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June 8, 2006 5:58am by David Farrar

Postcards

The NZ Herald has a story on National’s new postcard. The postcard rear is below. This is what you call campaigning on issues and is good to see.

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National

Comments (59)

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Danyl Mclauchlan

I think these are great – much better than the silly ‘move to Australia’ campaign.

But I still think its kind of a waste of money this far out from the election.
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June 8, 2006 6:18am
err..

Don seems to have had some work from Helen’s airbrush artist, too.

The second point seems a little silly, too. Who pays cash for their house? People who have enough cash. Seems rather obvious…
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June 8, 2006 6:48am
iiq374

err.. – Oddly enough those easily able to pay cash are those least likely to. Like Key those able to pay cash normally understand leverage enough to always have a mortgage.
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June 8, 2006 7:06am
woppo

It’s got a nice drone, you can nod to it (yawn) . . .
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June 8, 2006 7:11am
B whitehead

I think these postcards are a good thing, at last were starting to see the opposition do it’s job -Keeping the Goverment accountible
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June 8, 2006 7:52am
McPhee

Where is Don ?
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June 8, 2006 7:59am
Cadmus

Nice Air Brush job for Dr Don. The trouble is the election is over 2 yrs away. And who will remember this come election time?
It looks like the last attempt at clutching the straws of power by a failed National Party leader. I believe this card will be a piece of National Party memorabilia that will lay in the bottom of filling cabinets to gather dust over the yrs.
On the other hand it will be good to compare Don’s card to the pledge card National Opposition Leader John Key will be offering the electorate next election.
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June 8, 2006 7:59am
err..........

err… are you truly stupid enough to pay for your tuition fee if you can get an interest free student loan?
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June 8, 2006 8:03am
Rockey Boy

‘85% of New Zealanders would be paying a top rate of 19% or less’ Is this some massive tax cut that Dr Don and co have failed to previously mention or is this some creative accounting by including NZ’s total population (working, not working, retired, young etc) to get the 85% figure??

I guess this postcard at least proves we have an opposition and they occasionally appear on things other than ‘Dancing with the Stars’.
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June 8, 2006 8:06am
tim barclay

I think the message has to be done now on this and a number of other things. If the Labour Party takes up the suggestion good, move on to the next issue. A much sharper message when Brash says only the Labour Party does not borrow for long term projects (do you pay cash for your house), and only the Labour Party does not carefully prioritise spending (you do).
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June 8, 2006 8:22am
Camryn

Cadmus – It doesn’t matter that the specific card won’t be remembered in two years. It helps to build the foundation of clear difference that National needs. It all contributes to making it clear in people’s minds what National stands for, which makes it easier for them to take in further ideas and build on that.

I’m looking forward to Winston’s “Baubles for me, baubles for my supporters, f**k off the rest of ya” postcard.
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June 8, 2006 8:24am
Camryn

Rockey – I don’t know how this figure compares to other National tax cut policy statements either. DPF?

I did try to find out what the level of income is that represents the bottom end of the top 15%, but StatsNZ only has public data from 1999 backwards.

I do recall, however, that Treasury did some costings a few years back that showed we could cut income tax to a flat 20% for everyone without cutting a cent of government spending. Government speanding as a % of GDP may have increased since then though.

I think the basic gist of it all is that the top 15% pay most of the tax anyway and it doesn’t really matter much to the total take what rate you charge the 85%.
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June 8, 2006 8:39am
Blue Tune

This government may not last 3 years – in fact it looks less and less likely. So it’s very smart of National to maintain this kind of pressure.
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June 8, 2006 9:17am
Graham Miller

Cadmus
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June 8, 2006 9:19am
lyndon

Better advertising than than the billboards by a long shot.

If you try and make the analogies actually fit then it gets a bit hilarious – at the very least all the old arguments open up again – but that’s not the point, is it?
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June 8, 2006 9:40am
red

1. Yes I think these are a good way to communcate your diffrent policy views. it is getting close to honest (yes we will borrow) there is no room to explain how you will get better services with less money.

2. TO EARLY why do you need to do this 6 months AFTER an election? is this about getting a bump in the polls to keep don in the job?
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June 8, 2006 9:49am
Mausie

I know no one likes a spelling nazi, but the punctuation errors in that postcard indicate that perhaps the tax money would be better spent in education, after all.
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June 8, 2006 9:53am
Michael (the other right wing one)

I think the idea of the postcard is to appeal to ordinary voters, not to English teachers and the like. I too can see what could technically be classed as “grammatical mistakes”, but goodness me this is politics, not an English lecture.

