News

ACT’s plan to boost wages

ACT Leader David Seymour is proposing a programme of one per cent per year reductions in the company tax rate.

Company tax would drop by a percentage point each year for eight years, to a target of 20%.

“In Budget 2015, the Government should be signalling continuous improvement in our business environment, and this proposal does that,” said Mr Seymour.

ACT’s proposal would reduce revenue by around $170-180 million each year, which could be funded by a share of existing planned net expenditure growth and the phase-out of existing corporate welfare.

“This is a very modest proposal, but one that will help grow New Zealand’s wealth.  It is the kind of thing that a future-focused government should be putting in its budget.

The ACT Leader also released a summary document, reviewing the academic literature on the relationship between company taxes, economic growth and real wages.

“In short, we need higher wages in New Zealand.  But that needs strong business investment. We won’t get either without a more sensible tax rate on businesses.”

See attachment for full policy document.

Nothing to fear from competition

The Government Working Group reviewing the effects of offshore online racing and sports betting should be investigating how to open the market up to more competition.

“We should not be restricting NZ gamblers’ options by further strengthening the TAB’s monopoly” said ACT Leader David Seymour.

“We should open the market up to more competition so NZ punters can access domestic odds that match the ones they can achieve via overseas betting agencies. Only an open market can achieve this.

“It’s hard to see how a working group so heavily weighted with racing interests will come up with any other conclusion but to ask Minister Guy to limit New Zealand punters’ options.

“Strengthening the power of the monopoly provider is not in the best interests of the Kiwis who gamble on the races and sports. New Zealand punters deserve the same competition and choice as their Australian counterparts, where bookmakers compete/co-exist with the Australian TAB.

“Minister Guy needs to ensure his Working Group acts in the interests of all Kiwis who enjoy a flutter, not the vested interests of existing monopoly providers."

ENDS

Auckland Council fails to consult - Again

ACT Leader and Epsom MP David Seymour has criticised the process by which cars are set to be banned from Mt Eden/Maungawhau

“It is appalling that the Maunga Authority has refused to front media on this issue before the decision is made, but has a communications plan for after they’ve made it.

“Mt Eden is special to many people, its governance should be inclusive, but instead we will see electric gates and exclusion resulting from a secretive process.

“The Maunga Authority, which governs 14 cones across Auckland, consists of six elected representatives from the Auckland Council and its local boards, six appointees of local Iwi, and one non-voting representative of the Crown.  (The Maunga Authority’s agenda is online here, see pp9-12)

“Such a public place should be subject to full public accountability, but the public cannot vote for half of the voting members of the authority.

“Aside from the process, the new regime neglects the elderly, busy, young families and the disabled.

“The provisions for the disabled appear to be an afterthought and are premature to say the least.  Supposedly you drive up to a gate, call a number, tell them you’re disabled and get given a pin number. The agenda item says “consideration needs to be given to how the call centre screens visitors seeking access.” That’s bureaucrat speak for, “it’s going to be awkward asking people to prove they are disabled over the phone.”

“No doubt this enforcement approach would ultimately be more complicated and expensive than is being revealed, but that seems to be the way with Auckland Council.

“The change will disadvantage people, who will see the Mountain as less attractive. “Whenever a foreigner comes to town we whip up Mt Eden for an orientation, for busy people the Mt Eden experience is being taken away.

“The contemplative quality that the ban seeks to achieve is already available on eight of the 14 cones managed by the Authority, which are already vehicle free.

“Like the proposed and now revoked fireplace ban, this is an example of Auckland Council pursuing multiple and undemocratic objectives while rates are through the roof and poor housing supply is creating a national economic crisis.

ENDS

Free Press 20/04/2015

Sharing Economy to be worth $335 Billion. Price Waterhouse Coopers project that the sharing economy, Uber, Air BnB, Chariot and the like, will be worth $335 billion worldwide by 2025. Long term surveys show people are becoming less trusting, while increasingly using sharing apps where trustworthiness is recorded over successive transactions.  Technology is complimenting free market activity and reducing the need for government regulation. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11434321 

Markets of Virtue
It is popular to decry market activity as cynical.  Here is a simple experiment that shows how markets bring out the best in people.  Go to TradeMe and view feedback on some traders’ profiles.  People with a visible reputation rush to make good their misunderstandings and build goodwill. That’s the market in action.  Now go to the comments section of a political blog.  That’s politics.

