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GST off bananas (and other fresh fruit and vege)

Posted by Stuart Nash on November 1st, 2011

The Labour policy of removing GST off fresh fruit and veges is a very good example of evidence-based policy development.

The facts:
NZ is the third fattest country in the OECD (astounding). The productivity and health costs associated with this are huge – and growing.
Auckland University and Otago University medical schools undertook a joint research project into ways to influence consumer behaviour around the purchase healthy foods. Three groups were set up; 1) control group, 2) a group given very targeted information and education about the outcomes of healthy purchases, and 3) a group that were given information and a 12.5% price discount. The result: no change from control group (expected), no change from the group given a high level of education and information only (surprising), however, a 11% increase in the purchase of healthy food by those who received a 12.5% discount.

After consultation with a lead member of this research team, we decided that one of the best ways to influence buyer behaviour and promote healthy choices was provide a price incentive. This works. Six months after the study had finished and prices returned to normal for the third group, the researchers found the majority in this group were still making healthy purchase decisions.

So, education alone will not work in changing the eating habits / purchase decisions of the vast majority of NZers. A price incentive does. If anyone has a more effective way to directly target the obesity problem then I am very interested in hearing, because while it is a problem now, it is set to become an epidemic within a short space of time.

As an aside, we did briefly consider a ‘fat tax’ on unhealthy foods, however, ‘unhealthy’ is very difficult to define (under many definitions, milk and cheese are ‘unhealthy’) and so we decided that in this case, it is easier to remove a tax than add one.

Filed under: GST, Tax, health, policy

Fonterra and Tax

Posted by Stuart Nash on September 22nd, 2011

Fonterra has released its financial results for the year to June 30. Good to see that farmers received a record payout of NZ$7.90 per kg of milk solids. Other figures also make interesting reading:

1. NZ$19.9 billion – revenue
2. NZ$622m – gross profit (before tax)
3. NZ$149m – tax credit
4. NZ$771m – net profit (after tax)

In the past five years, Fonterra has reported $2.3b of before-tax profit on $86b worth of revenue – and not paid any tax.! In fact, they have claimed $198m worth of tax credits.

It does need to be noted that the reason Fonterra’s profit is low compared to revenue, is at least partially explained by the fact they’re paying out a significant amount to the farmers.

In light of the record milk solids payout to co-operative members, however, it will be interesting to see how much tax dairy farmers pay this year. Especially considering in 2009 (latest figures I have from the IRD) over 9,000 dairy farmers (52%) declared a loss, and 67% declared a net trading income of $20k or less. I hope for the sake of the country, a very important industry, and the farmers themselves, that this year net trading income is considerably higher for the vast majority. Wouldn’t bet the farm on it though…

Filed under: economy

John Key’s public meeting in Napier

Posted by Stuart Nash on September 1st, 2011

Last night Hawkes Bay Nat MPs, Messer’s Tremain and Foss, hosted John Key at a public meeting in Napier. The resulting debacle will, I suspect, pretty much ensure that Key won’t be visiting the Bay for a while.!

Someone obviously misjudged Key’s popularity and booked Napier’s Municipal theater (hate to think how much that cost – and I do believe the cost is attributable as well). The Municipal has a capacity of around 1,000. Tremain and Foss advertised the meeting widely though billboards and full page newspaper ads.

Well, around 120 people turned up, bolstered by a class of Auckland University students in Napier on a field trip. The theater looks empty with 300 seated, and so was, i am told, embarrassingly sparse. Around 50 peaceful protesters also turned up with signs and songs, so ‘the man of the people’ went in through the side door.

During the meeting Key was grilled by unhappy teachers and grumpy constituents, and copped an earful from Steiner staff who have been treated very poorly by Mrs Tolley. He then left via the side door.

All in all, not a successful event. If Foss and Tremain can only rustle up around 80 supporters from across the region (the rest were there to have their say and the aforementioned students) then things perhaps aren’t as rosy as maybe they appear. I am told that when Foss saw how many protesters had turned up he went very pale. Obviously concerned that such a poor turnout inside and a fantastic turnout outside might harm his career.

As an aside, 24 hours later i attended my daughter’s primary school play at the same Municipal theater: 1,000 parents and school supporters enjoyed the performance. Now that was the only decent show in town this week.!