Oh well at least you can’t call them “out of touch”.
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June 8, 2006 10:08am
david

Red, I’m still waiting for that great example of money management Dr Cullen to explain how he can give an EXTRA 1.5 Billion for health and not produce one extra operation. Hmmm,more money and less services…..Also you are quietly forgetting the “provision” of 8 Billion put into the surplus by Cullen. Thats really where the cuts are coming from, and of course the cuts will lead to more tax being paid, as it always does.
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June 8, 2006 10:10am
Spam

Camryn:
“I did try to find out what the level of income is that represents the bottom end of the top 15%, but StatsNZ only has public data from 1999 backwards. ”

From here:
http://www.treasury.govt.nz/budget2006/taxpayers/

From this, it looks like the 19% would be right-up to around $55-$60k mark.
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June 8, 2006 10:22am
noddy

Not too many investments give after tax returns higher than the interest rates banks charge. If you have the cash, pay off your mortgage. I think Don and John need to find a new financial advisor.

By the way, is there not supposed to be a parliamentary crest on that card? Don eating into our tax cuts already, isn’t he?
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June 8, 2006 10:33am
Michael (The Right Wing One)

I wish … all political advertising by parties was paid for themselves.

Yes, I know it’s a National MP communicating his views on issues of the day with the electorate, and it’s only $90k (not $450k like Labour’s pledge card), and the Nats are being upfront about it, and everybody does it.
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June 8, 2006 10:48am
Camryn

Thanks, Spam.

I agree that the top 15% in that table would seem to those earning over approx 55-60k. So, it seems like National is advocating 19% tax up to 55k. Since I’m pretty sure they aren’t, there must be some explanation…

I don’t know what the definition of a ‘person’ is on that table, but there seem to be only 3 million of them. Since the population is 4 million or so then this must be the source of the disparity… the Treasury figures are taxpayers and National is including the whole population in its calculation. I guess that’s not a lie, since they did say “New Zealanders” instead of “taxpayers”.

Factoring for that, it still looks like National is stating the income-level up to which you’d pay 19% is somewhere between 45-50k. That still seems more generous than anything previously stated. So, is this a change in policy? Is my maths bung?
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June 8, 2006 10:49am
Camryn

OPPS. I just read the postcard again. They did say *taxpayers*. Well, I can’t figure that out unless my wildest dreams have come true and National has serious stepped up its tax-cut policy.
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June 8, 2006 10:52am
Mr Drain

Most of leveraging’s advantages come from the tax writeoffs it produces this clearly has no play when its the govt borrowing money.

And i think the NZ govt should borrow all they can as soon as they can find another nation willing to lend it to them at 0% interest, until then lets not borrow money when we don’t need to.

Another way of looking at it, is who would put their big screen TV on hire purchase?

If the asset can’t be afforded and will give a greater return than the cost of interest, then of course it makes sense to borrow for it. If it doesn’t then you’re only pissing away the next generations money.
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June 8, 2006 11:24am
Clint

I like it. And obviously the public do too, hence the fact National are ahead of Labour at the moment. Got to keep momentum going, especially since Labour lie, cheat and spin their way out of everything and the sheeple seem to swallow it most of the time.
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June 8, 2006 11:32am
battler

How about allowing/encouraging the private sector to build & operate toll roads ?

That way everyone can be pleased

The Greens will be pleased that the Government is not spending money on roads.

Labour (Dr Cullen) will be pleased that the Government isn’t borrowing money

Jim Andertons Progressive party will be pleased that jobs are being created (even if it wasn’t due to a pork barrel grant from Jim Anderton)

ACT will be pleased that the private sector gets to do the work

National will be pleased that we can afford tax cuts

Motorists & transport co’s who are prepared to put their money where their mouths are can travel and move goods quickly on efficient user-pays toll roads.

The businesses running the roads will return profits to shareholders and interest to bond holders.

The workers working for the private road companies will receive salaries/wages.

Who loses?
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June 8, 2006 11:48am
Hisself

The poor sods who are forced to use the toll road, after the bank financing it forces the government to close alternative routes?
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June 8, 2006 12:08pm
iiq374

Another way of looking at it, is who would put their big screen TV on hire purchase? Oddly enough around about the same people who make up Labours voting base.

Most of leveraging’s advantages come from the tax writeoffs it produces this clearly has no play when its the govt borrowing money
Wrong – most of leveragings advantages come from being able to use more money than what you have available. The extra income is also subject to taxation at the same rate as the write off so if you are only returning the same as the write off then you still have problems.
You are right that because there is no taxation writeoff it makes the hurdle rate higher, but because of the security rating of the Government its lending rate is usually lower to start with.
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June 8, 2006 12:15pm
battler

hisself

how would the bank or other institutions / financiers force the government to close existing roads to traffic ?
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June 8, 2006 12:28pm
Rocket Boy

Ok – lets summarise.

(i) It does not really make sense to borrow to pay for an expense like roads because you are just forcing future generations to pay for them.

(ii) Having 85% of taxpayers paying a maximum of 19% does not add up and certainly appears to be a new National party tax policy.

(iii) Being over two years from an election most people will take little or no notice of the postcard.

(iv) It was paid for by the tax payer which is not good whichever way you look at it.

