Former Senator Phil Gramm writes on his principles for tax reform.

First, under no circumstances should Republicans agree to make the tax system even more progressive than it already is, or to increase the number of people who do not pay income taxes. In 1980, the top 1% and 5% of income earners in America paid 19.1% and 36.9% of total federal income taxes. Today, the top 1% and 5% pay 37.4% and 59.1%. Meanwhile, 41.6% of American earners now pay no federal income taxes.

Sounds like NZ.

Second, government should collect the minimum revenues needed to support and protect a free society and do so in a way that is, as far as possible, neutral in its effect on individual behavior. In its purest form, this means no individual deductions, credits or tax expenditures. No matter how committed Americans may be individually to charitable giving or home ownership, the government should not promote those values through special provisions in the tax code.

Agreed.

Third, Republicans should require all similarly structured firms be treated the same. If sweat equity is taxed as a capital gain for a mechanic who opens a garage with a financial partner, it should be treated the same for a hedge fund or private-equity manager who shares in the gains of his investors.

Likewise a capital gains tax should have no exemptions.

Fourth, business subsidies and credits should be eliminated. Ending subsidies to fund lower tax rates improves the efficiency of capital allocation. The sine qua non of tax reform is a more efficient allocation of investment capital. If the tax breaks that create crony capitalism are allowed to survive, then tax reform failed.

Lower tax rates, not special tax rates.

Stuff reports:

The price tag for a “living wage” for Wellington council workers is looking increasingly steep, with the prediction ratepayers could stump up an extra $1 million a year.

A Wellington City Council report shows the estimated internal cost of adopting a living wage will be $900,000 a year.

The figure included $575,000 for 502 council staff, and $325,000 for 257 staff across council controlled organisations.

The news comes after Hamilton City Council last week dropped plans for a living wage for its staff, when it was faced with an estimated cost blowout of $643,000 over two years.

The cost of a living wage for all Auckland Council employees has been put at more than $17 million a year.

Last month, the Wellington City Council voted to back the principle of becoming a living wage capital and the council committed $250,000 to implementing the policy by January 1, 2014.

So Councillors are sending ratepayers a bill for $1 million a year, so they feel good.

The BBC reports:

Some civil servants are “lazy” and need to be moved from their jobs, Britain’s top civil servant has said.

Cabinet Secretary Sir Jeremy Heywood was defending a scheme in which the bottom 10% of staff are targeted for improvement or moved out.

He also backed allowing ministers to “hand-pick” staff in their private office and limit permanent secretaries to five-year terms.

The last two things are already the case in NZ.

Sir Jeremy said suggestions top civil servants were opposed to a major revamp of the way the civil service operates, launched last year, were “wide of the mark”.

Under the scheme, the top 25% performers in each government department are rewarded – some with cash bonuses – and the bottom 10% identified for action to improve their performance or be moved out. 

No figures were available for the numbers who left their posts, but Sir Jeremy said there had been a willingness to implement the scheme, as “nothing annoys good civil servants more than seeing lazy civil servants going year after year without addressing that performance problem”.

Bonuses for the top performers, and assistance or moving on for the worst – sounds good to me.

I blogged yesterday on Labour’s silly claims about how the recent payment of a dividend from Transpower to the Government means that Kiwi households are paying hundreds of dollars too much in power bills.

A reader has e-mailed in with some facts that show how Labour’s claims are detached entirely from reality. The scary thing is that Parker must know what Labour is saying s not true, but they hope people will fall for it.

1. Transpower’s “Maximum Allowable Revenue” (MAR) for its monopoly line services (ie almost all its activities) is regulated under Part 4 of the Commerce Act 1986 by the Commerce Commission.
2. When the Commerce Commission sets Transpower’s MAR it does not take into consideration Transpower’s dividends or any interest it pays on debt. This is in line with standard regulatory practice as the dividends and interest payments are distributions and do not reflect the economic costs of production. Charges are related to efficient costs, including costs of capital (whether funded by debt or provided as equity).
3. This means that Transpower’s dividends have no bearing whatsoever on its charges for its monopoly line services; ie they have no impact at all on the parts of the price of power relating to transmission lines.
4. It is also the case that, given how the Commission sets Transpower’s MAR, Transpower’s charges do not depend materially on whether or not it finances its investments from retained earnings (ie foregone dividends) or by raising debt. 

