Good fun in the House today grilling Bill English here and here on why the Government’s online tax/benefit calulator leaves out the forecast inflation rate of 5.9% in 2010, and thus overstates benefits. Its a blatant case of misleading the public. The Speaker rules it is a straight question that deserves a fair answer: Bill English doesn’t get it, and digs a hole deeper than the original mistake…
…It would be funny except it has misled many average income Kiwis who were encouraged by the Govt to believe that the budget left them “better off”, when in reality it left them behind until at least 2014. It will be no fun at the checkout queue for many hard working families.
Yes David I was watching.
There are times when I wonder who is the most slippery, slimy customer – John or Bill. We want to see more of it from Labour. Simple, direct questions that prevent ministers from being able to give obtuse, indirect answers.
Ahhh… yes. I tried out that calculator but you’re right – it *doesn’t* include shocking inflation. Is there a calculator around that does?
I think one of the links should be: http://www.inthehouse.co.nz/node/3060
David, did I hear correctly at the end of Bill’s answer to the supplementary that he has a forecast of wage increases being (on average, I would assume, for this to make sense) greater than forecast inflation? If I heard correctly, then either the department making that forecast needs their Prozac budget cut, or Mr English is again being misleading…
Why would the calculator include inflation? Inflation is supposed to be addressed by wage increases, not tax cuts. This is elementary economics. Almost any acheivable tax cut will be taken away by inflation if wages are static.
If you want to be a purist, you could use projected inflation and projected wage increases, but that introduces a great deal of guesswork into a simple tax cut calculator. Best to keep it simple and understandable.
An ironic headline considering the Labour Party’s long preference for those who prefer fudge.
I note the right wingers havn’t moved in on this post yet. Bit of a tricky one for them. Maybe they are having a conference call on what strategy to follow.
I noted also that John Key avoided answering Pete Hodgson’s question directly in the House today. So obvious he was lying through his teeth. He gets a certain glazed look in his eyes which shouts “I’m lying”.
@Anne, kinda peaceful isn’t it
MacDoctor said:
Even if it puts rose tinted glasses on the financial reality that people will find themselves in?
At least they could put a note saying that is a known outstanding issue even if they don’t include it in the calculation.
And is it not great to have a speaker who actually insists that the Ministers answer the question rather than the pathetic Speakers (one the worst in living memory) that the country had to tolerate during the Labour years.
Would the hard working families be the same ones who had to put up with extremely high taxes during the Labour years – you know the ones earning over $60,000 who paid 39% tax despite massive surpluses that Clark / Cullen used to fund their social programs? Or the Hard Woking families that put up with Massive increases in their energy costs during the Labour Administration. Or the Government that cancelled tax cuts (miserable as they were because we – the hard working families were not grateful enough?
It is hard to believe your crocodile tears now you are in opposition when for so long we were robbed by over taxation (year upon year with multi-billion dollar surpluses) with no inflation adjustments. Please – let me see you policy on annual CPI adjustments to the tax bands – then maybe we will start to believe that Labour have finally turned over a new leaf.
@ wtl many thanks reference error now corrected.
@Macdoctor – you would include inflation because it is a necessary consequence of the GST increase and other policy decisions. So in order to advise a member of the public if they will be better or worse off as a result of the Budget it is not only legitimate but appropriate to include the relevant factors. And if you doubt me – do you think that there is a zero inflation component in the model, or perhaps a long run average that excludes the first year spike. Either way it is grossly misleading.
Meh, I can afford it. Thanks John and Bill!
@Monty
We have already had John Key state “he would like to see wages fall in New Zealand”.
National managed a 6.1% decrease in median income from 1990 to 1997 inflation-adjusted.
Median income in 2007 was 32% higher than the median income was in 1999 (inflation adjusted).
Those surpluses are what saved us….Bill English admitted as much…something about saving for a rainy day. Now Bill English has loaned money to give the few tax breaks and the most tax bills… no pun intended
Monty, in your scenario a family on $70K p.a. would have paid an extra 5c in every dollar for the last $10K of that $70K. What is that, $9.60 per week extra tax? This is worth crying over?
Now, those on $150K p.a. a year will score back over $100 p.w. les tax thanks to the Budget. Meanwhile your hardworking family on $70K get just a few dollars extra p.w. after GST and inflation compared to before. You must think that’s soooo much better (and fairer)
Having said that, you do make a good argument that not managing income tax thresholds well was extremely damaging to the last Labour govt, no problem with that point. I agree with you – hopefully Labour has become more creative and flexible here.
Link here to TV3 Coverage of the issue tonight.
http://www.3news.co.nz/Govts-online-tax-calculator-misleading/tabid/419/articleID/158736/Default.aspx
@ Adolf 7.26pm : Just a warning that this comment is treading the line on offensiveness to some. We welcome robust debate but not abuse. Hate to see you blocked off.