But other than these minor points the postcard is ‘good to see’……

What would be good to see is a leader of the National Party who actually gets up in Parliament and says these things with some effect and does not just appear as a smiling ‘Mr Burns’ from billboards and ‘postcards’!
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June 8, 2006 12:55pm
battler

Rocket Boy

RE Borrowing to finance new roads vs prepaying

A) What if the cost of financing is less than the return generated by bringing forward otherwise presently unaffordable roading projects, and the capital and interest are repaid via tolls which users are prepared to pay in order to move people & goods quicker than they can on the existing network?

B) Roads can last for more than one generation. Babies who are yet to be born will in the future have the benefit of the roads built now and over the next 20 + years. Are you advocating that one generation should completely prepay the roading expenses of the next generation (which will include people who are importers, exporters, taxi companies, transport companies and others who will derive financial benefit from use of the roading network)?
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June 8, 2006 1:05pm
Peter mck

Mr Drain

Buying expensive consumerables that last 2-5 years on HP is not a good idea – Borrowing to buy assets that appreciate in value and last 50 to 100 years is sensible economics

Labour supporters who believe the sort of crap that cullen feeds out are very economicially dim. Smarter people who understand that Brash / Key have more economic sense than the entire labour caucas and advisers put together will vote National. This is one part of a three year education process.
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June 8, 2006 1:10pm
Peter mck

Mr Drain

Buying expensive consumerables that last 2-5 years on HP is not a good idea – Borrowing to buy assets that appreciate in value and last 50 to 100 years is sensible economics

Labour supporters who believe the sort of crap that cullen feeds out are very economicially dim. Smarter people who understand that Brash / Key have more economic sense than the entire labour caucas and advisers put together will vote National. This is one part of a three year education process.
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June 8, 2006 1:12pm
culma

One topic and 100 left wing fuck wits are drawn to it like Helen Clark to a hero parade.

Well done DPF I’ve just read every entry from top to bottom, barring a couple I can quite honestly say I’ve seen less crap in my 3 year old sons nappy.
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June 8, 2006 1:40pm
llew

You read them all bar a couple? Or only a couple aren’t full of shit?

I know, I know, it’s not the done thing to point out errors…

I take it you’re meaning that one culma=100 left wing fuckwits? Or that you single handedly doubled the amount of crap in this thread? maybe I wasn’t reading it closely.

How old is your son & still wearing nappies?
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June 8, 2006 2:16pm
Camryn

I seem to be having a conversation with myself about what this “85% of taxpayers paying 19% or less” means in terms of tax brackets.

With reference to the data at Spam’s treasury link (above), can anyone fault the math that it would mean a threshold of 55-60k before a rate higher than 19% kicked in?

I’m stoked if that’s the case.

It’s not a new thing for the postcard… the same figure was in this Brash speech just after Budget day: http://www.national.org.nz/Article.aspx?articleId=6569
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June 8, 2006 2:20pm
Cadmus

Graham, Camryn, good to hear from you. Talking of Patsy questions what happened to the Question you where going to ask Rt Hon concerning NZ never going back on an agreement once it has pledged money?

Camryn, no we like to share the cake around in NZ1, it’s a good thing your man is unable to sell National Party Policy,or the “Dancer” is about at selling ACT Policey as his efforts as a latin Dancer.
Your last statement to me with Brash/Hide inserted would about sum up NZ by now, if they took power, but they are both gone as you well know.
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June 8, 2006 2:33pm
noddy

Camryn – it’s not very clear is it. I suppose he is talking about effective rates and including things like WFF. From those figures it seems to me that at pressent about 75% of tax payers have an effective rate of 21%. So National are talking about a 2% effective rate cut for this group and bring another 10% of tax payers into that group which would indeed be income levels around $55k.

Does Brash want people to think National will be dropping the 33% bracket to 19%?
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June 8, 2006 2:36pm
battler

Noddy,

The National Party does not appear to be wanting people to “think National will be dropping the 33% bracket to 19%?”

They appear to be proposing an adjustment to the brackets as below. Bear in mind that not everyone qualifies for the raft of middle class family welfare presently on offer to 300,000+ odd families. Superannuitant’s and average earning people without children being two major groups.

“The new tax rates and thresholds will be:
* Income up to $12,500 will be taxed at 15%.
* Income between $12,500 and $50,000 will be taxed at 19%.
* Income between $50,000 and $100,000 will be taxed at 33%.
* Income above $100,000 will continue to be taxed at 39%.
* The lower statutory rate of withholding tax applied to interest and other investment income will be reduced from 19.5% to 18%.
* The threshold for abatement of Working for Families (WFF) payments will be $30,000 from April 2006 and, to keep the effective tax rate on extra income low, the abatement rate will be 20%.
* A company tax rate of 30%.
”

– from http://www.national.org.nz/Article.aspx?ArticleId=5078
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June 8, 2006 2:49pm
baxter

You are right about roads lasting more than one generation Battler. I believe some built by Julius Ceasar are still in use today…I also think it is a good tactic to keep issues in front of the Public. Muldoon did it right from the moment he became leader of the opposition and never let up. I think Don should have had a NZ flag on the card as a foil to Clark/Cullen. I would also like them to emphasise extravagant wastage i.e. 53 million for a Supreme Court Building for five judges with virtually nothing to do.
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June 8, 2006 3:00pm
culma

llew – as I said, fuck wits a plenty, then someone like yourself comes along and confirms exactly what I was saying.