The Case for Economic Growth
The New Zealand Initiative have published an excellent essay entitled “The Case for Economic Growth”. See here.  Among their many well-made points, people subsisted on an average of 50c per day for 100,000 years until 1820 when capitalism came along.  Today New Zealanders are around 200 times wealthier. They also present evidence that wealth makes us better environmental custodians, and even makes us smarter.

Join our Smart Set
Donating to ACT is a smart investment.  If you enjoy Free Press and support ACT’s mission, please invest generously. Donate

Job Opportunities
US trends are often a useful guide to how technology will affect the NZ workplace. CareerCast rates 200 jobs on the basis of the work environment, stress levels and hiring outlook.  The top jobs tend to use math and coding skills, have a demographic tail wind from the aging population (audiologists, optometrists), or first world problems (dental hygienist, dieticians).  Way down at the bottom, number 199 and 200 were respectively lumberjacks and newspaper reporters. Make sure the kids do their math homework.

It’s not All Bad
The job outlook may not be great for journalists in traditional newspapers, but other US data shows rising demand for the skills of journalists, due to the surge in online sources of written news and commentary, as well as in related industries like public relations. Also, lumberjacks have apparently re-emerged in the hipster world, which covets “lumber-sexuals”.  Big beards and plaid shirts!

Equipping our Kids with the Right Skills?
We should take seriously that NZ math and science performance fell sharply in the last 2012 global PISA survey.  The most worrying aspect was the decline for Maori. We must equip our kids with the essential skills for the 21st century, so they can find meaningful jobs.  That is why we need new education strategies, such as ACT’s Partnership Schools.

Capital Gains Taxes
Last week the Reserve Bank deputy-Governor recommended more capital gains taxes on housing which resulted in a brief flare-up debate. By the end of the week all that was left was a gentle smoulder, more smoke than heat.   Free Press is relieved that the CGT is off the table for both major parties.

CGT Winners and Losers
A capital gains tax on housing would increase costs for landlords.  The person renting would pay all or most of the new tax.  Why? In the longer run, capital will only flow into rental housing if the return is adequate. Costs get passed on.

What about the Regions?
The last thing the regions need is another tax for Auckland’s sins.  It would be a rerun of the debate over the Reserve Bank’s LVRs, an initiative made necessary by Auckland and paid for by everyone.  Free Press wonders if the Wellington-based Reserve Bank has hatched a plot to make Aucklanders more unpopular than they already are.

Once More, With Feeling
It’s the Supply Side.  From the Deputy Governor: “Urban planning rules are complex and often restrictive. Planning must take account of the Resource Management Act, Local Government Act and Land Transport Act.”  He went on to quote the Productivity Commission estimate that the cost of planning regulatory requirements is between $32,000 and $60,000 per house in a subdivision, and $65,000-$110,000 for an apartment.  That’s why regulatory reform matters.  Free Press apologises for banging on about this, week after week, we’re getting tired of it, too, but regulatory reform is the only way to cure the disease, not the symptoms of a housing shortage.

The Real Culprits
The real reason for housing shortages is the zealous drive to intensify cities at all costs. Last week the New Zealand Planning Institute hosted its annual conference ‘back to the future,’ with the kind of zeal that would make real clergy blush.  Headline speaker Charles Montgomery corrected Q+A’s Heather du Plessis Allen that he doesn’t ‘think’ that living closer together will make you happy, he knows.

The Greatest Challenge since WWII!
Attendees told Free Press that Green MP Julie Anne Genter spoke and compared the need for more compact cities with the challenges faced during World War II.  We wonder if she’ll be using that speech on Saturday.  When the troops returned they built lots and lots of… suburbs.

Take it Easy on Landlords
In politics it seems to be “landlords bad, house buyers good”; all very George Orwell. But we need plenty of landlords as well as owner-occupiers.  People are mobile these days.  The transactions costs in buying and selling houses are huge – agent commission, legal and accounting costs.  Housing prices can be flat for many years, maintenance costs are high, people often over-capitalise, and people forget about the opportunity costs from alternate investments. If you wanted a leveraged investment you would have done far better in the share market in recent years than in Auckland property. People who have ended up with a leaky building are very aware of the old adage that housing is often a highly leveraged liability masquerading as an asset.

Free Press 13/04/2015

It’s Catching Vernon Small of the Dom Post says ACT’s call to index tax brackets to inflation is a ‘canny policy.’ The only real downside? “Let's face it, when it comes to vote-harvesting, drip fed tax cuts will never beat a multi-billion dollar election year tax package.”  That people will keep their own money without having to wait for an election lottery is actually another reason to support the policy.