It’s great to get feedback from people who know what they are talking about.

The BBC reports:

France has halted an anti-piracy policy that threatened persistent offenders with internet bans.

A law passed by the previous government had let local courts suspend copyright infringers’ connectivity for up to a month if they were caught three times.

It was supported by the entertainment industry, but France’s current culture minister had said that she thought the penalty was “disproportionate”.

File-sharers still face fines of up to 1,500 euros ($1,923; £1,292).

The government added that it would now focus its efforts on sites that made money from offering illegally copied content rather than individual users.

Suspension is disproportionate. Good to see France call a halt to it.

Chacha has the top 15:

1. I weigh this much
2. I have had this many sexual partners
3. I’ll be ready in a minute
4. That sex was great
5. I’m not mad at you
6. I’ve got a headache
7. It was on sale
8. This is just what I wanted
9. I don’t mind if you look at other women
10. I’m fine
11. You’re the best I’ve ever had
12. I’m focusing on my career right now
13. Fake phone number
14. I have a boyfriend
15. It’s not you, it’s me

I am sure there is an equivalent list for men somewhere!

Kudos to Auckland Transport Blog which has published an alternate transport vision for Auckland from 2015 to 2030. Their main post is here and their costings here.

It’s a great example of being pro-active and putting up a well researched proposal for debate. Doesn’t mean I agree with their proposal, but their contribution is valuable and welcome.

It would be good for an appropriate agency to independently cost their proposals, and estimate what impact on congestion their proposals would have.

Stuff reported:

Labour leader David Shearer quickly went on the offensive over power prices after announcing the demise of the ‘‘man-ban’’ selection policy, starting with an attack on John Key’s ‘‘desire to suck dividends out of national grid operator Transpower’’. He said it meant Kiwi households had hundreds of dollars added to their power bills. Transpower has paid more than $600m in dividends in the past two years and will pay out another $151m this year.

It means no such things, and shows some financial illiteracy. Dividends are simply the payment of surplus funds. The key figure is what has been the actual profit made each year. In other words, has Transpower in recent years been making far greater profits than in the past?

Here’s the average annual profit for the last 13 years:

• 2000 – 2002: $115m
• 2003 – 2005: $74m
• 2006 – 2008: $147m
• 2009 – 2011: $78m
• 2012: $85m

So if there has been a surplus of funds built up, then we know when it occured!

The level of profits by Transpower do not seem that large. At a minimum they need to generate a return on current capital, plus enough of a profit to allow for investment in new infrastructure.

Questions to Ministers

1. JACQUI DEAN (NAT) to the Minister of Finance: What reports has he received on the long-term benefits of strong fiscal management?
2. GRANT ROBERTSON (LAB) to the Prime Minister: Does he stand by all his statements?
3. ANDREW WILLIAMS (NZF) to the Minister for Building and Construction: Has he received any reports of substandard buildings being built as part of the Christchurch rebuild; if so, how many buildings are known to be substandard?
4. CLAUDETTE HAUITI (NAT) to the Minister for the Environment: What recent announcements has the Government made to improve New Zealand’s freshwater management?
5. METIRIA TUREI (GRE) to the Minister for Economic Development: When will he release all of the advice he has received on the social harms from the SkyCity deal, given his statement yesterday that it is his “understanding” that only “most” of the advice has been released?
6. Hon DAVID PARKER (LAB) to the Minister of Finance: Does he take responsibility for the composition of Budget 2013?
7. COLIN KING (NAT) to the Minister of Science and Innovation: What support is the Government giving to businesses to increase innovation and speed up the commercialisation of new products and services?
8. JACINDA ARDERN (LAB) to the Minister for Social Development: Does she stand by the statement made on her behalf in the House yesterday that “there will always be times when resources are stretched, but I believe we do have sufficient resources to care for the needs of vulnerable children”?
9. Dr KENNEDY GRAHAM (GRE) to the Minister for Climate Change Issues: How did he meet his obligations under the Climate Change Response Act 2002 to maintain the proper functioning of the ETS when he directed the issuing of 30 million additional New Zealand Units?
10. PHIL TWYFORD (LAB) to the Minister of Housing: How many homes does he believe will be built as a result of the Housing Accords and Special Housing Areas Bill, and what percentage of those homes will be affordable?
11. SCOTT SIMPSON (NAT) to the Associate Minister of Health: Has she received any recent reports regarding district health board performance in taking steps to improve patient safety in hospitals?
12. DARIEN FENTON (LAB) to the Minister of Labour: How many workplace deaths have there been in the last four years?