Is there a link where I could read the conversation instead? Sorry I don’t have broadband.
Broadband for all!
A Mother: Scoop is always a good source for parliamentary transcripts, before they are added to the Hansard:
http://www.scoop.co.nz/news/parliament.html
Questions and answers for today are at: (look for Question 6)
http://www.scoop.co.nz/stories/PA1006/S00030.htm
Thank you.
And the Nat Radio Checkpoint about 5:15 replayed most of the exchange the Calculator issue. That’s an improvement.
Well done David!
D.C. – what did you make of the early TV3 poll which suggested that middle and low income NZ’ers welcomed the tax cuts the most out of everyone? The story is a week old but I only came across it now.
http://www.3news.co.nz/Poll-2010-Budget-a-good-one/tabid/419/articleID/157140/Default.aspx
Does this mean that Labour’s message that the tax package overall is very bad for lower income NZ’ers is not being listened to?
The poll also said that support for tax cuts was weakest amongst high earners.
All of this is counter-intuitive (to me at least). Perhaps Labour should replicate this research and investigate what is happening here.
Monty – I agree Lockwood is one of the best speakers we’ve had, in my memory at least.
Spud – nice catch
That is refreshing Loota @ poll showing highest earners not the most enthusiastic. Perhaps it does show higher earners are less interested in more money for themselves and more interested in long term prosperity for the country?
Adolf, your comment befits your chosen christian username but little else. People still hold such dated views?
Loota that would be a online poll ?, you know the ones where they vote early and vote often
And probably have their own people voting…
David, what monetary policy will Labour fight the next election on and what do you expect its impact on inflation will be?
If you want to give Bill English a roasting about inflation that’s fair enough, that’s your job. However, in my opinion I reckon it’s a bit rich given that Labour has abandoned the long-standing consensus on monetary policy – I remind you that your leader said “the battle against inflation is no longer New Zealand’s sole or over-riding policy objective.”
Are you even able to answer the question or do you just not know yet?
Be nice to see a calculater that included all the bits missed out…
Well the TV3 poll is not likely to be the most scientific in the world, if thats what you mean :embarassed:
I just came acoss this interesting peice of information. For the 12 month period ending September 2007 CPI was 5.1%. Remind me again – did Labour adjust the income tx thresholds. Was the band for inflation not 1-3% what was Labour’s excuse. Is this an example of Labour’s mis-management of the economy that National is now trying to fix.
The truth is labour try and spin it one way now they are in opposition – but while in power the policies of Labour did long term damage to th economy – you point to one statistic or another – but reality is the tradeables has been in recession since 2005. Cullen and the social programs are committed and paid for by the 10% who pay 75% of the income tax. The envy tax needed to be extinguished to make NZ competitive. National are doing all the right things and as a result the country knows it and they are getting wide spread support both in opinion polls and the Preferred PM polls.
Monty said
Or maybe it was due to global oil prices skyrocketing and prices at the pump going up by 29%.
Let’s not forget that the 10% you refer to are able to pay more income tax AND still keep most of the money they earn AND still afford the luxuries of life.
Ummmmmm a neocon lie there, NZ companies already pay less tax than Australian companies (when you include taxes in addition to the headline tax and compulsory contributions), NZ’s top personal tax rate was already lower than Aussies. Bottom line is that the the neocon free market principle of lower taxes = a more competitive economy is meaningless and a fail.
Companies and individuals move to Australia not for lower tax rates but for higher incomes, better sources of capital, and richer more diverse opportunities than are available in NZ.
Drop your headline tax rates by another 5% if you like Monty, this adverse economic situation is not going to change simply because tax rates are a weak lever for economic growth.
“Envy tax” the usual NACT PR spin, just remember that those on $150K plus weren’t taxed the most because everyone else was envious, but because they could afford to pay it and still have all the luxuries of life.
Oh yeah Monty, another major contributor to that 5.1% CPI increase was fresh food prices rocking up because of unseasonably bad weather wrecking crops in the Sept quarter.
Do you want to blame that on Labour as well?
Spud – perhaps the right wingers & the right leaning fence sitters just can’t be bothered commenting on yet again another regurgitation of Labour’s nonsensical attacks that mean nothing to most voters.
Even those of us who love a feisty robust debate get a little tired of these kinds of posts that do nothing but demonstrate how much Labour has to learn.
AND I always find it particularly amusing that Labour even has the audacity to mention inflation, let alone feebly attack the Nats on the issue…..
But yes, Mr English came off pretty bad in that debate…vaguely amusing.
Loota “..Do you want to blame that on Labour as well?”