Peter Dunne – Changes to Child Support

Posted by Stuart Nash on August 21st, 2011

Peter Dunne has finally announced proposed changes to the child support regime in order to make it fairer. He admits that “on something as contentious and as emotionally charged as child support… it is not about trying to please people. It is about creating a system that people feel is fundamentally fair, and crucially, that they feel is for the benefit of their children. If we get those two factors through to people, then we have succeeded, and I believe we are doing that here.”

Aside from the obvious contradiction there (‘not trying to please people… but about creating a system that people feel is fundamentally fair’: in my experience, people are pleased with a fair system, and not with one that isn’t), I don’t think anyone would disagree with the sentiment. As Revenue spokesman, I get many e-mails from people who believe they are being ‘ripped off’ by a discriminatory child support regime.

Three points I would make however:
1. Two and a half years ago Dunne said he would complete a review of the system in 6 months. What took him so long?
2. Dunne’s IRD is undertaking a round of redundancies (16 front line staff in Napier alone) and yet they are about to restructure the child support system… Does that mean ‘more with less’? Give me a break.!
3. Most importantly, Dunne has said that the changes to the system will be in legislation introduced to Parliament in the next few months. There are only four sitting weeks left this term. This is incredibly important legislation because over 200,000 NZ children rely on child support payments. I hope like hell this isn’t something that Dunne and the Nats are planning to introduce under urgency.

I am not saying there doesn’t need to be changes to the child support system, because there quite obviously does (of the approximately $2b in child support debt, under $200m is actually principle). But any legislation reforming the child support system needs to go through the proper parliamentary process; e.g. public select committee where all NZers can have their say.

The real shame of all this: if Dunne had done what he said he would do, then we would have had this whole system reformed months ago. Wonder why he hasn’t…


Sir Paul Reeves – a personal reflection

Posted by Stuart Nash on August 14th, 2011

Sir Paul Reeves was a good mate of mine. I first met Sir Paul when he was the Anglican bishop of Waiapu based in Napier. He was Mr Reeves back then. His youngest daughter Jane and I were at Carlyle Kindy together and then in the same class at Napier Central School for a few years.

I really got to know Sir Paul when working at AUT University as the Director of Strategic Development. Sir Paul was the Chancellor of the university and his office was beside mine. In fact, he had a major hand in me getting the job. I was outside the Vice Chancellor’s office waiting for my interview and Sir Paul walked past and said ‘Hello Stuart. What are you doing here’? I told him and when the Vice Chancellor came out Sir Paul started extolling my virtues (I had also caught up with him a couple of times when I was standing in Epsom in 2005). Needless to say I got the job.

He spent much time in his office and I was always popping in asking advice and chatting. He was a man of incredible wisdom, knowledge and insight. I learned much from simply listening. He was a mentor on many levels.

I remember once when I was working on AUT’s proposal to purchase the Carter Holt Harvey site to build a South Auckland campus. Our executive team was trying to get hold of Graeme Hart, whose Rank Group owned the site. This was proving close to impossible until we asked Sir Paul to try his luck. Within literally 5 minutes, Sir Paul was talking to Graeme. As it turned out the country’s richest man was a huge fan of Sir Pauls. We all were.

We kept in touch after I left to pursue political dreams. He did me the incredible honour of coming down to Napier and opening my electorate office. Amazing.

One of the last times I saw him was Christmas when a friend came into my office and wondered if it was at all possible for me to ask Sir Paul to sign a Maori dictionary for her high-achieving grandson. I phoned him up and of course he was very happy to do this. I called in and had a great chat. Sir Paul was happy to do anything for anyone despite the fact he had more letters after his name than than the Oxford dictionary (ONZ, GCMG, GCVO, CF, QSO) – and that doesn’t include his university degrees (two from Oxford).

He was such a humble gentleman. A true knight and a wonderful man. In fact, he really was a great Kiwi bloke.


Farmers driving the Nat’s economic policy?

Posted by Stuart Nash on August 2nd, 2011

Interesting to note in today’s estimates committee stage debate the 3 Nats who spoke were Bill English, Amy Adams and David Bennett. All spoke about the “twin evils” of debt and capital gains tax.

