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Archive for 3 April 2013

Meanwhile, back on Planet Key…

3 April 2013 9 comments

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1. Treasury, IRD, tax cuts…

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income tax - tax cuts - IRD - Treasury - Bill English

Acknowledgement:  NZ Herald: Income tax cut tipped as best bet

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It appears that right wing bureacrats in the ‘zoos’  we know as Treasury and IRD are, once again, advocating tax cuts.

A recent report by Treasury and IRD are once again pushing for tax cuts as a ‘panacea’ for our low economic growth. As Brian Fallow reports,

They conclude that cutting personal income tax would be the most effective in boosting economic welfare.

“Boosting economic welfare” for whom? We already know that there is a widening wealth/income gap in this country. (see:  NZ rich-poor gap widens faster than rest of world, see:  Gap between rich and poor highest ever, report shows)

So really,  that argument is ideological clap-trap. In fact, New Zealanders have enjoyed six tax cuts since 1986, and the mantra of “ cutting personal income tax would be the most effective in boosting economic welfare” seems as much an empty promise as ever.

The report next claims, that tax cuts,

“…would increase incentives both to work and to save and invest.”

No… the real incentive to save (via Labour’s Kiwisaver) was the $1,000 kick-start which government is offering ever New Zealander who opens a Kiwisaver account.

Other tax cuts have simply given people more cash to pay of debt; invest in mortgages (rental properties) or buy imported consumer goods. None of which contributes to our economy. In fact, our private debt continues to skyrocket,

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private sector debt 1988 - 2009 (% of GDP)

Acknowledgement:  Treasury – 4.2.2  Private-sector debt and factors affecting it

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At the same time our savings record has been abysmal, as Reserve Bank Governor, Dr Alan Bollard,said on 14 June 2010,

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Based on our Monetary Policy Statement, we forecast New Zealand household savings to improve from a very poor position to one that has improved, but is still in significant deficit. We believe that since the crisis, New Zealanders have decided they are over-exposed to property assets and to high debt, and they are prepared to constrain consumption to improve their savings. But we are unclear how much rebalancing they contemplate, and for how long.

Acknowledgement: Reserve Bank  NZ – New Zealand’s Economic Recovery, External Vulnerabilities and the Balancing Act Ahead

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The report also suggests altering the “fiscal drag” – whereby an increase in salary/wages ‘bumps’ the earner into the next highest tax bracket,

That would have to be some big ‘bump’,

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IRD - Rates for tax year 2012-2013

Acknowledgement: IRD Income tax rates for individuals 2012-2013

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Families receiving Working For Families pay much less tax, as the report clearly stated,

“And for a couple with two children and one earner, who is on the average wage, the tax burden was just 0.6 per cent, with Working for Families tax credits, compared with 26.1 per cent across the OECD.”

Acknowledgement:  NZ Herald: Income tax cut tipped as best bet

The report recommended,

“A simple change to current thresholds in 2015, to correct for five years of fiscal drag since the 2010 tax reform, is estimated to cost around $1.5 billion per annum.”

If the report’s suggestions are to be taken seriously and implemented by National, the result would be a massive one-and-a-half billion loss in tax revenue.

Where have we heard this before?

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Govt's 2010 tax cuts 'costing $2 billion and counting'

Acknowledgement: Scoop.co.nz:  Govt’s 2010 tax cuts ‘costing $2 billion and counting’

Which then led us to this,

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Treasury lowers govt's forecast for 2014 2015 surplus to NZ$66 mln

Acknowledgement: Interest.co.nz: Treasury lowers govt’s forecast for 2014/15 surplus to NZ$66 mln from NZ$197 mln on Budget day

See also

Govt austerity slows growth, keeps rates low – RBNZ (13 Sept 2012)

Govt deficit up as tax take dips (5 Dec, 2012)

Now in case any National/ACT Party supporters are reading this and are still sceptical, I refer them to this piece from the United States,

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Tax Cuts Don't Lead to Economic Growth, a New 65-Year Study Finds

Acknowledgement: The Atlantic – Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds

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Basically, in a nut-shell, the findings of the study in that news item stated,

In 2001 and 2003, President Bush cut taxes, and we faced a disappointing expansion followed by a Great Recession.

Does this story prove that raising taxes helps GDP? No. Does it prove that cutting taxes hurts GDP? No.

But it does suggest that there is a lot more to an economy than taxes, and that slashing taxes is not a guaranteed way to accelerate economic growth.

That was the conclusion from David Leonhardt’s new column today for The New York Times, and it was precisely the finding of a new study from the Congressional Research Service, “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945.” 

Analysis of six decades of data found that top tax rates “have had little association with saving, investment, or productivity growth.”

Acknowledgement: IBID

Heck, I could’ve told you that.

In fact… I have.

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2. Rio Tinto, Meridian Energy, Bill English…

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Tiwai Point - Bluff Aluminium Smelter - Meridian Energy - John Key - Rio Tinto

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Tiwai and  Bluff are situated in Eric Roy’s Invercargill electorate – sitting adjacent to Bill English’s Clutha-Southland electorate.

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Invercargill - clutha southland - electorates - bill english - eric roy - tiwai point - aluminium smelter - rio tinto - meridian

Acknowledgement: Wikipedia – New Zealand electorates 2011 election

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In the US, this is known as “pork barrel politics“, where politicians support certain industries in their own constituencies, so as to save their own political necks.

