This week Phil Goff talked about the direction of Labour’s economic policy. On Wednesday night though it was the university student’s turn with ‘Alt B’
A few months back the Productive Economy Council launched a competition for students to create an alternative budget. The four teams who made the finals were impressive, and they needed to be- the judging panel included Brain Gaynor, Bernard Hickey, Selwyn Pellet (Spokesperson for PEC), John Walley, Lachlan McKenzie (President of Federated Farmers) and Divya Dhar (Young New Zealander of the Year). Each team presented for 10 minutes, with 15 minutes of questions from the panel.
There were some themes- keeping kiwis in New Zealand, preparing for the baby boomers, boosting exports, and tax reform. The methods proposed were varied. Some (if I’m honest) hurt my leftist sensibilities- trickle down with some add ons. But the winners were bold, challenging and knew exactly what they were trying to achieve. You can check out their presentation here.
I agree with some of their proposals.
A capital gains tax is good. An inheritance tax is common elsewhere so no real reason why we shouldn’t have one. I think their level at which an inheritance tax would kick in is too low though- surely parents should be able to pass down to their children a modest family home.
Some attempt to encourage graduates to stay in New Zealand is good. At the moment we are getting a very poor return on money spent on tertiary education. With a quarter of our grauates having left New Zealand (and I believe that in the last couple of years the numbers leaving are higher still) we are educating people mostly for the benefit of the rest of the world. This is unsustainable.
The idea of means testing superannuation is a difficult one. The problem with excluding the top 12.5% of top earners is how do you identify them? The richest people in New Zealand have hidden their assets- it is the top PAYE earners who get hit with the bill for everything. If you are going to attempt to means test something as ctitical as superannuation you have to make sure it is fair, and I mean really fair.
I recently read a biography of Robert Muldoon, and was amazed to find that 30 years ago a tax enquiry identified the problem of PAYE payers paying for everything while the real top earners evaded tax. Nothing has been done and nothing has changed in three decades. It is time something was done about trusts and all the other tax rorts that go on in this country.
What a relief it is that someone is finally talking about a threshold for Superannuation!
Just as strongly as I believe the superannuation rate should be increased, surely it should also be means tested. (Just like every other social welfare benefit)
I believe it is necessary for it to asset, not income tested as many superannuates are sitting on a multi-million dollar trust fund, tucked up in their Omaha mansion, earning the same amount each week as your average working class pensioners.
Atrocious!
Even if it was means tested for those up to the age of seventy that would be a step in the right direction.
Yeah, but let’s not make that too harsh, it would be cruel to make people lose everything before they can get living costs.
“I believe it is necessary for it to asset, not income tested as many superannuates are sitting on a multi-million dollar trust fund, tucked up in their Omaha mansion, earning the same amount each week as your average working class pensioners.”
As it stands a trust is viewed as a seperate entity to that of an individual, how do you equate ownership with benefit?
Currently (I think) the individual takes possession when distributions are made. If you equate ownership to individuals then there are other valid issues that trusts do achieve that would be undermined. Protection of assets from the likes of “non-bloodlines”.
There is the ability to benefit from entitlements that were not aimed at certain fortunate groups. e.g. middle class when on retirement you require respite care you pay out of your funds until they are at a level of about $20k(I think ??) If you have no assets the govt pays. Yet the indivdual may have “control” of many millions. At $1k+/week a tidy saved sum of a few $000k goes in a few years. That person may as well have toured the world run out of money then begged to the govt. On the face ot if something like Aussie whereby all contribute about 8% and the employeer conts 12%. If that individual cannot save to a satisfactory level then perhaps the govt top ups the annuity at retirement age (80???)Winston had some version of this. Yet again we require boldness from a party and some willingness to forgive that party for the initial pain. (ps my quoted nos are just est I am not sure of the exact nos).
Why is it that the young are bold and experience (The political system) dampens down this enthusiasm?
Good proposals Jacinda. Why weren’t you at the Auckland regional youth council meeting this week? Aren’t you Labour’s youth spokesperson? I was shocked that the main issue was the supercity, and neither you the youth spokesperson or Phil the supercity spokesperson bothered to show up and talk to 100 young people from around the region about what the supercity would do.