Today there are five questions from Labour, four from National, two from the Greens and one from NZ First. Labour is asking the PM a gotcha, on Budget 2013, vulnerable children, affordable housing, and workplace deaths. The Greens are asking on the SkyCity deal and the ETS, and NZ First is asking on the Christchurch rebuild.

Patsy of the day goes to Colin King for question 7: What support is the Government giving to businesses to increase innovation and speed up the commercialisation of new products and services?

Government Bills

1. New Zealand International Convention Centre Bill – first reading
2. Psychoactive Substances Bill – third reading
3. Plumbers, Gasfitters, and Drainlayers Amendment Bill – third reading

The New Zealand International Convention Centre Bill was introduced by Steven Joyce and gives effect to the controversial SkyCity pokies for convention centre deal. The Speaker has indicated this first reading will be a conscience vote.

The Psychoactive Substances Bill regulates psychoactive substances including party pills and other legal highs. It was introduced by Peter Dunne and is now being guided by new Associate Minister of Health Todd McClay.

The Plumbers, Gasfitters, and Drainlayers Amendment Bill amend the principal Act to validate a disciplinary levy and an offences fee prescribed by the Plumbers, Gasfitters, and Drainlayers Board. The Bill also seeks to extend the Board’s power to impose levies to fund its functions. It is being guided through the House by Maurice Williamson.

Transparency International has done a global survey on perceptions of corruption. The results for NZ are here. The percentages thinking each type of institution are corrupt were (with result for Australia in brackets):

1. Political Parties 46% (58%)
2. Media 43% (58%)
3. Business 36% (47%)
4. Religions 35% (44%)
5. Parliament 33% (36%)
6. Public service 25% (35%)
7. Police 24% (33%)
8. Judiciary 20% (28%)
9. NGOs 19% (23%)
10. Health services 17% (20%)
11. Education systems 16% (19%)
12. Military 11% (25%)

A pity they can’t break the score for political parties down by party!

Australians perceive corruption more often in every category. Interesting that the media features so highly.

John Hartevelt at Ninth&10 reports:

Ed Miliband today achieved what might previously have seemed impossible. His Labour Party/union reform speech had Tony Blair gushing before it was even delivered – and it had the approval of Unite Union leader Len McCluskey immediately afterwards. …

But whatever the long-term impact of Miliband’s ideas, he achieved a tidy political set-piece today. This mattered for Ed because he is often written up as a man not ready for the job. In the middle of last week, some of his front-bench was briefing that he needed to “get a grip” on the union influence stories spilling forth from the initial problem in Falkirk. In a few days of practiced political management, Miliband does seem to have tightened – if not quite sewn up – this troublesome narrative, for the time being, at least.

You can look back on the past week and see a plan that was quickly put together and decisively executed. There was a resignation, suspensions and police referrals last week. A grim-faced Angela Eagle was deployed to tell a “get tough” story on Falkirk. This week, the lobby was briefed in advance of Miliband’s speech on some meaty reform details. Blair obliged with his warm endorsement on Sky News right ahead of the speech and Miliband sprung a genuine surprise with a voter-friendly proposal to restrict the amount MPs can earn outside of their day jobs. The analysts were so impressed by this last point that they said Miliband had hurled the ball cleverly in to the Tory half of the court for a response.

And this is how competent political management should look.

The contrast with David Shearer’s Labour leadership in New Zealand is incredibly stark. MPs in NZ are again whispering to journalists about Shearer’s leadership and playing dumb with their bosses when asked for an explanation (this is what I took to have happened with the Duncan Garner tweet drama last night, NZ time, for those who were following it). Whatever his colleagues say, it’s clear that Shearer does not have enough of the confidence of his own caucus. …

He seems too far gone as leader now.

The diverging prospects of the two Labour leaders over the past week are instructive. Neither man is as politically gifted as his centre-right adversary, but at least one of them is making some of his own luck.