English, Adams and Bennett are all farmers (2 South Island drystock and 1 Waikato dairy), hence the irony of being lectured on debt and tax considering the farming sector has around $40b worth of debt, or a quarter of NZs total debt (most held by overseas-owned banks), and many in the farming community are masters at ‘optimising’ their own tax obligations.

Obviously all three would be subject to a capital gains tax when they sold their farms (I know Adams and Bennett have more than one farm, but unsure about English). So I was left wondering who these three cockies are representing – the NZers they claim to speak for, or their own back pockets..? Call me cynical, but I suspect its the latter.

Some things, it appears, never change: the National party is, once again, the party of the landed gentry working to feather their own nests and buggar the rest. Another irony is that the four Labour speakers (Cunliffe, Parker, Jones and yours truly) all come from a business background. Hmmm. The farmers lecturing the businessmen on debt, taxes and the economy. Go figure…

Filed under: Tax, economy

Peter Dunne – Politicians Prayer

Posted by Stuart Nash on July 22nd, 2011

You gotta smile at Peter Dunne’s demand that the Nats give him the same level of help that they are giving ACT. Talk about an over inflated sense of self importance.! Actually, he cuts a rather sad irrelevant figure around parliament these days. He’s given very little respect by either the Nats or Labour.

Dunne won a seat for Labour in 1984 that he was never supposed to win, thanks to Bob Jones and the NZ party splitting the Nat vote, and he has held on ever since.

In recent times he has flipped flopped between National and Labour with no apparent political philosophy except a desire for a ministerial salary. He rages against Labour’s tax policies and yet as Revenue Minister under Dr Cullen he probably had a minor hand in Labour’s tax policy development.

The one Bill he put up as part of supply and confidence agreement with the Nat’s will get approximately 1 vote in it’s second reading.

But most importantly, he achieves exactly 0% in any poll, thus underlining his irrelevance in today’s political scene. He also knows that he will be beaten by Charles Chauvel this election; why, because the right vote will be split due to his own vanity. History does repeat.

Lord please bless me with the judgement to know when it’s time to go, and allow me the good grace to leave with my dignity and my pride intact. Too late for Peter Dunne.


Capital Gains Tax – most get it

Posted by Stuart Nash on July 20th, 2011

I have been traveling around the country explaining our capital gains tax policy to individuals and audiences. The messages vary depending upon the audience, however, even those in business ‘get it’ when the economic advantages are explained.

For example, as a country we are approximately $169b in debt, however, about 86% of this is private debt, with the majority invested in the housing market. The value of the investment property market is about $200b, and yet this returned -$500m in revenue to the govt. last year.

Now imagine if a good chunk of this money was invested in the productive economy as opposed to housing i.e. people investing in businesses and companies that created wealth, jobs, foreign exchange etc.

Interest rates would be lower, USD-NZD cross rate lower, people wealthier, more jobs, deeper capital markets and we might have avoided the worst of the finance company collapses.

As it is, the tax incentives around investing in the property market distort this country’s investment profile to such a dangerous extent that we are at risk of losing a good chunk of our manufacturing base.

The CGT is about fairness, tax equity, paying our fair share, but most importantly, it’s about rebalancing the economy towards investment in the productive sector, towards the companies that export, that create wealth, jobs, foreign exchange and that drive this country forward. That requires bold thinking and a vision. And no one from any sector of the community – be it business, or other – believes that selling state assets is the answer.! Only Labour can deliver an economic vision and an alternative to selling our state assets.


Jobs promised – but from where?

Posted by Stuart Nash on May 20th, 2011

re Budget 2011; Bill English and John Key have promised 170,000 jobs will be created by 2015 - but from where?  When pressed on TV this morning, Bill said that record commodity prices will create more jobs in these sectors. 

Record commodity prices does not equal more jobs.  Products are commodities because we have failed to add any (or very little) value in NZ.    So the reality is the opposite is happening.  For example, in the forest industry record log prices have meant job losses as forest owners are selling more unprocessed logs overseas and domestic processors are struggling to afford the sharp increases in prices.  We have already seen three mills close in the past 6 months. 

