Ora, thanks to savings found by ending the First Home Grant.

The First Home Grant subsidises buyers, and hence increased demand. This in turn will increase prices.

On the other hand, increasing the supply of houses will reduce pressure on house prices.

So a much better policy.

The Herald reports:

Deputy Prime Minister Winston Peters has taken aim at Te Pāti Māori, calling them “radical extremists” and accusing them stoking racial division.

Peters was responding to Te Pāti Māori’s promotion of the nationwide protests planned for Budget Day and comments made in recent days by party MPs. He criticised the use of imagery of pistols in the protest’s advertising on social media, saying “make no mistake, racial division is exactly what they want, not unity.”

“They don’t want democracy, they want anarchy,” Peters said.

This is what people need to understand. We have a political party in Parliament that doesn’t want democracy, that doesn’t believe in equality of suffrage. They want to stoke conflict, not resolve it.

Chris Hipkins said his vision for 2040 includes:

The rates of tobacco smoking in New Zealand are the lowest in the world after Labour reinstates an ambitious Smokefree agenda.

Our current daily smoking rate is 6.8%.

This list of prevalence rates for 164 countries would have a rate of 6.8% as in 154th place, or 10th lowest in the world, and the lowest in the OECD.

The current policy setting of having vaping as a less harmful alternative to smoking is working well.

The Post reports:

A spreadsheet blunder has resulted in Wellington Water asking for less money than it needs from every council in the region – to the tune of tens of millions of dollars.

The last-minute request for increased funding was made in a week when cash-strapped councils are making major decisions on long-term plans, with one mayor labelling the water agency “incompetent”.

The mistake – described as a miscalculation where programme management costs had not been budgeted for – was revealed in Thursday’s Greater Wellington Regional Council meeting.

The Post understands this now increases Wellington City Council’s budget by $9m, while Lower Hutt’s budget blowout was said to be significantly higher. Mayors and council staff were not able to confirm the numbers on the record ahead of Friday’s Wellington Water Committee meeting.

Upper Hutt mayor Wayne Guppy, a long-time critic of Wellington Water, said it was “beyond belief” and “just incompetent”. The discovery of the error could not come at a worse time, when councils were almost finished budgeting one of the toughest long-term plans in local government history.

That $9 million is an extra $100 or more per household.

Wellington Water committee chairperson and Hutt City mayor Campbell Barry said he became aware of the issue in the past 48 to 72 hours and staff were working through what it would mean for the Hutt.

“I’ve been really clear to Wellington Water they need to front up to this issue at the water committee [on Friday] and give a full explanation, and the steps they are taking.

Time for Councils to sack their reps on the Wellington Water Committee and replace them with ones that will hold Wellington Water to account.

It’s only $300 but it’s still wrong to claim accomodation in Havelock North when the purpose of the trip was purely about trying to convince a Labour MP not to defect.

In theory this bill should not be needed, but in practice it is. One aspect I really like is it allows someone who is “cancelled” to take a civil suit against the venue seeking costs and exemplary damages.

Here we have Te Pati Maori saying the revolution is here, with crossed guns as imagery. Sarah Palin got crucified by many media for merely posting an imagine of a politician in cross-hairs. Imagine an ACT MP posted something showing pistols and calling for revolution? It would lead every news story.

This is from the official Day of Action page. Just the usual stuff about the Government wanting to wipe out Maori, they need to seize power and get rid of the parliamentary system.

Bryce Edwards has highlighted the danger of this:

Currently, the worst offenders are Te Pati Māori and others aligned with them. Not only are they using ethnic-based slurs and attacks on people’s identities, but they are also using all sorts of evidence-free claims to foster outrage.  …

The new version of the Māori Party, which regards its predecessors as too moderate, has decided to escalate the claims, obviously in the hope of getting more attention. Now, there are claims of “extermination”, “systematic genocide”, and “white supremacy” levelled at opponents. …

Te Pati Maori have become the indigenous version of Donald Trump.

I have no doubt Chris Hipkins is the worst and most ignorant (or dishonest) Minister of Education our nation has seen. He said this on ZB last week:
“If people are concerned about kids who aren’t achieving in mainstream schooling, the area to look is alternative education and activity centres.”

Hipkins and Ardern said to NZ before banning Charter Schools in 2018 that they would develop Designated Character Schooling. They – and their Ministry accomplices – turned down several brilliant applications. Hipkins and the teacher unions walk hand-in-hand blindfolded while:
– a significant portion of our primary school teachers cannot do basic English, Maths, or Science.
– the top 30 high schools see an average of 87% of their leavers attain UE, for the bottom 30 high schools it is 2.7%.

We are not talking being concerned about a few kids Mr Chipster – but around 40% of our high school students in abject failure.

Charter schools are a part of the solution but the last introduction of them was an appalling policy and implementation failure that was saved by a few high quality and incredibly dedicated educators and social entrepreneurs who carried the camel across the desert.