To be fair to Shearer, he is not solely responsible. The Deputy Leader is meant to play a key role in party management, as are the staff.

Stuff reports:

Online shoppers face being chased down for GST on all goods, services and digital products bought from overseas.

A joint working party has been set up by Inland Revenue and Customs to investigate collecting GST on more personal imports.

Credit-card companies could be asked to collect the revenue, as could overseas payment intermediaries such as PayPal.

You could ask, but why would they? It would cost them money, and anger their customers to discover what they purchased has had 15% added to their bill.

The Government is also reviewing the threshold at which you have to pay GST on imports. It is currently $400, which means they only collect GST if it is of $60 value or more. You may be able to lower that threshold slightly, but I suspect the costs of collection would be more than the revenue gained if they dropped it by much. In Australia I think the threshold is $1,000.

The other issue is that many online retailers, especially in Asian countries, automatically declare the values of the goods they are shipping to be $20. Short of opening every letter and parcel and getting the contents valued, there is again little that can be done.

Michael Forbes at Dom Post reports:

Cars could be banished from more parts of the Golden Mile when Wellington gets its new public transport system.

The Wellington Public Transport Spine Study, which investigated the merits of light rail and a dedicated busway from the CBD to Newtown and Kilbirnie, did so on the basis that cars would be completely blocked from parts of Courtenay Place and Willis St during the day.

In Courtenay Place, this would happen between Taranaki St and Cambridge Terrace from 7am to 7pm on weekdays, with limited access possible between peak hours if necessary. Willis St would become bus or tram only between Manners St and Lambton Quay from 9am to 5pm on weekdays. Southbound cars are already banned from this section of the road.

A decision on the changes will not be made until next year, after local and central government have picked either a light rail system for $904 million, or a bus rapid transit system for $207m, as the long-term solution to public transport demand in Wellington.

But the forecast savings of between 6 and 11 minutes for both systems is modelled on the assumption the changes will occur.

I haven’t got a problem with this, as there are good alternatives running parallel to those roads.

But the idea I did like was from Bob Jones to ban all vehciles from Lampton Quay, and turn it into a huge pedestrian mall with more street cafes etc. That would be great.

I’ve been at NetHui for the last three days, enjoying many discussion ranging from online harmful communications to the future of video on demand. One of the highlights was a panel on state surveillance and it included the former GCSB Director, Sir Bruce Ferguson. Sir Bruce gave more details about how the GCSB had operated than I had previously heard in public.

Tracy Watkins reports:

Sir Bruce Ferguson, former boss of the secretive Government Communications Security Bureau, said he was told years ago the best way to find out what was going on in Wellington was to join the Koru Club, then spend a couple of hours there on a Thursday or Friday night.

Heh, so true.

In a surprisingly candid speech to the internet forum NetHui in Wellington yesterday, Sir Bruce also lifted the lid on how the GCSB believed it could get away with spying on New Zealanders for so many years, despite legislation specifically banning it from doing so.

He confirmed that about 50 of the 88 cases identified in an inquiry earlier this year as potentially breaking the law against spying on New Zealanders had happened under his watch.

“I received a warrant signed and duly checked by the inspector of warrants and the head of either the police or Security Intelligence Service and the boss [the prime minister]. It comes to me and it asks specifically for help from the GCSB to spy on a specific target . . . they have to convince me in that warrant the reason why they’re doing that and that means they have to show they have reason to believe that person is acting against the security of the state.

“They then have to ask by name for the people in GCSB who may be able to help them – the specific specialist by name. I then sign a warrant or agreement in that warrant to second those individuals. I second them to the asking authority, be it the SIS or the police. So I’ve now seconded them, as far as I was aware, to that organisation.

“They go across there, they do what is required by the SIS or the police and they finally finish the task and come back. At no stage . . . was I ever aware or made aware of the outcome. That wasn’t my business.”

I regard this as a pretty significant revelation, for two reasons. The first is that most of the cases we have heard about do not seem to involve the GCSB itself intercepting communications. It involves a GCSB employee effectively being seconded to another agency to assist them.

The second interesting thing is that the GCSB doesn’t retain any data from those cases. The staffer helps the other agency do their job, but doesn’t report back – so hence there are no GCSB files with data from NZers. They remain with the SIS or Police.