We cannot blame all the bad things on Lab and the good things on chance. All we can do is try and let those within Lab see where they went wrong and put them back in step. There is becomming a common theme of pointing the finger at Nats performance but not taking ownership of the 99-08 issues that many see as hypocrisy as these same issues were evident within this epoch, e.g. the graph attached on inflation and the tradeables and non tradables
http://www.aucklandcity.govt.nz/auckland/Economy/analysis/images/1208inflation.jpg
Monty, can you explain national voting against all minimum wage increases when the Government of the day was running surpluses?
Herodotus, fair comment but it cuts both ways, many seem to gloss over the cullen fund, kiwi saver, reduced public debt etc which were all effective tools emanating from Labour, or was it chance?
Did labour give tax cuts when inflation was at that price and tell everyone they would be better off, as long as they didnt count inflation? Genuine question
Monty please stop using the term envy tax. I don’t know anyone that envys people that have made it, except the ones that look down their noses at the people trying to okay.
Tracey re Kiwisaver, my issue with this is that many who live on min substance wage are unable to benefit from govt handouts regarding this. As they are also taxpayers, the poor are partially subsidising those who can afford to enter into this scheme. As I have calc that debt levels were maintained at $30+b.
Re WFF refer below to for the reason again those that did not need this govt assistance were given WFF entitlements. There appears to have been govt funding(from Lab)to many that did not need it or should have received it, and this money could have been better directed to those in real need.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10648752&pnum=0
“perhaps the right wingers & the right leaning fence sitters just can’t be bothered commenting on yet again another regurgitation of Labour’s” – You should know, it must be hard slog at times, you’ve earned a beer!
@A Mother – I have a term, scrooge cuts!
Has anyone else noticed how little the MPs comment after their original posts? I wonder if that means that they do in fact read all our comments – both for and against – and are content to just let us debate between ourselves while perhaps taking note of some of the things we say? I hope so.
I have noticed that the MPs are on this blog less lately and fewer posts. I’m guessing that they must be having a busy time of it, as long as they’re working then I’m happy for them not to be on this blog.
I do think that each and every comment gets read though, I’ve seen a lot of black overs from Trev and Clare so I’m sure it is all noticed.
Actually, maybe my perception is wrong, I’m not sure that there are fewer posts and Cunliffe and Mallard have made quite a few comments. – Too tired to think.
Rebecca I made a post the other day asking for an appropriate MP to contact about an issue. Within 3-5 minutes I got an email with a suggested MP to contact. The person who contacted me didn’t comment on the thread, so yes, they read, even if they dont comment.
I watched the whole video – It’s really embarassing. I just want to know if the 5.9% inflation forecasted is enough to throw out of balance the final outcome of the calculator to any income group. There are some other factors that aren’t included aswell e.g Bill English saying the calculator assumed the NZer spent all his income. That bring’s up another important question for me, are NZer’s mostly saving or borrowing?
Yes that is a good one Spud.
Tracey – that’s fantastic. Very encouraging.
Interesting report re the recent 2009 OECD report….
“In the 1970s, New Zealand featured in the top third for most child wellbeing indicators. In the early 21st century, New Zealand has slipped to the bottom third for most indicators, many of which are preventable conditions.”
Out of 30 OECD countries, New Zealand was ranked 21st for infant mortality, 29th for measles immunisation rates, 20th for the percentage of children living in poor households and 17th for the percentage of children in overcrowded houses.”
Is Labour going to take responsibility for this?
Like it or not, for many many MANY families they can’t possibly be any worse off under the NACTs than what they were under Labour.
These stats are appalling. Nice job National AND Labour.
“Is Labour going to take responsibility for this?”
Muldoon and Ruthansasia also need a mention if your’e going to point the finger squarely at Labour.
@Rebecca. I do think that WFF helped get children out of poverty. Housing, yes housing needs to be addressed. National is now selling them off again like last time. Have you seen the waiting lists? Very hard to get on the waiting lists too.
Fruit in schools was introduced by Labour too, for lower decial schools. The playcentre My children go to benefit from this due to being attached/on same grounds as the school and gets brought over to the playcentre each day for the children that attend. I have heard that National is revising this?
I do believe the policies that National is bringing in is doing harm to NZers as I’ve previously stated on other threads.
I do agree that where we are sitting on OECD for child wellbeing is really shocking, but the policies that National bringing in are going to make it worse in my opinion.
Will people support higher taxes to diminish child poverty?
Will they support investment in improving housing for those on low incomes – will they support an increase in benefits to levels of countries withour this child poverty? Taking GST off food and power is one way to help reduce child poverty without increasing benefits. A CGT would fund this move and re-direct capital to productive purposes.
There is the dis-connect of appreciating having ther lowest income tax rates in the OECD – when that is tax delivered off low relative incomes.
Our current tax regime does not even maintain our current level of health and edcuation services, let alone afford any reduction in child poverty – which will increase further under National as they did in the 90’s.