OnPoint: Fiscal Responsibility is the New Black
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My feeling is that they're trying not to talk too much about the tax cuts because they're planning to balance them with their CGT and higher personal income tax rate. Both of which they're having trouble building a story around.
As for the CGT, they seem to be having a bit of trouble figuring out how much that will generate and when it will really start to kick in. Or at least communicating that in a meaningful way.
And with the income tax changes, well, nobody wants to talk about raising tax rates. Plus National's argument about the benefits of keeping the top income tax rate, the trust rate, and the company rate all equal is hard to argue with.
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It’s all very legitimate – if you care about accounting.
I do, but first I’d like someone to explain why I should share Phil and John’s touching faith in Treasury’s *cough* charmingly rose-tinted projections. Based on previous form, we might do better getting fiscal advice from Rod Petricevic.
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Labour's GST change is stupid and incomprehensible. The new tax-free income threshold should be enough to cater for the very poor, and is much easier to sell (and is so much more workable).
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Brendon Steen, in reply to
I agree completely. GST-free fruit & veges is a populist gimmick.
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And corporate welfare has been glaringly absent – I suspect the Hobbit Wars, the Road Transport Forum, et al have managed to polished that turd as 'saving jobs'.
At least a start has been made on fisking a certain pork barrel motorway.
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People do realize, I hope, that when China slumps, all the fiscal responsibility in the world isn't going to help a lot. We didn't escape the worst of the financial crisis through being clever, but because we've got a solid buyer for our commodities.
When that goes away, there'll be bank collapses all over Aussie (and consequently, here). Best bet would be to grow Kiwibank and try and ring-fence the fallout from a dairy slump to those that made all that money from the boom.
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Sofie Bribiesca, in reply to
GST-free fruit & veges is a populist gimmick.
So? Why not have a feel good factor. Why not try and promote good diet for the families ignoring the importance of fruit and veg. Why not make us vegetarians feel good about a saving. Why not remember the Health system with all it's promotional advice in Doctors surgeries. Why not help our health industry that has a huge burden with Diabetes type2. The benefits of fruit and veg far outweigh just the fiscal.
Jus' sayin' -
Simon Grigg, in reply to
When that goes away
Got a timeline on that, Rich?
It's just that people like Bloomberg, Fox and the US media have been warning us monthly that it's imminent since - ohhh - about 1996.
I have to go there now and then so I'd be keen on some insight as to when this crash is happening so I can work my life out around it.
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People do realize, I hope, that when China slumps, all the fiscal responsibility in the world isn't going to help a lot. We didn't escape the worst of the financial crisis through being clever, but because we've got a solid buyer for our commodities.
When that goes away, there'll be bank collapses all over Aussie (and consequently, here). Best bet would be to grow Kiwibank and try and ring-fence the fallout from a dairy slump to those that made all that money from the boom.
Try telling that to your typically one-dimensional property investor in Australia or NZ. However I doubt that there will be bank collapses through Australasia. Banks can't fail and will continue on their merry way with implicit taxpayer backing. The nation's wealth is wrapped up in residential property and the government would be terrified of the free market wreaking havoc with our "wealth." The govt knows banks are an essential driver of ensuring debt flows to the generationally challenged. It might be hard to swallow but there's a good argument to suggest that NZ has been sold down the road by the politico-banking-real estate complex.
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In saying that they would get back to surplus faster than National, Labour is ignoring the money that we would get from asset sales, but counting the revenue that we would get from those assets;
Surely you need to compare like with like: Debt is a liability, assets are ... assets. Assuming market valuations, these have to zero out. The interesting comparison is revenue from dividends versus interest on additional borrowing.
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Jim Cathcart, in reply to
Got a timeline on that, Rich?
It's just that people like Bloomberg, Fox and the US media have been warning us monthly that it's imminent since - ohhh - about 1996.
I have to go there now and then so I'd be keen on some insight as to when this crash is happening so I can work my life out around it.Well the slump has already started. But for every 100 bullish newspaper articles about China, you don't get that many doom/gloom tirades.
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Brent Jackson, in reply to
The interesting comparison is revenue from dividends versus interest on additional borrowing.
I agree. It would be nice to see a succinct explanation of how much NZ stands to lose both immediately (consultants fees, etc), and long term (foregone dividends less govt debt interest for the same money), when National sell off our assets.