Defending John Campbell
Tribal politics has erupted from the inkling that Campbell Live might be cancelled. Rookie National MP Todd Barclay offended more people with one anti-Campbell Facebook post than some will manage in their entire career.  Not to be outdone, Labour have issued a press release defending Campbell.

John’s Our Boy
Campbell thinks and even says he’s a leftie, but look at what he does:  He fundraises for people in tough spots, most recently Vanuatu.  He goes after shonky business practices, last year shaming the nation’s malls into getting rid of a particularly predatory and irritating sales company.  He advocates for people getting a rough deal from government departments, such as the Immigration department.  He does all of this without government help, while entertaining thousands and making an eye-watering salary.  If you’re reading this John: www.act.org.nz/join.

Send Money Now
We interrupt this Free Press to remind you that freedom ain’t free.  Please consider making a regular donation to help build ACT, every dollar makes a difference: www.act.org.nz/donate.  Back to Free Press.

Adam Smith’s Boy, Too
The father of capitalism was a moral philosopher in a time of great poverty.  He invented economics to explain ‘the nature and causes of wealth,’ but he died perfecting his favourite work, ‘The Theory of Moral Sentiments’ where he said, The great pleasure of conversation and society, besides, arises from a certain correspondence of sentiments and opinions… But this most delightful harmony cannot be obtained unless there is a free communication of sentiments and opinions. The Campbells of the world are essential to a free society.

Spiritual Son of Sir Roger
At 51, Campbell came of age under Rogernomics.  Older lefties would spend their time calling on the government to ‘do something’ where Campbell uses argument, persuasion, and private fundraising.  What’s more, he does it on New Zealand’s first privately owned TV channel, whose history is one of deregulation and foreign investment.  The creative destruction that made his show may now end it, but not its spirit.

“This House Believes Internet Access is a Human Right”
David Seymour’s team convincingly negated the above moot in front of 200 high school students, who were assembled for a UN Youth camp last Friday.  Free Press readers might have certain presumptions about such an audience, but they’d be wrong.  Opponent Laila Harre completely misread them.  Losing the debate, she started attacking David but the audience took to Twitter and told her to get some arguments instead of ad hominem.  The times they are a-changing.

Bring Back Nandor
Wellington-based Green Party leadership contender Gareth Hughes was late to the debate due to flight delays.  Were none of the 14 Green MPs available in Auckland?  To his credit, Nandor would have taken the train (and flown at the same time).  The Greens they have a-changed.

Railtax
ACT is the last party to call for a new tax, but some of them should be better labelled.  Bill English has admitted another billion dollars may need to be dropped into the ailing Kiwirail.  ACT says let’s be up front about this:  one billion dollars is the same as businesses paying an extra cent of company tax (currently 28 cents on the dollar) for the next four years.  It would be more honest to say the company tax is now 27 cents, plus a one cent levy for Kiwirail.  Let’s make it crystal clear that but for the rail bail, company tax could be reduced by a point.  Transparency.

It’s Already a Crime
One News reports on an Indian student at Canterbury who likes to wear a Turban.  Probably a good idea in Christchurch at this time of year, but he has had death threats after false accusations were made against him on Facebook.  As David Seymour has pointed out, inciting violence is already a crime (Crimes Act 1961), and the police can easily find people on Facebook, but they didn’t bother until they were shamed by journalist Rachel Parkin.  It is important to enforce the laws we have already before making new ones such as the proposed Harmful Digital Communications Bill.

Winnie and the Wailer
It’s said that in politics you should accuse your opponents of your own worst trespasses.  New Zealand First MP Tracey Martin bizarrely attacked Hekia Parata for barracking in Parliament.  David Seymour sits one along from Parata and reports she is one of the most dignified parliamentarians.  MPs who sit near Martin, however, will need hearing aids before they retire.

More Private Greening
A fertiliser company has been sponsoring a series of regional awards through the New Zealand Farm Environment Trust.  It’s for farmers who, among other things, manage run-off.  According to the farmer versus environment mindset this shouldn’t happen, but  ACT has long said that property owners make the best environmentalists.  An example is the Bay of Plenty Supreme winners: “The mud soils are high in phosphate and to reduce phosphate loss John has constructed up to 200 detention dams throughout the farm, which slow the runoff and collect sediments.”  The whole story of these farmers working with the land is a good read for those of us who think meat is made at Countdown: http://www.nzfeatrust.org.nz/vdb/document/315 

Let's introduce a Railtax

The Government’s largesse into rail is so big it deserves its own tax, the Railtax, according to ACT Leader David Seymour.

In response to Bill English’s admission Kiwirail may sink another billion dollars [1], Mr Seymour has called for a very simple transparency measure: a separate tax to pay for it.