Farm prices, whilst high, are not the panacea to all problems.  The sector is still saddled with massive debt ($42b) which it must address before any expansion is considered.  Besides, how will record wool, meat and dairy prices create jobs?  The works may stay open a few months longer, but I certainly haven’t seen any plans for new processing plants.

The public sector is being asked to find saving of $1b, and we all know that will mean staff cuts, so no new jobs there.

Sure, Chch reconstruction will create employment, but I hope the govt isn’t counting on Chch to pull it out of recession.  That’s simply not sustainable growth.

So where are these 170,000 jobs coming from Mr English?  From post budget TV appearances, he doesn’t seem to know either.  Great plan Bill…

Filed under: Budget, economy

Treasury v IRD – $4b diff in forecast revenues

Posted by Stuart Nash on May 19th, 2011

On page 81 of the budget docs it states “…the total difference between [the IRD and Treasury's] tax forecasts across the five June years 2011 to 2015 is nearly $4b…”  “The lower forecasts of tax revenue from Inland Revenue indicate there may be some downside risk to our tax forecasts”

May be some downside risk???  Understatement of the year.!  IRD are the government’s tax collectors.  Would be wise to go with their advice I would have thought.  Govt gone with Treasury. 

Much wishful thinking and crossing of fingers I suspect…

Filed under: Budget, Tax

Farmers and tax – the IRD’s numbers

Posted by Stuart Nash on May 19th, 2011

I would like to clarify the figures re average tax bill for dairy farmers that appeared in today’s press, as there are a few hardy souls out there who doubt them.  The figures I used are from the IRD and were derived from written questions to the Minister of Revenue (so a little strange that he has come out and criticised them). 

The first written question I asked the Minister was “how many individual tax entities were there, by $20k tax bracket, in the 2008/09 financial year [last full financial year the IRD has the stats for] that described their primary activity as dairying?”  As for all questions, I also asked for the stats on farming, hort, viticulture, forestry, aquaculture and primary industries (just to cover anything else).  So the question was pretty specific.  The stats show the following:

1.  17,244 legal entities described their primary activity as ‘dairying’.  Of these, 9,014 made a loss (net trading income). 2,635 made between $1 – $20,000.   

2.  1,236 (7%) made $100k or more and 377 (2%) made over $200k

3.  Agriculture in total (incl viticulture, hort, dairying, livestock) has 65,240 legal entities.  Of these, 35,568 made a loss and 12,816 made between $1-$20,000.  So nearly 75% of all legal entities involved in the agriculture sector earned $20k or less. 

Then another written question to Minister Dunne: “How much tax was paid in the 2008/2009 financial year, by tax-registered entities that described their primary activity as dairying etc etc?”

1. Dairying $26m

2. Other livestock farming $81m

3. Other horticulture $62m

4. Viticulture $6m

5. Services to agriculture $73m

6. Agriculture (subtotal) $247m

7. Mining $486m – [for comparison, mining paid almost double the tax than that paid by the whole agricultural sector in 2008/09 tax year

So, take the number of dairy entities (17,244) and the amount of tax they paid ($26m).  Therefore average figure for tax paid per legal entity in the dairy sector is $1,507.  If there is any other way to derive the average, then please let me know. 

Remember, these are not my figures, but are from the IRD. 

A final written question to the Minister: “What are the different types of tax entities, by number, that describe their primary activity as primary industries?”  (I do have the breakdown by sector but will just provide by agriculture in general) Note: only includes companies, partnerships and trusts with trading activity. 

Partnerships – 30,042

Companies – 16,895

Self employed – 13,110

Trusts – 5,193

Look, this isn’t a beat-up on the farming sector.  I have made it clear that they are not breaking the law, as current tax legislation allows the expensing of what many would consider capital items.  Fair enough.  They’ve played within the rules, but perhaps the rules aren’t working any more and farmers are simply not paying their fair share.  I will do more in this area and report back. 

As an aside, see the piece below from the Fed Farmers website.  Don’t know how old it is, but the truth is out there – from the horses mouth (sorry, couldn’t resist).

S

Tax Policy

Too Much Tax

Members sign up to Fight Against Ridiculous Taxes

New Zealanders pay on average $12,000 per year in tax. This is a lot of money!