Tom Pullar-Strecker at Stuff reports:

Dial-up internet services and many devices that rely on them such as older burglar and medical alarms and fax machines are a step closer to the junk heap after a review of the Telecommunications Service Obligation, which guarantees minimum phone and internet services.

Copies of the White Pages directories will probably no longer be automatically delivered to homes, but phone users should continue to get the option of “free”, unmetered local calls, according to a discussion paper on the future of the Telecommunications Service Obligation, made public yesterday by Communications Minister Amy Adams.

A price cap which limits increases in phone-line rentals to the rate of inflation may be removed in urban areas that are deemed to be subject to sufficient competition, but could remain and might even be tightened to ensure prices fall in real terms elsewhere, the paper said.

The obligation, which is an agreement between Telecom and the Crown, was last updated in 2001.

Changes are needed because the Public Switched Telephone Network and eventually most copper-based communications services are expected to be superseded by internet telephony and the ultrafast broadband network.

The UFB network cannot support low-speed data devices, including dial-up internet modems and other household devices that Telecom and copper network owner Chorus are duty-bound to support at present.

The discussion paper said 114,000 homes were still reliant on dial-up internet for web and email access last year, though that is forecast to drop to 41,000 homes by 2015.

I’m not sure we even need a TSO anymore. It played a useful role when we had a monopoly, but I’d prefer the focus to be on improving competition.

The Guardian reports:

Three senior judges have ruled that the public has no right to read documents that would reveal how Prince Charles has sought to alter government policies.

The high court judges have rejected a legal attempt by the Guardian to force the publication of private letters written by the prince to government ministers.

Cabinet ministers have conceded that the prince’s private letters – dubbed “black spider memos” because of their scratchy handwriting – contained the prince’s “most deeply held personal views and beliefs” that could undermine the perception of his political neutrality. …

Grieve had argued that disclosure of the 27 “particularly frank” letters between the prince and ministers over a seven-month period would have seriously damaged his future role as king. The attorney general said there was a risk that the prince would not be seen to be politically neutral by the public if the letters were published.

“This risk will arise if, through these letters, the Prince of Wales was viewed by others as disagreeing with government policy. Any such perception would be seriously damaging to his role as future monarch because if he forfeits his position of political neutrality as heir to the throne, he cannot easily recover it when he is king,” Grieve had said.

This is almost Orwellian. It is not the publication of his letters that would damage his political neutrality. It is the fact he is in fact in no way politically neutral. His letters are what damage his political neutrality, not their publication.

The argument for the monarchy is that it provides a politically neutral head of state. It clearly does not. Prince Charles appears to be somewhere between Labour and the Greens in his political views. Good on him, but why should he get to become King of New Zealand?

Duncan Garner on Radio Live talks about the planned coup for Labour, and how he had two sources – one inside and one outside the caucus. He says the strategy is death by 1,000 cuts.

The key is that Robertson wants Shearer to remain Leader, so he can lose – and Robertson takes over after the election. So his faction wants to keep Shearer there. But other factions know their best chance is to move now.

Listen to the whole seven minutes piece.

I think I’m going to order a giant carton of popcorn for the next few days!

UK Labour is joining Australian Labor in reducing the influence the unions have on their parties. This should be contrasted with NZ Labour which is moving in the other direction and has given the unions a direct vote in the future Labour Party leadership.

The Independent reports:

Trade unions will no longer be allowed to enrol three million members a year to Labour ranks, Ed Miliband will announce on Tuesday in a dramatic effort to draw a line under the crisis gripping the party, following allegations of corrupt practice in candidate selection.

The Herald reports:

Sir Owen Glenn is adamant his $2 million inquiry into family violence in New Zealand will go ahead, and says accusations that he hit a woman in Hawaii more than a decade ago are completely false. …

He told Campbell Live last night the accusations were fabricated by the American woman, his former personal assistant, to extort money.

He implied she had psychiatric issues and said she re-ignited the claim 10 days ago hoping for another payout.

He continues:

Two Hawaiian policemen knocking on his door at 1.30am said the woman had filed an assault complaint against him and took him into custody. He was released on bail the next day. The woman dropped her claims, and the case never went before a judge, he said.