SHEEP – MERE SHEEP.
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June 8, 2006 3:07pm
Darren

Battler, Hisself makes a fair comment as this is what happened in Sydney.
Part of the deal between the toll road company and the NSW government was that some roads would be blocked off in central Sydney forcing the traffic to use the new tunnel there, so the operator was guaranteed a good return.
However, it seems that the NSW government blocked off more roads than was legally necessary and consequently, for many motorists, this has added to congestion in central Sydney rather than the Kings Cross Tunnel reducing it.
I can accept good arguments for toll roads, but is it economically efficient to have empty roadspace (say on a tollway) when the other roads are choked up with traffic?
Furthermore, set the toll too high and not enough vehicles will use the road, as is the case with the M6toll in Britain.
I still believe in freedom of the king’s or queen’s highway. Toll roads are wasteful as they need an administration/billing process to operate them.
Either you have staff operating tollgates, which also hold the traffic up, or you have electronic tags. Now think of the cost of a couple of million e-tages at several hundred dollars each and look at the expensive waste there. Money that could be better spent on roads.
Melbourne’s tollway needs a callcentre and other administrators just to run that and half of the revenues generated by Ken Livingston’s 5-quid or so charge in central London is also lost in administration.
The budget surplus is big enough for plenty more roads spending and/or we can have extra taken from petrol tax- surely the purest form of user or beneficiery pays? Petrol tax can also be adjjusted regionally you you won’t get Cantabrians moaning about paying for Auckland’s roads, or vice-versa.
Tollroads will also deter users from using the new road (like with the M6) thus traffic does not take the most efficient route and it means communities hoping to benefit from a new road (say by having a bypass) do not get the full benefit either.
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June 8, 2006 3:16pm
battler

Hi Darren

In regard to the example you cite – I would suggest that it is a form of cronyism if the Government colludes with a private operator to disallow taxpayers to use roads that they have alreay built and paid for in order to artificially drive up the return on a new roading investment and I would not advocate this approach.

I would suggest that if there were toll ways sitting empty either a) the operator didn’t do their homework before going ahead with the project or b) they need to adjust their pricing structure so as to balance supply/demand and have their asset being utilised in an optimal way or a combination of both.

The other alternative in NZ is to move our whole funding system to a “Road Pricing” model whether it is state or private or mixture. Now this would be extremely controversial and would need several measures to ensure it was fair and not arip off. Notwithstanding that caveat, it would offer many benefits.

People object offhand to road pricing models without thinking it through.

However when you consider the realities of the current model and compare this with road pricing – road pricing is actually much more logical.

Think of how we fund and manage our roads at present –

We tax people blind via Income Tax, GST, Petrol Excise, Registration, Road User Charges. All this money is gathered up in Wellington, and then divided out on a political basis. One only need look at Tauranga for an example of pork-barrel political based road funding. This money is then put through an expensive government Bureaucracy i.e. the budget round, Transit NZ etc etc etc and then finally roads are built. We then allow EVERYONE to use the roads at ALL TIMES for NO PRICE. Result CONGESTION and inefficient allocation of investment capital. Yet we accept this as the norm for road funding and eschkew any notion of “Road Pricing”.

Consider if we did the same with the airline business. Tax the productive people through the roof, build airports, runways and aircraft based on pork barell politics. Then operate an airline service “Free of charge” where you can board any plane on any route as you please. The result would be chaos, and even those willing to pay a premium may not be able to travel, while those who pay zero tax and are travelling purely for personal pleasure may be jetsetting around the country. It would me madness. Yet this is exactly the methodology blindly accepted by the public in the roading sector. And we suffer because of it.

If we moved to a road pricing model there would be initial costs. Once this is done, the Petrol Tax could be abolished, road user charges aboloshied, and the registration fee reduced. All users would then pay as per their usage for their travel.

Road pricing could be used to efficiently allocated investment capital, fund maintanence, and control congestion or i.e. ensure efficient use of the network.

To put this into perspective – consider Auckland’s motorways. If there was billing for usage and let’s say it would cost peak time $10 for an average commuter trip (for arguments sake only). That would mean you could choose to pay $10 to drive to work. If you don’t like to pay too much you now have a realistic way to make a saving. Two people travelling in a car would be $5 each, four people $2.5 each and so on.

Result – motorway flowing freely, people responding to incentive.

Now, some people will argue this discriminates against low income users who can’t pay tolls. I dispute this. Bus operations would become profitable because they would have a comparative advantage. Remember the motorway would be moving freely so everyone would be moving quickly. Yet, it would be so much cheaper to take the bus.

With buses profitable AND comparatively cheap, Bus subsidies could be abololished.