Federated Farmers thinks New Zealanders are overtaxed and we take every opportunity to say so.

We want lower tax rates and to close the gap between top personal and company tax rates. We think that closing the gap will be fairer on the many farm business that are not structured as a company.

To support us on this tax issue, email our National Board spokesperson ….


AMI – The Questions

Posted by Stuart Nash on April 8th, 2011

The government had to back AMI.  Whether AMI had a sound risk management strategy or not is actually irrelevant at this point in time (that will come later), but  leaving a third of Chch residents without insurance payouts would have greatly compounded the disaster for far too many people.  I do have some questions of the government however:

1. When did the government find out that AMI might have trouble meeting its financial obligations to Chch policy holders?  Surely as soon as the government learned that AMI held insurance policies for a third of Chch residential properties, they would have at least quietly enquired if the company had sufficient funds to meet all their obligations.

2. When did AMI signal to the government that they may be facing financial difficulties?  I am assuming that AMI has been to the market to try and find a commercial solution to their funding issue, but has had no joy.  Going to the govt (and all the bad press associated with such a move) is hardly an option of first preference. 

3. How many briefings did the government seek from AMI about their financial situation and about different solution options?  Sure, the government had a lot on its plate, but remember the first earthquake was in September, the second in Feb – we are now seven months on from the first one and two on from the second…

If the government didn’t know about AMI’s predicament, then this is a pretty serious oversight.  It really does appear that we don’t have all the facts.  Hopefully these will come out in time, as we are potentally talking about upwards of a $1b of taxpayers money when there isn’t that much spare at the moment.

Filed under: economy

Imagine – rebuilding a city in 2 years

Posted by Stuart Nash on February 21st, 2011

Napier’s Art Deco festival is over for another year.  The 80th anniversary of the rebuilding of the city after the earthquake was celebrated by around 40,000 people from all over NZ and the world. 

At 10.47am on 3rd February 1931, NZ’s most devastating natural disaster (in terms of loss of life) struck in the form of the magnitude 7.8 Napier earthquake.  256 people died and many more were injured.  What the earthquake didn’t destroy, fire finished off. 

What is amazing is that the city of Napier was pretty much rebuilt in 2 years – predominantly in the Art Deco style – by people who just got out and ‘made it happen’. 

Napier’s Art Deco festival is a celebration of everything that is wonderful about the beautiful city of Napier, and I would encourage everyone to attend at some point.  It is actually the only NZ festival to be included in the Lonely Planet’s guide to global festivals. 

I just wish the Nats had a plan for building economic growth, wealth and prosperity in a way that the people of Napier had a plan and a vision for rebuilding the city in 1931.    Unfortunately, its now pretty clear that they don’t.  Shame.

Filed under: economy

Philosophy & principles behind Labour’s tax policy announcements

Posted by Stuart Nash on January 25th, 2011

As we know, today Phil Goff announced a tax free threshold policy. Trevor outlined the bones of this revenue policy in a previous post.  Phil also announced other measures to improve the fairness of the tax system.  These mainly centred on closing down tax loopholes that are currently used by some to avoid paying their fair share and that inhibit investment in the productive economy.  I would like to briefly explain the philosophy and three guiding principles behind today’s announcement. 

Philosophy: Labour is a social democratic party that (by and large) adheres to the principles of Keynesian economic theory (as do most Western democracies).  Keynes believed that in times of recession the government should provide tax relief to the lower and middle socio-economic classes, as this group will spend any increase in disposable income, thereby stimulating demand in the economy.  He stated that giving tax relief to the wealthy is counterproductive, as they either save or retire debt; which is exactly what has happened in NZ.  Alan Bollard, Bill English and the Treasury have admitted that the latest tax cuts have had no stimulatory effect on the economy at all.  So in a time of the greatest recession since the 1930s depression, why spend $14billion on tax cuts that aren’t going to help economic recovery?  You don’t – or shouldn’t.  National’s tax switch was fiscally irresponsible, based on out-dated economic theory and poorly targeted.