Parata had no enthusiasm and was a hand-brake. The Ministry of Education ran interference and were incompetent and obstructive at every turn. The teacher unions were delighted to have something to bang on about to give their members the false impression that they actually do something for their fees and care about kids. The contracts contained aspects that were, frankly, stupid and were first seen by those organisations willing to start the schools on the day they had to sign in October of 2013 (i.e. followed by a 3 month run in to start). Individual Charter School organisations took the Ministry to formal mediation on up to six items. The media did what NZ media does – took press releases from the left and ran them as fact.

And yet … the skill, passion and perseverance of a few individuals, organisations and supportive families and students has allowed some widespread enthusiasm and support for their introduction. They are needed – but everything must be done well.

1. The contracts must be good. The goals set exact, important and achievable.
2. The authorisation boards – and whoever is writing the policy and contracts – should be meeting constantly with previous providers. All of the Ministry reports of the last tranche are abject nonsense are not worthy of being door-stops. My understanding is that few previous providers have been consulted at all.
3. Authorisation and monitoring must be completely independent of the Ministry and any reference to protecting bums on sets in the Ministry’s network of schools.
4. The schools must be completely transparent in all aspects. When I was involved in the two Villa Education Trust Charter schools they were acknowledged as being the most transparent by evaluators and had very high relative results for NCEA from their Y10 leavers who went into State schools. Their first two external evaluations as Designated Character (State) Schools had their results diving and investigations being started for avoiding OIA’s.
5. They must be allowed to grow when they succeed and closed when they fail.
   
   
   Just restarting Charter Schools, kind of like last time, will do very little good at all. There are already too many signs that this is going to be the case.
   
   Starting them expertly and in good numbers – could significantly improve NZ Education for the good of NZ children, their families and society as a whole.
   
   Alwyn Poole
   Innovative Education Consultants
   www.innovativeeducation.co.nz
   alwynpoole.substack.com
   www.linkedin.com/in/alwyn-poole-16b02151/
   

That may be too generous. My reading of the documents is they actually wasted almost $230 million.

An insightful interview with Chris Luxon and Nicola Willis in the Herald. Was nice to see they can hassle each other:

In return, Luxon says he has discovered Willis has “a wicked sense of humour”.

He had a painful brush with that sense of humour just before the interview.

It was a totally deserved one. He and Willis were inspecting his newish digital photo frame, one of the few personal items in a very spartan office.

He had brought it to add a homely touch to his “gilded cage” – the ninth-floor office of the Prime Minister.

Willis then narked on him, telling us the first time she saw his new photo frame the photo displayed was a portrait of himself.

She was merciless in her mockery. She even took a selfie of herself next to the photo in question, which she shows off.

She laughs and laughs and notes that she totally understood why he would want photos of himself to look at, saying somebody might want to start the day looking at something that inspired them.

“So here you are, starting your day looking at an image of yourself to motivate you.”

He takes it very well, laughing and trying to explain that at that stage he had not curated the photos that would rotate through it.

The exchange dispels any doubt Willis might defer easily to Luxon and whether he can handle having the mickey taken out of him.

I regard it as a very good thing that you can take the Mickey out of your boss, and that your boss can handle it.

Nicola mischievous streak ius also covered in this interview with Tova O’Brien:

With that, I suggested she’d already answered the Theresa May memorial question, ‘what’s the naughtiest thing you ever did?’ (the former British PM famously replied that she’d, gasp, run through a field of wheat), but Willis says no, the question would be lost on her because she did a lot of naughty stuff – and started young.

“I remember I literally, at my primary school, turned the power off at the mains, which led to everyone in the school having to evacuate and go onto the field and them asking who had done it and so yeah, I did naughty stuff.”

Reminds me of my kids a bit. This week we were walking through a rest home and passed a group of residents. One of them had a beautiful hand carved walking stick. My youngest (4) stopped as he passed him, grabbed the walking stick and declared it was now his staff and walked off with it! You are equally mortified and amused. And yes it was promptly returned.

Karen Chhour writes:

But the legislation has had unintended consequences. We’ve seen what happens when an interpretation of Te Tiriti is placed above the needs of the child.

In some cases, we have seen “reverse uplifts”, where a child is removed from a loving foster home to be placed with relatives deemed more culturally appropriate.

I have seen firsthand the devastation on caregivers’ faces and the pain in their voices after being told a “forever home” did not necessarily mean just that. I saw the damage caused to a family being threatened with a reverse uplift because they were not Māori, who by the grace of God managed to find a Māori ancestor generations back in their bloodline. That was enough to save them from a reverse uplift.

So a reverse uplift would have occurred if it were not for the fact they could find an ancestor from six generations ago, and somehow this is meant to be good for the child?

Then we had the very public case of a young girl referred to as Moana. Moana was traumatised and neglected for years before being removed and placed into a safe, loving home – until a social worker decided they needed to remove Moana from their care because a Pākehā family could not provide for her cultural needs.

All I’m asking is for Oranga Tamariki to make sure that we’re putting safety and wellbeing first. Everything else must come second to that.

Cultural needs are important, even very important. But they should not be a binary test that over-rides all other criteria.

It is true that my own experience informs my politics. I grew up dealing with Child, Youth and Family, and I learned that what matters most in a home is stability, love, and safety – not race.

But more relevant than my own experience is that of children harmed today under Section 7AA.