As added benefits – the cost to the nation of running our car fleet wall fall (car pooling, petrol savings from not sitting in stalled traffic), the economic benefits would be great due to increased productivity in the transportation and logisitcs sector, and even if you’re low income and take the bus – at least you will be moving fast – and without the need for the likes of the $300m busway in NORTH SHORE. That 300m could have paid for the initial set up of road pricing easily, and achieved benefits multiple times what the white elephant on the North Shore is going to offer.
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June 8, 2006 3:50pm
Camryn

Battler – A good post on road pricing, and thanks for finding the brackets. I think 50k would be cutting it fine for 85% of taxpayers paying 19% or less. It seems to be in the ballpark though. So, I think it’s a good tax policy, but it’s a pity they’ve left the gradient so steep to make it as flat as possible in the earlier stages. Why have brackets? Why not have a smooth gradient so there are no magic numbers to avoid? Pay 19.000% on the 20,000th dollar and 19.001% on the 20,001st dollar (or whatever) and so on. I think the brackets are a remnant of an era of lesser computing power.

Cadmus – Sharing the cake is fine, but we’re taking too much out of the mix all the time. We could have a bigger cake to share, but the bakers have less ingredients and less incentive to make it bigger. Some bakers are leaving to make Aussie’s cake bigger. Helen loves to stand on the top of the cake, sharing it out as she sees fit… as if she baked it. She doesn’t mind if it stays small… all the more people begging her for a little slice. Winston is licking the icing off her feet.

[I find that I feel better when I reply to Cadmus in style. If he replies to reason with unhinged ranting, he deserves a reply in kind + it seems to get through better]
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June 8, 2006 5:47pm
Camryn

Before anyone takes my example above as an actually suggestion… yes, I know it would end up being a crazily high tax rate. It’s an example. The “smooth” system (actually just tiny brackets) need not be linear either.
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June 8, 2006 5:53pm
SPC

A comparison between a country which has under-invested in infrastructure because of low incomes to a company soon to become bankrupt.

An under-capitalised company which borrows because it has good revenue streams to meet the cost of borrowing. Of course in a downturn, the company goes bankrupt.

The country just ends up with another load of inter-generational debt and we lose the remaining state assets (power companies etc) to pay for it. Is it not wonderful to have a party like National so in synch with global bankers (they love countries with assets yet to be mortgaged).

Tax cuts and the mortgage cost on the home goes up.

Tax cuts and exporters and wage incomes get suppressed by a high dollar.

Tax cuts and we will never get to a first world standard of public services.

A country which has low incomes and low taxes and an over-valued dollar can never maintain a place in the first world.

It won’t attract skilled workers to work here. It won’t attract people from the first world here to live (because public services will get too run down). It won’t keep any company that can produce elsewhere.
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June 8, 2006 8:47pm
Camryn

A sentence fragment.

Sense not made.
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June 8, 2006 10:30pm
SPC

We know, those wanting tax cuts, have to pretend, not to get it.

Pretense, that one can have tax cuts without any consequences, is just that.

And of course (may I start a sentence with the word and without this being used to divert attention from the issue), so much about character can be revealed in a few words.
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June 9, 2006 1:32am
battler

SPC

Are you saying that Helen Clark and Michael Cullen and their hangers on know better than you do how to spend the money that you earn? Do they know better than you which health services you need, which school you should send your children to if you have them, and which investments you should use to save for your retirement?

Or are you one of the people who is a net recipient of the state’s resources rather than a net contributor and therefore thank your lucky stars for whatever crumbs the state throws your way?

Health spending has increased by BILLIONS of dollars over successive government terms. What extra services have we have received? How is the population any healthier?

Education spending has increased by BILLIONS of dollars over successive terms, yet 20% of students still graduate high school with little in the way of useful skills, knowledge or qualifications. Is this the best way to do things?

In regard to the exchange rate. Do you realise that we import more goods than we export? Do you realise that the lower the exchange rate, the higher the cost of our imports and hence the higher the cost of many inputs to our exporting sector, and the higher the cost of living for everyone? Do you really think it is good long term strategy for a Nation to have a depreciating currency for the short term benefit of exporters ?
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June 9, 2006 8:53am
llew

Culma.

Heh heh. No shit, I’m just being rude. I just thought that if spouting shit means you’re a lefty fuckwit (your logic, no?), that you must be he king of lefty fuckwits.

“One topic and 100 left wing fuck wits are drawn to it like Helen Clark to a hero parade.

Well done DPF I’ve just read every entry from top to bottom, barring a couple I can quite honestly say I’ve seen less crap in my 3 year old sons nappy.”

Real clever & incisive there. I like the way you debate the point. Touch of the sycophant too. Nice.

Kind of holding up a mirror. Have a real good look. Spout bile. Insult those you disagree with, without offering anything constructive to the argument. Like this:

“llew – as I said, fuck wits a plenty, then someone like yourself comes along and confirms exactly what I was saying.

SHEEP – MERE SHEEP.”

I think you more than confirm your point yourself.