Integrity: for any tax system to work efficiently it must have integrity; i.e. minimise the ability of taxpayers to engage in avoidance.  When the government-instigated Tax Working Group discovered that half of New Zealand’s wealthiest 100 citizens don’t pay the top tax rate, there were gasps of disbelief.  How could this be?  It could be because there are too many loopholes that allow a high level of legal tax avoidance.  The Tax Working Group noted that the $200billion invested in rental properties brings in no tax revenue; in fact it generates tax losses.  Hardly the type of investment that will drive sustainable economic growth or create export-driven industry, and yet the law currently allows it.  Labour will change this.  It is important for the integrity of the tax system that these loopholes are closed down and people pay their fair share. 

Equity: basically this deals with tax equity across investment classes.  Phil talked about using the tax system to drive investment towards the productive economy by closing down the tax advantages afforded to those who invest in property.  Under current law, investors have the ability to write off tax losses associated with investment property against personal income.  Often people negatively gear investment properties simply to maximise tax losses, and therefore avoid paying their fair share of income tax.  Labour will change the law around this and ensure that losses associated with investment properties are ring-fenced (as currently happens under company law). 

Equality: is it really fair that in last year’s October tax cuts, someone earning $1,000,000 pa received an extra $1,000 per week, whereas someone on the median income received pretty much nothing?  No it’s not.  I totally agree with rewarding those who do well, who are successful, take on responsibility and who put in the hours, the study and the time – but not at the expense of the great many.  The level of inequality in NZ is alarming and it needs to be addressed.  We pride ourselves on living in a country where all have the opportunity to achieve to our potential.  However, this ideal is sadly no longer reality.  The tax system is but one tool we can use to create a fairer, more equitable society.


Time for a better way

Posted by Stuart Nash on January 8th, 2011

Bought a book for a couple of dollars from a second hand store in Tirau last week: ‘Upgrading New Zealand’s Competitive Advantage’ by Michael Porter et al.  Published 1991.  Thought it might be interesting to understand what the experts were saying back then and to see how far we have come in 20 years, especially since PM Bolger is quoted on the back as saying “..I hope to see a new consensus for change emerge from the debate this book will stimulate.” 

There are many themes throughout the book, but several important ones that readers may recognise are: unhealthy reliance on commodity exports, lack of savings, poor investment in R&D, capital constraints, lack of investment in training etc

In fact the solutions provided are a little too ‘market oriented’ for my liking (and outdated considering the times – I am sure the great Michael Porter will have modified his thinking over the past 20 years), however, when I read about the problems inherent in the NZ economy in 1991, I may as well be reading something from the NZ Institute highlighting exactly the same problems 20 years on.

Give credit where credit is due, the last Labour govt did do a lot to address many of the issues (think R&D tax credits, huge increase in funding for post-secondary education, Kiwisaver, Cullen fund, significant investment in NZTE, NZVIF etc etc).  Therefore it is concerning that many of these initiatives have been rolled back by the Key-led govt in the name of ‘fiscal prudence’.  Short term scrapping them may save a buck or two, but to do so is putting NZ’s chance of developing any real, significant and sustainable global competitve advantage at great risk.   

Many business people who initially announced Key’s arrival as the second coming have recently voiced disappointment and disillusionment at the complete lack of progress by this government in addressing the fundamental issues affecting the NZ economy.  The title of the NZ Institute’s ‘A Goal is not a Strategy’ paper pretty much sums it up. 

There is a better way: there has to be.  And there is only one party that has the balls and guts to deliver it.  Key has shown that he simply hasn’t got the political will to do what’s right.  I hope those who expect him to pull something out of the hat 2 years down the track are not holding their breath.  If so, they will have gone from blue to a muddy grey by now. 

I also hope that in 2031 I am not reading of the same problems plaguing the NZ economy that were pointed out by Porter et al in 1991 and the NZ Institute (amongst others) in 2011.  It is time for a better way, and I think most are beginning to realise that way is with Labour in 2011.


The lies exposed behind ‘that’ DB ad…

Posted by Stuart Nash on December 19th, 2010

NZers love a good yarn, and none more so than me, however, there is something about that DB ad that really pisses me off.  Perhaps because it attempts to rewrite history in such a disingenuous way; or perhaps because I have a history degree I consider such historical dishonesty abhorrent; or perhaps because it treats NZers like fools by asking us to believe something that simply isn’t true - or all three. 