I could imagine the electoral fall-out if the smelter was allowed to close down. English and Roy could kiss their lucrative, well-paid, parliamentary careers goodbye. And might even face a less-than-friendly welcoming committee if they ever showed their faces in Southland again,

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The Mob

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3. Rio Tinto, Meridian Energy, Fran O’Sullivan…

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It’s not a pretty sight when one of National’s tame journalists – in this case NZ Herald’s Fran O’Sullivan – falls out of love with Dear Leader. The shock to her system – when she realised that Key, English, Ryall, Joyce, et al, are dodgy bastards willing to cut secret, back-room,  dirty deals to facilitate their deeply unpopular asset sales – must have made her question her loyalties to  this shabby, so-called “government”.

The use of our taxes to subsidise a billion-dollar trans-national corporation – whilst superannuitants, low income earners, and the poorest of the poor freeze during winter (see: Winter triggers 1600 more deaths ) – must be stomach turning for all but the most dogmatic  National Party supporters.

Plus, this blogger has never read so many, none-to-subtle allusions, to men’s genitalia in one article. I encourage the reader to read Ms O’Sullivan’s entire column – it is eye-opening,

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Govt intervention doesn't cut mustard

Acknowledgement: NZ Herald – Govt intervention doesn’t cut mustard

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When right wing columnists turn against National and the most popular Prime Minister since [insert another prime minister’s name here], and write a stinging attack on their inept, ad hoc, policies – then you know the tide has turned.

If National’s ministers are going to strike secret deals with big corporations, giving them access to millions in electricity subsidies, the least they could do is demand a 49% share-holding in said corporation (a  “mixed ownership model” in reverse) so the taxpayer gets something in return.

But then, National’s much-renowned, so-called “business acumen” is nothing more than a carefully-crafted,  self-created myth. In case National voters haven’t been paying attention, the MPs they voted for are inept.

And it’s our taxes they’re pissing against a corporate urinal.

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4. Mining, Drilling, Arresting, Imprisoning – Simon Bridges…

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On TVNZ’s Q+A today, Energy Minister and Dear Leader Mini-Me, Simon Bridges, announced a new law with heavy sanctions against protesters who “want to stop other people going about their lawful business and doing what they have a permit to do and they are legally entitled to do“.

He said, in part,

JESSICA MUTCH I want to start off by asking you your predecessor in a speech, Phil Heatley, said, ‘I’m determined to ensure the mining sector is not hampered by unsafe protest actions by a small but vocal minority.’ You’ve been working on this since taking over. What are protesters in for?

SIMON BRIDGES So, that’s right. So we are acting, and so two offences are going to be put into the Crown Minerals Bill. Look, the first of those is truly criminal offence. Effectively, what it says is that it will be stopping people out there at deep sea, in rough waters, dangerous conditions, doing dangerous acts, damaging and interfering with legitimate business interests with ships, for example, seismic ships, and what they’re doing out there.

JESSICA What fines are we talking about there?

SIMON Well, for that one, 12 months’ imprisonment, or $1000 (please note: the minister meant $100,000 not $1000) or $50,000 fine, depending on whether you’re a body corporate or an individual. Then a lesser, more infringement offence, really, strict liability offence for entering within a specified area, probably up to 500 metres within that ship, again because of the dangers associated with doing that.

Acknowledgement: TVNZ:  Q+A – Transcript Simon Bridges Interview

Petrobras has already been involved in oil-spills elsewhere in the world,

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Brazilian oil spill draws attention to drilling in New Zealand

Acknowledgement: TV3 – Brazilian oil spill draws attention to drilling in New Zealand

It’s little wonder that East Coast locals and environmental activists joined together to protest against deep-sea drilling of their coast. The Deepwater Horizon disaster in April 2010 was a clear warning what the potential was for an environmental catastrophe – one that we are simply unprepared for, as the grounding of the MV Rena showed, eighteen months later.

For Simon Bridges to now threaten future protestors with heavy fines and prison sentences has the hallmarks of a nasty, petty, authoritarian  government that is afraid of it’s own people.

Never mind Labour’s so-called  “Nanny State” that National complained about in 2007 and 2008 – this has the hallmarks of a quasi-fascist state.

This is a desperate, shabby thing that Bridges is doing.

[See more at The Daily Blog]

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5. Solar power, water conservation, irrigation…

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Now, Gujarat to cover Narmada canals with solar panels!

Acknowledgement: The Hindu Business Line – Now, Gujarat to cover Narmada canals with solar panels!

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Last week, he inaugurated a 600-MW solar power project spread across 11 districts. This included a 214MW Solar Power Park, the largest such generation centre at a single location in Asia. Also, Azure Power, leading independent power producer in solar sector, announced a 2.5 MW rooftops project in Gandhinagar.

Gujarat, which invests nearly Rs 2,000 crore an year on renewable energy, has attracted investments of Rs 9,000 crore so far on solar energy projects.

The pilot project has been developed on a 750-m stretch of the canal by Gujarat State Electricity Corporation (GSECL) with support from Sardar Sarovar Narmada Nigam Ltd (SSNNL), which owns and maintains the canal network.

Acknowledgement: IBID

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The pilot project will generate 16 lakh units of clean energy per annum and also prevent evaporation of 90 lakh litres of water annually from the canal, an official told Business Line here on Monday. The concept will, therefore, tackle two of the challenges simultaneously by providing energy and water security.

Acknowledgement: IBID

That’s what India – a Third World/Developing nation – is doing.

Why can’t New Zealand do something as bold; as imaginative; and as environmentally-sustainable as our Indian cuzzies? What’s stopping New Zealand from living up to it’s Clean & Green image?

Oh, yeah. I forgot.

This guy,

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Previous related blogposts

 

Corporate Welfare under National

Anadarko: Key playing with fire

Petrobras withdraws – sanity prevails

On the smell of an oily rag

 

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