What have you got against sheep anyway? don’t go insulting your rural support there.
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June 9, 2006 9:00am
krimsonlake

I’m a bit confused by the comment “That would have given our people a huge incentive to work hard and get ahead”.

The implication being that people don’t already work hard and get ahead due to current taxation levels?

“We’ll borrow wisely…” might set off some alarm bells too. It inadvertently implies a future huge government debt.

Just saying.
If I were writing up these things I’d sure as hell be avoiding ambiguity.
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June 9, 2006 9:02am
noddy

battler – I won’t relitigate the discussion about the role of collective organisations vs individuals. You ask about health outcomes, the simplist measure of improvements is life expectency figures.

Simply put, we are living longer and longer. According to the WHO male life expectyancy in 2004 was 77 years, in 1985, according to Stats NZ it was about 70 years. So you can see the cumulative effect of the spending of successive governments.
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June 9, 2006 9:11am
battler

Hi Krimsonlake

Re your comments here-

“I’m a bit confused by the comment “That would have given our people a huge incentive to work hard and get ahead”.

The implication being that people don’t already work hard and get ahead due to current taxation levels? ”

That is exactly the case.

Have a read of this article for an example of how accepting a PAY INCREASE could result in a NET DECREASE IN TAKE HOME PAY under Labour’s family assistance programme.

http://articles.garethmorgan.com/a-nation-of-bludgers_1039.html

In regard to the “borrowing wisely”, I would agree that it could lead to confusion in the electorate as to the exact intentions of the National Party.

I would actually advocate allowing the private sector to enter more service areas, and let them take the risk and do the borrowing instead of the taxpayer. That we they will only do projects that have a good prospect of a return that exceeds the financing costs, whereas government borrowing is secured against our future taxes, meaning financiers are less concerned with the viability of specific investment propositions. Further, projects funded by the government are more open to political interference, cronyism and favours and wastage. Look at the Wananga, Pipi Foundation etc where taxpayers money is misused. Look at Tauranga for pork barrel road funding. Look at the Greens/Labour deal for politically expedient funding of dubious projects.
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June 9, 2006 9:18am
battler

Hi Noddy,

Re health outcomes.

I wouldn’t dispute that the life expectancy may have increased over a certain period from 70 to 77.

My questions would be –

1. What would be the life expectancy be now if we had adopted a different course of action than tax, spend collectively and hope for the best?

2. Is 77 the best we can do, when there are people on this earth who live into their 80’s, 90’s and even beyond 100. My question would be what is the difference between what we do to live to 77, and what other people do to live beyond 100. Is physical health best achieved by having no incentives to maintain health, and then offering taxpayer funded subsidies to finance pill popping and surgery to those whose bodies aren’t surviving the thrashing they’ve been given?

I guess in this post I’m asking people to stand back from the whole situation and examine it objectively and question whether our approach is best. What is it that is causing a small island nation to need to spend several billion dollars a year on pills and surgery, to only receive 77 years of life in return, many of the last of those which could involve severe incapacity and pain. Is there a better way? That is the question.
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June 9, 2006 9:27am
SPC

battler

I am saying that government will spend the money on public services and because of low incomes and low taxes, we have under funded these and infrastructure for a generation. That is the context, in which the current surplus and it’s dispersal, needs to be considered.

And the Super Fund has nothing to do with this, unless National is planning to rip off the Fund and end bi-partisanship on this issue (what do you know about this?).

You argue from the premise that those who buy their own selected health and education options have no interest in the state sector – when they send children to state pre and primary schools, state educated teachers and take subsidised tertary education and rely on tax funded A and E hospital care/specialist technology services).

You see the issue as one which separates out those who “personally” gain from smaller government predicated on tax cuts. I simply see this, as an indication that you see “bribeability” as being at the centre of personal “political” choices. Whereas some people do see “national society” as built on more sure foundations, than an ordering of economic activity on the basis of “short term” global market choice factors.

My personal self interest, is in the area of asset values and interest return from savings. National’s tax cuts would lead to higher rates (money and currency) and thus a depressed share market and home values, but would increase returns on cash deposits. I have not gained in income from Labour government policies in over 6 years, nor have I advocated policies which would advantage myself financially.

“Health spending has increased by BILLIONS of dollars over successive government terms. What extra services have we have received? How is the population any healthier?”

This is occuring worldwide (aging population and new technology developments, including drugs). A global skilled worker shortage, is also pushing up wage costs. One has to spend more, simply to stand still and retain the staff.

The increase in spending is greatest in the USA, but their health outcomes are still very ordinary and lack of access to care is a major political issue for them.

“Education spending has increased by BILLIONS of dollars over successive terms, yet 20% of students still graduate high school with little in the way of useful skills, knowledge or qualifications. Is this the best way to do things?”

The problem you cite, is unrelated to funding levels, but to the consequences of the achievement and ranking related assessment system. It used to be 50% under SC. The only recourse, is to bring in universal attainment standards as the – so those struggling have something to aspire to. Then the school system could focus on keeping these people in school (rather than truancy) and focused on this goal. Even if/while others move on to higher achievement levels.