In response, Jim Anderton has put out an excellent fact sheet that discounts the lies in the ad.  Its well worth a read,  so, read away…

“The ad is set in 1958 around the time of the so-called ‘Black Budget’ of Labour’s Finance Minister, Arnold Nordmeyer. It would be a good resource for NCEA students and their teachers as a classic example of Orwellian propaganda techniques used to distort history.

The 1984-type facts and the truth are as follows:

1984-type fact: “Fancy a pint with a tight fisted bore” is the way the Labour Party’s Finance Minister Arnold Nordmeyer is portrayed. It continues, “As far as misers go, old man Nordmeyer took the cake”. 

Truth:  In the 1958 Budget, Nordmeyer had raised excise on beer, spirits, cigarettes and petroleum products as a part of a package to meet a balance of payments crisis that had been caused by the previous National government. Arnold Nordmeyer was putting the interests of New Zealand before short term political gain. He was not trying to stop the working man’s drink after work but to raise revenue from non-essential items. Nordmeyer was also of course the architect of New Zealand’s Public Health Scheme, at the time the envy of the world.

1984-type fact: Nordmeyer’s “infamous 1958 ‘Black Budget’ was a puritanical regime that taxed the world’s best beers so heavily no ordinary bloke could afford to drink them.”

Truth: In 1958, the amount of imported beers coming into New Zealand was next to nothing. The working man did not drink imported beer at the pub or at home. Imported beer did, however, have a tax advantage over the local product. Nordmeyer equalised the excise so that local and imported beers would be equally taxed.

1984-type fact: “Morton Coutts found the situation about as tolerable as a tofu burger. His mission was gutsy but simple: to dodge Nordmeyer’s tax by brewing the world’s best beer, right here. ”

  • The ad implies that Morton Coutts invented the Continuous Fermentation Process as a result of the ‘Black Budget’ to give working men back their export quality beer. 
  • The ad shows the ‘toffs’ being thrown out of the public bar to be reclaimed by working men now that they can afford to drink good beer again (which has been altruistically ‘created’ for them by Morton Coutts).

Truth: Morton Coutts had taken over his father’s brewery in 1918. He had used the innovative Continuous Fermentation Process since 1956 – not as a result of the ’58 budget. 

Nordmeyer’s budget, besides raising revenue to meet a serious budget deficit, was aimed at encouraging manufacturing in New Zealand so that full employment policies were maintained. Rather than beating the system, Morton Coutts was doing exactly what the Labour government wanted – building up a strong manufacturing base and creating jobs for New Zealand workers.

1984-type fact: Film footage titled ‘Men rioting in Wellington’. One is led to believe it is working men protesting over the price of a jug!

Truth: The ad uses real film footage shot during the Waterfront Lock-out of 1951. There were no riots in Wellington or public demonstrations of any sort against the 1958 Budget.

Pumping hundreds of thousands dollars a day into advertising campaigns like this one reveals once again the liquor industry’s cynicism towards New Zealand’s social problems, our history and the working people who drink the fourth most amount of beer per head in the world. For the liquor industry, there are no bottom lines.  The creators of this ad would have a place in George Orwell’s Ministry of Truth where lies are truth and truth are lies”. 

 Thanks Jim.  If the DB can’t sell its products without resorting to blatant lies, then they must be in a sorry state.  You can probably guess who’s beer they’re now drinking here :-)


Inequality – very real and getting worse in NZ

Posted by Stuart Nash on November 18th, 2010

This week I attended a free policy forum hosted by Victoria University titled ‘Does inequality matter?

There were a number of wonderful, passionate, articulate and incredibly well informed and qualified speakers, including Professor Richard Wilkinson, who wrote ‘The Spirit Level: Why Equality is Better for Everyone’

There were three major points that were emphasised:

1. It is the difference between us in our society as opposed to differences across societies that determines relative levels of inequality.

2. Almost everyone benefits from greater equality.  Usually, the benefits are greatest among the poor, but extend to the majority of the population.

3. real jobs and adequate wages is the major way to reduce inequality

Now these aren’t exactly rocket science and will come as no surprise to the vast majority.  The evidence suggesting that social, educational, health etc outcomes are much better in more equal societies is compelling (almost irrefutable), however, when one puts this into context with what we are seeing from the National government, I am wondering why people aren’t getting angry.

