Did anyone else think the figure of $416m the courts say the BNZ owes in tax sounded familiar?
It is around the amount that Labour had committed to “Pathways to Partnership” funding from 2009 to 2012 - the process by which community organsiations were to be fully-funded for essential services they provide to vulnerable families for the Government.
Labour had delivered the first round of this funding in 2008, but the National Government has shelved this commitment and now those community organisations are working under increasing pressure with these families in an economic recession without the pathways to partnership funding.
Instead, they are having to compete against each other for the “Community Response Fund” where the criteria is so difficult to meet that many organisations in Hamilton tell me that they won’t qualify.
Here is my question: If the BNZ has to pay back this tax money to the Government, will the Nats commit to pathways to partnership to support vulnerable families or will they find more inventive ways to give it away to the top 3% of earners (like they did with the April 1 tax cuts) or will they find private schools more deserving?
What do you think?
$416 million – thats also about 1/2 of what Mallard wanted to spend on the waterfront stadium.
I think that the Nats can find a better use for it.
What I think, Ms Moroney, is that your understanding of public accounting is woeful given that you have been a government MP for some time.
The tax amount under dispute has not been paid to the government. There is an ongoing judicial process, which may not be in the government’s favour. I think it’s a bit premature to start wondering about how the windfall might be spent.
If there were a windfall from any source, be it increased GST take, lower than projected welfare expenses, foreign currency gains, etc, then of course the Government will have to decide what happens with any windfall. Given the $7 billion budget deficit, that might just be a priority.
There seems to be a habit forming from Labour to commit to spending money that the government doesn’t have, and not identify where that money will come from. Mr Goff’s welfare for millionaires is a case in point. So is committing to building the Waterview tunnel at an extra $1.5 billion.
There’s only so much money to go around. The country is already projected to incur enormous deficits over the next ten years. I think Labour needs to start a practice of identifying which other services they are going to cut, how much extra debt they want the government to take on, or which extra taxes they want the government to raise, to pay for all these things on Labour’s wish-list.
Pathways to Partnership was a brilliant policy of the previous Labour Government.
Community organsiations need government support for the “essential services that they provide to vulnerable families” as Sue stated above.
What would happen to our society if community organisations couldn’t opperate due to their rising costs associated with running their organsiation and had to close?
What would happen to our society if community organisations couldn’t opperate due to their rising costs associated with running their organsiation and had to close?
Perhaps the beneficiaries and the criminals would become a little less inclined to breed further generations of beneficiaries and criminals?
Perhaps decent Kiwis would gain some respite from the crippling taxation that’s flushed down the welfare toilet?
Sheez, Tim. Sue was making a political point, not discussing the finer points of accrual accounting. Who’d have thunk it, a politician making a political point. You really need to lighten up, bro.
$416 million – that sounds about how much we overpaid for Kiwirail too. What irony.
Pathways for Partnership was a practical resourcing policy that community organisations had lobbied for. Now it’s cut. Great idea for re-instating it, Sue.
UA, I wasn’t discussing the final points of accrual accounting. The thrust of my argument was, where’s the money coming from? Even if the BNZ pays $416 million in extra tax, Labour has already promised that at least five times over.
Just to put $400 million into perspective – thats 2/3rds of the $600 million per year that would have been wasted in interest should NZ have had its credit downgrade.
Thank goodness that National came into power and prevented that happening.
You start adding them up – 800 million for labours / mallards waterfront stadium (thank god that was stopped), $400 million wasted on labours trainset, 600 million per year due to a credit downgrade.
I’m interested, say the BNZ lose their legal battle and are ordered to pay this money…where exactly will they get this from? Will they call back in all the business and housing loans they have made and pay it off in one lump sum? Well I suppose they could pay it off eventually at $50 a week…lol.
I remember on the news last week a BNZ Executive being interviewed saying that BNZ had provisions in place, and would be able to pay the amount (dependent on the legal outcome) from this financial year.
I think that this has got a little off track from Sue’s initial posting however.
@Tim – “If there were a windfall from any source, be it increased GST take, lower than projected welfare expenses, foreign currency gains, etc, then of course the Government will have to decide what happens with any windfall. Given the $7 billion budget deficit, that might just be a priority.”
It should certainly be a priority.
If Labour are so keen to hand out taxpayers money perhaps they should advocate slashing core public sector wages by 10-20% to a) bring them back into line with the private sector & b) free up the money for more worthy uses.
@LabRat – I believe that since Bill English recently described Kiwirail as being worthless and half a billion needs spending on upgrades it would take the disputed back taxes from all four major banks to compensate for the amount squandered by Cullen on his trainset.
Guess what…. it wont be $400 million. 100% penalty plus interest should apply. Will likely end up being best part of 1 billion. Just watch Westpac and the others settle out of court. NAB raised AUD2.5 billion the other day in Aus, citing this case. And I’d imagine this money will just go where the rest of govt revenue is going for the next 1
….. oops – heres the rest of that
…. where the rest of govt revenue is going for the next 10 years – part of the way towards bridging the significant structural deficits created by the last 9 years of poor quality spending, and lack of productive investment.
And having read the jusdgement I agree withthe outcome. No matter how you slice it, theses condit deals done by the domestic and some foreign banks were all done with no commercial aim apart from reducing tax. They were non-commercial without the tax benefit.
Hmmm. Interesting. I make it 2 for Pathways to Partnership funding, 2 for the deficit and 0 other ideas.
Talking about accounting practices there has been some interesting “cooking” of the history books going on here.
Gomango is right, the figure is likely to be much higher and the other banks haven’t even been before the courts yet on this one.
Maybe the Nats might consider going back on their short-sighted decision to stop contributions to the Super Fund for a decade?
Now that would make for a brighter future!
$416m would have paid for 1/3 of the tunnel Labour promised to build under Mt Albert.
What was Labour going to cut to pay for the other 2/3s?
@ Neil – they don’t cut anything – they throw it away and whack it on the bill.
Thats how you get beneficiaries ‘earning’ more than people in jobs and a country in financial difficult times requiring a responsible government to actually make the country survive within its means.
But hey all that money for a tunnel was worth the votes huh?
Don’t count your chickens before they hatch – BNZ are going to appeal, and they have precedent transactions that were taxed according to their interpretation of the tax rules.
I would think that the Government and the banks should settle as this will drag on for years.