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Paul Williams, in reply to
Perhaps, though there's plenty of GST exempt products in Australia and the world still spins.
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We need to be like Ireland. We could have an offshore banking industry right here. We could get 200 banks to set up shop here. Just think 200 CEOs at $5m a pop. Kiwi Accountants and lawyers would hope back home. When Ireland were doing this one firm was paying $250m to the Irish Exchequer. Wow. Taiwan sounds good too. Or Jersey maybe.
Yachts. They're a biggie.
Phooey. None of this hairy stuff. Let's go for the real stuff and churn the odd trillion a day in the money go round that this guy made his millions on. Good for me. Must be good for the country.
Now where did we hear something like this??
Try 2005. Herald, Fran O'Sullivan listening to John Key
He is very quiet on the idea now.....ah yes...yesterday....
Added:
The former investment banker knows what he is talking about.
Tui ad response injected here.
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Sacha, in reply to
long term
and all the future innovation revenue potential in the Greens' plans for example.
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Simon Grigg, in reply to
But for every 100 bullish newspaper articles about China, you don't get that many doom/gloom tirades.
I'd argue that the opposite is the case. I've read countless well argued, figure backed op/eds in the likes of Bloomberg, The Wall Street Journal and the FT over the past ten years or so predicting approaching Chinese economic doom. It peaked in the 12 months or so after the 2008 crash and the pace has only slowed slightly since.
A small sampling:
A bizarre one from the Times of India predicting the Chinese economic collapse will lead to war with India.
Those took about 5 seconds to find.
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Kumara Republic, in reply to
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Sacha, in reply to
Gordon Campbell says even business leaders ought to be alarmed by some of the shonky economics on display.
After all, it can make no economic sense to sell down the state’s stake in energy assets that stand to earn high dividends in perpetuity – and as the Greens argue, could provide a launching pad for the export of high added value green technology – in order to generate a short term windfall, and then pour that money into schools and hospitals that will generate no economic gain at all.
A few robber barons may want to take the asset sales money and run. But the more thoughtful members of the business community will see this asset sales policy as unsustainable. Investing in irrigation – as proposed around Budget time – doesn’t pass the sniff test, either. (As Rod Oram has pointed out, the returns from irrigation have been assessed in Cabinet papers as delivering a meagre 6.4% return.)
For a sector already nervous at the government’s apparent lack of an economic plan for growth, the energy asset sell-down must be of concern. Both in itself, and for the uses to which it has been earmarked. Rather than use this one time only windfall to pay down debt – as any prudent manager would do, especially when government debt is rising in a risk averse world – the government is planning to pour it into daily running costs.
It doesn’t take a financial genius to work out that the spending on schools and hospitals could be paid for more cheaply (in the short term) by borrowing, and in the longer term by the dividends from the fully retained assets.
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In effect, isn't what Phil Goff and Labour promise is that they will borrow to invest in energy companies and Air New Zealand?
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Sacha, in reply to
Their future capital needs will have to be met somehow, yes.
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Craig Ranapia, in reply to
If peurile 'Yo Mama!' exchanges could actually do some good I'd be very keen on a Grand Coalition with Key and Goff job-sharing.
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Sacha, in reply to
justice :)
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I agree completely. GST-free fruit & veges is a populist gimmick.
Why? Why is it a gimmick? There are actual real studies done that look like they prove it is a good idea.
It is philosophically attractive (tax bads not goods where possible) and, given that GST hits low incomes hardest, will make most of a difference at the bottom of the tax distribution.
The only argument against it is one based on the purity of a universal goods and services tax, which is all very nice but really, when you get down to it, fundamentally an aesthetic argument about clarity and tidiness.
So why is it a gimmick, for heaven's sake?
(If I was being catty I would argue it is a case of Very Serious People agreeing that nice things are Bad.)
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Steve Parks, in reply to
The only argument against it is one based on the purity of a universal goods and services tax, which is all very nice but really, when you get down to it, fundamentally an aesthetic argument about clarity and tidiness.
The argument against is stronger than you make it seem here. I’m not sure that it has anything to do with aesthetics. The two main benefits of GST are the difficulty of avoiding it, and the ease of administration. Reducing GST on certain items obviously undermines the latter aspect (by how much is a matter for debate – Goff says not by much in this case).
Whether the other points you raise make up for this is another matter, but the objection to the GST change isn’t superficial.
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