“One billion is equivalent to the cost of knocking a percent off the company tax rate for the next four years, so let’s make the government’s choices transparent,” said Mr Seymour.

“Of the 28 per cent company tax rate, New Zealand’s businesses will pay 27 cents on the dollar for company taxes, and one cent for bailing out Kiwirail. We should separate out that one percent and call it the Railtax.

“Who knows, the business community may decide that’s a good deal.

“On the other hand, the Railtax would make it clear as day that if we stopped ploughing money into the nostalgia industry rail has become, we could cut the company tax rate by a whole percentage point.

Mr Seymour says the approach could work for many other large expenditures.

“There are a range of government expenses that just seem to hide in the shadows of the tax system. 

“We could have a couple of percent of income tax going towards Superannuation and another percent going towards student loans.

“Any expenditure over a billion should be fair game.”

ENDS

[1] http://www.nbr.co.nz/article/another-rail-cash-injection-looms-jb-p-171067

Online harassment requires more law enforcement, not more laws

The case of an Indian student being defamed and threatened online is an indictment of flawed police practice, not existing legislation, says ACT Leader David Seymour.

The harassment and subsequent police inaction was reported on One News on Tuesday. [1]

“Mr Singh has been let down by police inaction, not by a lack of legislation,” says Mr Seymour.

“The Crimes Act section 311(2) is clearly meant to cover the types of violent threats [2] made toward Mr Singh, and the Telecommunications Act and Harassment Act can also be used to address this type of cyber-bullying, said Mr Seymour.

“Police inaction in such a serious case is not justifiable when there are clear avenues for prosecution. I am forced to agree with the New Zealand Police Conduct Association – this is a case of selective law enforcement. [3]

“ACT stands for a tough stance on crime via thorough enforcement of existing laws – not via adding more cumbersome and complex legislation which may come with unintended consequences.

“I will be meeting with Minister Adams to discuss the proposed Harmful Digital Communications law. We must ensure that existing legislation is truly inadequate before passing any new restrictions on online communication.

“ACT opposes any law which restricts speech under the pretence of preventing offence.”

ENDS

[1] http://tvnz.co.nz/national-news/death-threats-turban-wearing-student-police-say-they-can-t-help-6278026/video

[2] http://www.legislation.govt.nz/act/public/1961/0043/latest/DLM330795.html

[3] http://www.stuff.co.nz/the-press/news/67624792/indian-student-wrongly-accused-of-sexual-abuse

Free Press 7/04/2015

Outstanding Performance
Over the weekend, David Seymour used an interview on TVNZ’s Q+A to outline ACT’s relevance.  Correspondence has poured in saying it is his best performance yet. It’s still online here.

The Real Outcome of Northland
You’ve heard it before, but a point worth repeating from Q+A: By refusing to compete in the heartland provincial seat of Northland, Labour’s Andrew Little ceased being the prime opposition leader. Winston Peters destroyed Bolger and Clark in their respective third terms. Little would have to accommodate a strong Winston in his first term.  ACT is as relevant as ever to voters who want a stable coalition on the right.

A Costless Poverty Measure
Among David’s points: ACT has the soundest poverty policy, making housing affordable by fixing the regulatory framework.  The Listener recently suggested child poverty would be more than halved (from 285,000 to 130,000) if only housing returned to affordable levels.  Surely the poverty lobby should be on board here?

It’s the Land…
A major attraction to New Zealand is abundant land (it’s no coincidence that the Kiwi Dream is a place of one’s own) but now you’re not allowed to build on much of it.  Overwhelming international evidence tells us that overbearing land use planning strangles the housing supply, pushes up prices, and fuels speculation. This evidence comes from North America where tax and monetary policies are similar nation-wide but land use planning varies by State and City. You don’t build a $150,000 house on a $500,000 section, so the poor get cut out when land is scarce.  You also don’t mass produce housing if there’s no pipeline of land to put it on, so those who can’t afford bespoke homes lose again.

An Intellectual Wasteland
The greatest disappointment of the program came from Grant Duncan, a little-known Massey University academic on the pundits’ panel.  Rather than considering, let alone refuting, the arguments above, he described ACT’s concern for poverty as a ‘joke’. His contribution to the world of ideas didn’t improve throughout the session, consisting of petty ad hominem attacks.  He referred to ACT as a lapdog and Epsom voters as sheep.  His argument against ACT was not about policy but polling.  So much for politics as the contest of ideas. Free Press wonders if Mr Duncan was having an off day, or if his performance reflects the standard at Massey?  If so, should Massey students ask for their money back?