“There was subsequently no case to answer. If both parties agree there is no case to answer, it’s no contest,” he said.

However, he said she then filed a lawsuit against him for unfair dismissal.

“She was a case of extortion, I said I wouldn’t pay her out. But [the employment mediator] said ‘look, have a small settlement, whatever I can get it down to’ so I agreed to that in the end only because of the length of time and the harassment etcetera, but I only paid that strictly – and it’s in the court papers – for payments of her psychiatric bills.”

The settlement was $80,000 as opposed to the $300,000 she was seeking.

Inevitably, I imagine she will sell her story to a media outlet.

Mount Cook and SH 80 to the Hermitage – from Peter’s lookout. New Zealand landscape photography by Sarah Sisson.

I really should post one of my images again soon, but I keep finding nice ones by Sarah during my travels through the archive.

The beauty of this image is that up-and-coming landscapers like @Beautox and @FredInTheGrass can’t replicate it – some wandering greeny task-force have bowled the infestation of wilding larches that give this scene its Nordic Autumnal vibe….

Cheers – Todd

Free Wallpaper Download

You may download the large version of today’s image from this link:   Password = wwp

Thanks for your support!

Cheers – Todd [www.sisson.co.nz] 

Duncan Garner has tweeted:

I won’t out my original source Hooton. They’re still leaking despite ‘all being behind’ Shearer.

and also:

I’m not going to get into this, except to say my source is within the caucus.

So if it was MP. The question is, which one. We can’t know for sure, but logically one would expect it to be an MP who:

1. Was not a supporter of Shearer in the ballot vs Cunliffe
2. Has been demoted by Shearer since then
3. Was a supporter of the “man ban”
4. Has little to lose by leaking as they are likely to retire at the next election, or prior to that

One can’t blame Chris Carter for this one.

Vernon Small at Stuff reports:

David Shearer has pushed the Labour Party into dumping its controversial “man ban” proposal that could have preserved some electorates for women-only candidates, but a related move to ensure that by 2017 at least 50 per cent of its MPs are women is set to go ahead.

This is the policy that if used in the past, would have seen Labour gain no male List MPs in 1996, 1999 and 2002.  Michael Cullen would have failed to be elected as an  List MP, under this proposal. Daft.

But the party’s stance on the party list remit appears to have caused confusion among MPs with some saying the effective “quota” had also been dropped, while others said there was no change to the proposal.

A spokesman for Mr Shearer later confirmed it was unchanged at this stage.

It says a lot when Labour’s own MPs don’t even know what the situation is.

Mr Shearer announced the U-turn on the “man ban” rule ahead of the party’s weekly caucus of MPs that insiders said was at times acrimonious, with supporters of the move targeting list MP Shane Jones in particular over his comments.

That would be the gelding comment.

That, in turn, sparked a flurry of rumours late on Monday about a possible leadership spill, emanating from both the Left and the “blokes” wings of the party.

Labour has more factions than MPs!

The Press editorial comments:

To hoots of derision from almost every quarter, the Labour Party’s proposal to exclude men from consideration for selection as candidates in some electorates – the so-called “man ban” – has been ditched.

The wonder, of course, is not that it was ditched, but rather that an proposal so maladroit ever saw the light of day with a party endorsement in the first place, and, having done so, that it took some time before Labour leader David Shearer could find his voice and move to quash it.

They’ve known about this for eight months!

The whole fiasco surrounding the proposal was another indication of division and disarray within Labour. It somehow gained the endorsement of the party’s national council as an idea for discussion at the national conference without Shearer, who is a member of the council, being aware of it. Even if he was not present at the council meeting that discussed it, he should have been able to rely on the good sense of his colleagues to scupper an idea that was such an obvious non-starter.

Then, by some unexplained misfortune, the idea leaked into the public arena by way of a popular blog deeply unsympathetic to Labour. Then, rather than seize the initiative and rapidly scotch the proposal, Shearer ducked reporters’ questions, dodged television interviews and dithered until yesterday, when the matter was finally laid to rest.

It is hardly original to note that if this is the way the party conducts its own affairs, it will need to work a lot harder to present itself as a potential alternative government.

Could you imagine them having to respond to a disaster like the Christchurch earthquake? Would it take them five days to agree to comment on it?