“In regard to the exchange rate. Do you realise that we import more goods than we export?”

Yes and that is inevitable, when a currency is more often than not over-valued (because we have an unbalanced/ conflicted domestic and external economy and RB policy is effectively the inanity of punishing export production to control domestic consumption).

We have an 8%GDP BOP deficit and unfortunately, it now includes a trade deficit as well as the traditional invisibles one.

“Do you realise that the lower the exchange rate, the higher the cost of our imports and hence the higher the cost of many inputs to our exporting sector,”

This is a common fallacy amongst the ill-informed public. The only threat to the export sector is from higher (than overseas competitors) domestic inflation. All imported worldwide cost inflation also effects their competitors. Currency devaluation impacting on imported input costs, is only one one subset of the total export value. The exporter gains the same proportionate gain on the TOTAL value of that export. The one off gain continues year after year in greater profit margin and or ability to pay higher wages (an over-valued dollar is one reason for our depressed wage levels).

“and the higher the cost of living for everyone?”

Really? A higher cost of imported goods against a lower mortgage cost – it does depend on one’s situation. A lower cost of imported goods against a higher mortgage cost and depressed export sector earnings.

“Do you really think it is good long term strategy for a Nation to have a depreciating currency for the short term benefit of exporters?”

As usual, you have it all around the wrong way. It’s not good for a nation to be reliant on foreign borrowing to finance it’s home property boom, because it is not earning it’s way.

We have an 8%GDP BOP deficit, because of an over-valued currency. And any tax cut leading to higher rates (money and currency) would only perpetuate this.
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June 9, 2006 6:13pm
Camryn

SPC – tax cuts increase growth, which ends up providing more money for the services and investments you value.
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June 9, 2006 6:55pm
SPC

Only production led growth is sustainable.

The other sort of growth, consumption led growth, results in RB adopting restraint of inflationary demand policies. These very policies adversely impact on production led growth.

Enzed exhibit A, for a flaw in the global market system.

Meanwhile the only way to assist production led growth is to restrain consumption led growth.

My preferred tax cut option are variations on the one adopted by Ireland 5 years ago. They topped up the savings of anyone committing to a 5 year savings plan. This allows a transfer of surplus to taxpayers in a non inflationary way (it also encourages savings). A combination of the current regimes restraint with taxpayers coming to own a share of the surplus.
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June 9, 2006 10:37pm
battler

Hi SPC

“I am saying that government will spend the money on public services and because of low incomes and low taxes, we have under funded these and infrastructure for a generation. That is the context, in which the current surplus and it’s dispersal, needs to be considered.”

This is a commonly held myth. Spending on public services has increased with each budget for many many years.

The real issue is that our GDP per capita has been falling behind that of the Nations we like to compare ourselves to like Australia and the USA.
Both of those countries have lower tax receipts as a % of GDP than New Zealand.

“And the Super Fund has nothing to do with this, unless National is planning to rip off the Fund and end bi-partisanship on this issue (what do you know about this?).”

The “Super Fund” is purely financial smoke and mirrors and people should be able to see through it. It is simply a way for the government to increase it’s operating surplus and add to the crown balance sheet, in order to offset only 14% of NZ Super requirements in many years far off from now. This comes at an opportunity cost of small businesses (of which there are over 200,000 in NZ employing roughly 80% of the labour force) being able to re-invest more of their profits in growing their business, increasing profits and paying more taxes, and employing more people who will become tax payers instead of welfare recipients, thus negating the need for the “super fund” in the first place. Don’t be fooled by Dr Cullen’s spin about it being a “NZ Super Fund” to take care of our aging citizens. It is simply the crown transferring wealth from the people’s balance sheet’s to the crown balance sheet.

“You argue from the premise that those who buy their own selected health and education options have no interest in the state sector – when they send children to state pre and primary schools, state educated teachers and take subsidised tertary education and rely on tax funded A and E hospital care/specialist technology services).”

This is a “chicken or the egg first” scenario. Many people who would privately look after their own health and education have already had their private funds taxed off them to pre-pay for state sector provisions on their behalf, removing their ability to allocate their own funds to purchasing resources of their own choosing. It gets even worse in education, where not only does the Government tax the people’s income off them to pay for state schools, it then introduces “Zoning” so you can’t even choose which STATE school to attend, let alone beginning to think about the possibility of opting out of the state system. The promoters of “Zoning” claim that it is to assist lower income people however the policy achieves the reverse. When I was attending school there was no Zoning. I was in a lower income household in a low income area but attended one of the better state schools in my city. If Zoning had been in place, I probably would have had to go to a worse state school than the one I did because it would have been in my “zone”. With Zoning, the people of better means can buy into the zone of their choosing, driving up property values due to demand, and thus locking out those who can’t afford to buy property within the zone. This creates a vicious cycle, where the better teachers flock to the better zoned schools, and the poorer children are left with the crumbs.