Super Policy
Also covered in the interview is ACT’s call for a referendum on superannuation.  If New Zealand can appoint an expert committee to generate options for changing the flag, then vote on them in two referenda, why not do the same for the critical issues of fiscal sustainability and intergenerational fairness?

Watch this Space
David has written to and is talking to nearly all leaders about the Super Referendum idea. The reception has been cordial so far – more to come.

Dr Cullen Strikes Back
We know Labour’s fiscal blowout sunk the tradable sector of the economy from 2005 on, and forced New Zealand into recession before the great financial crisis. But, as a thought experiment, could Helen Clark have won a fourth term if Michael Cullen had cut taxes instead of spending more in her third term?

Here we go Again
As David revealed in parliament, the stealth tax increase of bracket creep has cost the average Kiwi family $1036 since 2010.  This year it will cost them another $431.  Things are starting to sound familiar.

A Clark II Prime Minister
The final point from the interview was: After seven years of National, is this as good as it gets? Centre-right voters accept that after earthquakes, a global financial crisis, and an attempted coup by Kim Dotcom, we’re damned lucky to have the government we have.  But John Key has effectively declared a truce on Clark’s policies.  What about housing, super, and tax?  Are we merely holding our ground when in power and going backwards when out?

ACT goes to Tanzania
The world now has two ACT parties. The Alliance for Change and Transparency (ACT-Tanzania) party was officially launched in Dar es Salaam earlier last week.  They adhere to principles of “patriotism, democracy, freedom of thought and action, dignity, equality, integrity, transparency and accountability”; and believe in “self-reliance, hard work, sincerity and professionalism towards bringing positive change in the country”.

Monetary Policy Confuses Everybody
Bill English said the outlook for interest rates depends on "whether you think zero inflation is permanent or temporary, and it's a bit hard to tell right now. The question of whether it's permanent or temporary: that's exactly the challenge the Reserve Bank Governor has got.” Actually, it’s simpler than that:  the Reserve Bank’s job is to keep inflation within the 1-3% target band, regardless of whether global inflation is high or low. So the medium term inflation path should be determined so long as the Bank does its job. What’s hard to judge is just how long near-zero, or even negative, nominal and real yields will persist in the major industrialised countries.

But it Confuses NZ First the Most
Winston has always been good at making complicated issues seem simple, perhaps a little too good. He’s claimed that high interest rates are both crippling the economy and creating a consumption boom. So high interest rates discourage spending and investment and encourage spending and investment. Welcome to Planet Winston.

Easter Time
Apparently every MP receives a generous box, perhaps $100 worth, of Easter treats from the Food and Grocery Council.  What is the purpose of these big boxes? Surely no MP would be influenced by Easter eggs, even an inexplicably large number of them, but then why go to such an effort?  For the record David sent his straight back. 

Judges get it right on third strike

“Victims of sexual and violent crime have won a victory following the 12 year sentence handed to a repeat sex offender under ACT’s three strikes law,” says ACT Leader David Seymour.

“After two other second-strike cases were exempted from the legislation under the ‘manifestly unjust’ provision, it’s pleasing to see a judge make full use of the law, targeting one of the most heinous crimes possible.”

The offender was convicted for two indecent assaults on elderly women, which both took place during parole for an earlier ‘first strike’ offence.

“This exemplifies the importance of the no-parole condition for second and third strikes. If he ever commits the crime again, he will be guaranteed a 20-year sentence without parole.

“Three strikes removes serial offenders from society and firm penalties discourage potential offenders. This sends a message.”

Reference: http://www.stuff.co.nz/national/crime/67561820/Man-jailed-for-sexually-assaulting-elderly-Hawkes-Bay-women

National looks after everyone but taxpayers

“National is parading its indexation of welfare payments while refusing to do the same with tax brackets,” says ACT Leader David Seymour.

“Benefits were adjusted for inflation today. What about the workers? Tax brackets should be adjusted too.

“This fiscal year, a person on the average income will pay another $378 in tax as inflation pushes them into higher brackets, even if they have no increase in real spending power. They have already paid an extra $649 since 2010.

“The average household has already paid an extra $1036 since 2010, and will pay $431 more this year.

Taxpayers are today being asked to fund:

· Government grants for first home buyers of up to $20,000;
· A two-week extension to paid parental leave;
· NZ Superannuation increases, heralded as growing at twice the rate of inflation since 2008.

“If the government wants to fund this by increasing taxes, it should do so openly and honestly, not through stealth taxation."

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