Tax cuts where the 650 people who earn over $1,000,000 have received around $1,000 per week extra in the hand or 200 times more than someone on the median wage, who gets less than $5/week extra.!  Price increases that have taken every spare cent out of the pockets of thousands of New Zealand families. 

People are going without in this country and the latest tax ’switch’ has driven inequality in a way that we haven’t seen for a generation. 

National has turned away from the belief that equality of opportunity is paramount to success on almost every measure.  Well, I can tell you, it is alive and well in the Labour party, and must be the principle philosophy that underpins all policy: it is certainly my guiding philosophy.  I believe it is the prerogative of every NZer to demand the right to be given the opportunity to be as good as they possibly can be. 

Equality does matter Mr Key and Mr English.  Stop for a minute and smell the roses, because National’s policies are pulling at the very fabric of our society and our communities.  And that will never end well for anyone.

Filed under: Tax, economy

Minister gives wrong introductory speech on tax bill

Posted by Stuart Nash on November 9th, 2010

Just to show how confused the Nats are around tax legislation, duty Minister Jonathon Coleman gave the government’s opening speech on the Taxation (International Investment and Remedial Matters) Bill 2010.  Well, he was supposed to, but instead spoke for 10 minutes on the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill that was passed over a year ago. 

Wonder who stitched him up? After all, he was just the duty minister and so was given the speech.  Perhaps Foss as head of the Finance and Expenditure Select committee, and therefore the govts representative sponsoring this bill.  We all know Foss is ambitious, but to do that to a fellow MP and a minister…

Coleman certainly didn’t look happy.  And who can blame him.!!!!

UPDATE: Coleman gave exactly the same speech, word for word that Peter Dunne gave when he spoke on the First Reading of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill in July 2008. Check out Dunne’s speech here and Coleman’s video below.


Tax take down by $1b on forecast for last quarter

Posted by Stuart Nash on November 8th, 2010

Today’s announcement that the government’s tax receipts are $1.1billion down on forecast for the last quarter is disastrous news for vulnerable New Zealanders, but comes as no surprise. 

As I have said before, Keynesian economic theory states that in times of economic recession, you don’t give tax cuts to the highest income earners because they will tend to either save or retire debt (i.e. they won’t spend), and this is exactly what has happened. 

Bill English told the Finance and Expenditure Select Committee 2 weeks ago that the $14b in tax cuts were not designed to be stimulatory.  Treasury Head John Whitehead and Reserve Bank Governor Allan Bollard have also stated on record that the tax cuts are not stimulatory. 

My question is, ‘Why the hell would you spend such a vast sum of money at a time of economic recession if one of the outcomes wasn’t to get the economy moving again?’ 

I predict the government will use such a poor revenue result as ammunition to make further cuts to the vital services already stripped to the bone.  There are rumours out there that Mrs Tolley will announce further cuts to early childhood education services, and this is just the start.

Once again, those who lose will be the majority of New Zealanders who have seen their cost of living increase significantly in proportion to any tax cut they may or may not have received.  Change that no one now believes in.

Filed under: Tax, economy

GST increases by over 2.5% – yr examples please

Posted by Stuart Nash on November 3rd, 2010

I have heard many stories regarding goods and services that have increased by more than the 2.5% increase in GST.  I blogged earlier about retailers pricing at psychological price points ($9.95, $19.95, $24.95 etc), however, Key and English assured us that prices wouldn’t increase by more than the 2.5% GST rise.  Okay… 

So, if you have examples of goods and services that have increased by more than 2.5%, please let me know.  I am building a simple database to prove that the increase in the cost of living, brought on by the increase in GST, is having a significant impact on Kiwis who are really struggling with stretched budgets.  I should note that it is not illegal to increase prices in NZ, and a NZ Herald poll highlighted the fact that over 1/3 of companies planned to use the GST rise as an excuse to whack up prices – so are they? 

Especially interested in price increases from state-owned organisations. 

And also interested in organisations that have rebelled and dropped prices (like Saphire and Heath coffee shop in Napier: dropped the price of coffee by 50c in protest)