Another anomoly in the system, is home education. The state spends around $7000 per student per year in the public sector, yet the Ministry of Education only pays an “allowance” of around $700 to home educators. This is in spite of the fact that home schoolers often achieve better academic results, and are saving the taxpayer $7000 p.a. for 13 years.

In regard to A&E services it is again “Chicken or the Egg first?” The people who might pay into a private A&E facility memembership (in a similar way to how you can join the Order of St. John for ambulance service), have already been taxed to pay for a state system. It is also worth noting that a large volume of A&E admissions are related to irresponsible use of party pills, drugs, and alcohol abuse / overconsumption resulting in fights & motor vehicle accidents. Perhaps some of these people should be invoiced for their services to at least partially offset the costs to the taxpayer of their irresponsible personal behaviour?

“You see the issue as one which separates out those who “personally” gain from smaller government predicated on tax cuts. I simply see this, as an indication that you see “bribeability” as being at the centre of personal “political” choices. Whereas some people do see “national society” as built on more sure foundations, than an ordering of economic activity on the basis of “short term” global market choice factors.”

I disagree. When I was growing up I was in a household which qualified for welfare, and would have PERSONALLY benefited from increased taxes and increased welfare payments. However it is actually somewhat demeaning to rely on taxpayer funded assistance for one’s meals and accommodation, and I would rather have economic policies in place which allow people to have a crack at life themselves. It is a similar argument re: Youth Minimum wages. My first full time job was on “Youth Rates”. I did not see my employer as “exploiting” me. I appreciated the opportunity to learn new skills in a workplace environment while being paid to do so. It was my first step onto the full time income ladder, and gave me the skills and confidence to apply for my next job with a higher salary, and so on, to where I now earn several times what I first started out earning and have aquired a whole raft of skills in different industries in the process.

I do not believe it is bribery to say to people “You have the ability to have a go yourself and earn an income, and the government will allow you to keep the majority of your income so you may meet your own personal living costs”.

I do consider it is bribery to say to people “Oh, you don’t need to work or apply thirt and enterprise. We will tax the productive people at 39c in the dollar, and then use their earnings to give you interest free loans, subsidised state housing and welfare payments” and create a tax/benefit regieme where some people are WORSE off accepting a pay rise and paying more tax than if they stay on their existing income and receive welfare supplements.

Oftentimes it is elitists who will never in their lifetime need welfare that are loudly advocating for increased taxation & welfare, while those of us who have had contact with the welfare system would actually prefer for economic policies that allow one to have a go, and reward personal responsibility, thrift & enterprise.

“This is occuring worldwide (aging population and new technology developments, including drugs). A global skilled worker shortage, is also pushing up wage costs. One has to spend more, simply to stand still and retain the staff.

The increase in spending is greatest in the USA, but their health outcomes are still very ordinary and lack of access to care is a major political issue for them. ”

It is interesting that you cite an example where increased spending has resulted in still very ordinary health outcomes yet you use it to advocate increased Government spending, and you claim that NZ’s woes are due to “low taxes” and “underfunding”

Is it wise to over tax people and spend money on pill popping and expensive surgery, when many health problems are the result of lack of proper exercise & healthy diet, and abuse of drugs, tobacco and alcohol?

“The problem you cite, is unrelated to funding levels”

Then why do you advocate for increased government expenditure?

“Really? A higher cost of imported goods against a lower mortgage cost – it does depend on one’s situation. A lower cost of imported goods against a higher mortgage cost and depressed export sector earnings.”

Only 16 cents in the dollar of total household spending is on mortgage & rent payments. The other 84 cents in the dollar is for other goods, a large part of which are imported. As an example, 16 cents in the dollar is spent on private transport (same amount as rent/mortgage). Where do 100% of our cars come from? Imports. Where does most of our oil come from? Imports. Where do a lot of the kitchens and bathrooms and building materials used in the houses we have used mortgages to pay for? Imports.

“As usual, you have it all around the wrong way. It’s not good for a nation to be reliant on foreign borrowing to finance it’s home property boom, because it is not earning it’s way.”

People are borrowing against their homes to purchase consumables because the government has overtaxed them to fund dubious projects and to finance a welfare regeime that encourages some people NOT to increase their income, and to finance a smoke & mirrors super fund that transfers wealth from the people’s balance sheets to the crown balance sheet.

“We have an 8%GDP BOP deficit, because of an over-valued currency. And any tax cut leading to higher rates (money and currency) would only perpetuate this.”

But a tax cut leading to less pork barrel political spending, and increased business investment resulting in increased GDP thus creating a higher pool of local capital and reducing our dependence on foreign capital would slow and even reverse it.

The National Party talks about reducing taxes AND maintaining or increasing government spending because that is easier to sell to an electorate that is wedded to the idea of state as a provider of personal needs. The real issue is about weeding out the pork-barrel spending of dubious value, and allowing personal responsibility, private thrift & enterprise to flourish.
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June 10, 2006 10:51am

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