Jammy June – who extended the invitations?
Also Jammy – who represented National MPs there?
@ Spud Agreed. Perhaps a million dollars per couple?
@ Herodotus.
You obviously have a far better understanding of the trust fund system than I do. In my simplified view it seems that only those rich enough afford “creative” lawyers and accountants benefit from what is a taxation sieve.
I guess it would require legislative change, if we really wanted to make our pension system fair.
Loota, it was the Converse 2010 Youth Summit. Nicky Kaye was there, neither Jacinda or Phil were to be seen.
@Jammy June I was really sorry to miss the Summit. It was scheduled for a few weeks back (from memory) and I was down to take part in a panel, but unfortunately the organisers had to move the date and it fell in the middle of our Labour caucus meeting in Nelson. I’d love to hear the outcome if you want to share? Otherwise I’ve been trying to stay in pretty close contact with various Youth Councils on what their expectations are for the final bill. I have quite different views on this than Nikki and others (as I understand from the Select Committee submission process). I believe young people’s participation in the new super city should be entrenched in the primary legislation- it’s too important to leave to chance.
Trusts are a nightmare and most are pseudo trusts insofar as the beneficiaries are also trustees with full signing authority. It used to be that you at least had to have the appearance of being arms length from what was your money, and now belongs to “the trust”. A Trust is inanimate and accordingly it it run by humans called Trustees. I come across mirror trust arrangements regularly int he upper middle class and higher brackets. I have yet to see a (so-called) working class couple with a mirror trust.
Jacinda, do you ever get frustrated by the armchair ride Simon Bridges gets from Paul Henry, including letting him talk over you and or longer and son?
Tracey I take it you have viewed quite a few trusts. I was wondering how many trusts are untested. That is they are trusts by name but the actions of the trustees/beneficaries make them technically invalid as trusts. But like property speculators the IRD does nothave the resources or the will to test. Or if not the IRD then whatever govt dept, e.g the respite care and who pays for this as the so called assets that are protected by the trust is not really a trust. I hope this is not too vague?
@Tamati – Hell yes!
@Tracey – Yeah Jacinda does get talked over
Jammy said
Hmmmmmm I suggest they make sure they get invites next time and it gets diarised.
The winners was a more serious effort than the one coming out next week.
But an inheritance tax at that rate could result in both the wealth and the heirs leaving the country (sell up take all the wealth to OZ and die there and pass on the money without the high 40% tax) better to have one, if one does, at a lower rate say 15%. The principle of broadening the base (CGT etc) but not having rates which incite avoidance is sound.
I favour a higher 20% GST on discretionary spending (better encourages the alternative to save) and 10% on necessities (reduces poverty) to a flat rate of 15%.
Aw, inheritance tax is mean
Trusts are varied and to clobber an honest trust formed for good reason in a punitive way is nuts.
Trusts can be the only way to protect a parents responsibility to provide for children in many cases.
If a parent experiences family breakdown and re partners then the family home becomes relationship property unless protected.
Also is a child’s health is problematic any funds set to one side to cater for this also becomes relationship property. Superannuation similarly.
Trusts are often used to prevent injustice and distortion to existing family through re partnering. A block for gold diggers.
Also the family protection act can cut across provisions of a will through court action, and this may not be defended by the deceased.
A mine field which can only be negotiated by using a trust to secure such family assets – all fair and square above board.
Estate duty is still alive in NZ but the scale is set to zero currently.
Progressive tax is a far superior option and much fairer as high income comes from the society it is drawn from.
Incentive to save and work to provide for a family and pass left overs onto the next generation has no negative consequence for anyone.
The accumulation of gross wealth as we have in NZ where a tiny percent control the majority of wealth is a different matter to inheritance. They should be dealt with separately.
The big questions need courage to answer and the public do not have the stomach to make the changes.
We are subservient to aggressive aggregation of societal wealth by a tiny group. They have power to manipulate through gradual change in one direction.
Disappointed I ran out of time to enter this. The winning entry looks like it’s dominated by the same old tired theory