Child abuse is a national shame, and people have been calling for years for something to be done to protect our most vulnerable children. Now that we are doing something about it, those same people respond with personal attacks and call us racists.

Every child deserves to wake up every morning knowing that they’re going to be safe. Because ultimately you have to be able to survive to enjoy your culture. And at the moment, we are working with children in care who need our help just to survive.

So true.

TPM released:

Te Pāti Māori are calling for a by-election and the establishment of an Independent Commission Against Corruption (ICAC) after the National Party’s donation botch.

On this issue I agree with them. I have supported one for many years. There’s many things such a body could do such as investigating a charity illegally funding a political party.

“When the brown party is late to file a disclosure, we’re referred to the Police and Serious Fraud Office. When the National Party doesn’t disclose, it’s a ‘mistake’ and ‘poor error of judgement’. This is not one law for all.

This is blatant playing of the race card, stating that the legal authorities treat parties different based on the skin colour of their members.

The Electoral Commission has only known of the incorrect donation return for a few days. They have in no way decided not to refer it to the Police, yet alone dismiss it as a mistake. In fact I’ll be astonished if they do not refer it.

The Maori Party was referred in 2021, after it transpired they had not disclosed $320,000 of donations. The decision to refer was only done five weeks after the Electoral Commission was notified.

So there has been no different treatment at all between the two incorrect donation returns. I suspect Te Pati Maori knows this, but they prefer to stoke racial resentment.

Hamish Price writes:

A chasm is opening in New Zealand’s traditionally bipartisan foreign policy regarding the Government’s potential involvement in Pillar II of Aukus. If not managed carefully by the National and Labour Party leaderships, it risks locking them into positions on our primary security arrangements that will flip-flop with every change of government, reduces our security options, and diminishes our credibility on the regional stage.

Yep foreign policy should be stable.

Conversely, defence minister Andrew Little was more enthusiastic about New Zealand exploring the benefits of Aukus Pillar II for our defence and security framework.

But in the six months since going into Opposition, Labour have now firmly hoisted their colours to an anti-Aukus mast. In February, the party’s associate foreign affairs spokesman Phil Twyford called Aukus an “offensive warfighting alliance against China.” 

Seems hysterical. AUKUS is not an alliance like ANZUS or NATO. It is primarily a technology sharing agreement. Considering how small fry we are, I’d say we’d potentially gain a lot from it.

If Australian Labor can come to the party on Pillar I, then why is its New Zealand counterpart resisting a much more benign engagement in Pillar II?

A good question.

Helen Clark’s views on Aukus have been rehearsed publicly, and consistently, over the past three years. However, her criticism that the new Government’s interest in Aukus is a break from bipartisan consensus doesn’t bear scrutiny. Labour in government engaged with Aukus, and the new Government is continuing its work. It is Labour’s flip-flop, and Hipkins’ inability to explain it on security terms, that is widening the differences.

Foreign Minister Winston Peters is clearly frustrated that Clark has captured much of the public debate on Aukus, and even more so that the Labour Party are now adopting her opposition. But her leadership on the debate occurred at a time when both the previous and current governments were largely silent in the conversation. “We’re evaluating it, we’re not sure, wait and see,” are not compelling counter-punches.

Clark has almost become Leader of the Opposition in exile on Twitter. Everyday she is tweeting against the Government in almost every policy area there is.

Russia’s invasion of Ukraine, and China’s support for it, was a key moment in European perceptions of China’s transformation from a strategic challenge to a strategic threat.

That’s what change me also.

There are various short-, medium-, and long-term scenarios in the region with differing probabilities. The most plausible scenarios are:

• The region becoming less tense. For this to happen, China would need to renounce its current aggressive stance, declaring a hostile takeover of Taiwan as off-limits, withdrawing from provocative conduct in the South and East China Seas, and disengaging in undermining the international rules based order.
• Alternatively, the United States capitulating to China’s superiority in the region.
• The status quo being maintained: a challenging environment with potential flash-points between the major powers, but no further escalation.
• Increased escalation leading to a protracted cold war between the major powers.
• A hot war between the US and China.

Before reading what Hamish thinks is the probability of each, I’d say (1) is a pipe dream, (2) is highly unlikely and (5) is highly undesirable and unlikely. So the future is probably (3) or (4).

Price thinks (4) is most likely – a new Cold War.

Aukus candidates may resist describing it as a deterrence to China’s aggression, but advocates need to do so. China’s aggression is a real challenge, now universally accepted by the West. If advocates for Aukus do not frame it as a deterrence, then the deal risks being framed as a proponent of aggression by its opponents, as Twyford has in New Zealand. 

That is good framing – it is about deterrence.

And although Golriz Ghahraman resigned on Jan 16 she still incurred $11,920 of expenses. That includes $6,292 of accommodation costs which may have committed. But $4,738 of ‘surface’ travel?

That does seem exceptionally high, especially as she was overseas until the 13th of January so that is $12,000 of expenses over three days? Perhaps there is a simple explanation such as unclaimed expenses from the previous quarter?

UPDATE: The Greens have said some of it is from the previous quarter and also it appears MPs who resign can keep charging up expenses for a month after their resignation.