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Plans, Pies, and Bottom Lines.
What's on offer this budget week?
Thursday is budget day. The day when Finance Ministers traditionally eat a pie and then deliver their budget to parliament.
Within moments of the speech starting articles will appear online, telling you all you need to about what it means for you. The journalists will have been in lockdown with advance copies of the budget. And, I assume, no pies.
Outside of the election campaign the budget is the key opportunity for the government to lay out their wares. Their plans and priorities for the next few years.
It’s also become traditional for the opposition to lay out alternative ideas. Their own budget or priorities, as a clear choice for voters to consider. This being the last budget before the election is especially important.
There are lots of things people will be looking for in this budget. Mainly to increase incomes with additional funding for the likes of nurses and care workers, or to reduce prices. For example the regular call for GST to be dropped from food, at least from fruit and vegetables, has been quite loud this year.
I’ve never been a big fan of moves to remove GST from food. It’s good in principle obviously, making healthy food more affordable. But there are many edge cases and complexities, besides which I suspect that shoppers would find that prices didn’t drop by the full rate anyway. Better to get the GST from everyone and give it back to those who need it most via tax changes. Give those who need it more money in their pocket to buy food, and have the wealthy continue to at least pay some tax.
Tax is always a major topic of interest. Even more so this year with the cost of living crisis dominating discussions. While the government have ruled out the introduction of new taxes in the budget it would be a surprise if there was not some adjustment targeting the middle class as an election year sweetener.
While Labour will want any tax changes to have maximum impact on the election, they could announce them now. Not only announce them but actually pass the legislation so the changes take effect at the end of March 2024.
We’ve seen similar in the past with the message to voters being we’ve already locked in a tax cut for you, if you vote for the other lot they might take that away. It would also nullify National campaigning on updating the tax brackets, if similar changes have already been passed by parliament.
Who are you going to trust? The government who have already legislated the tax bracket changes, or a National/ACT coalition - two parties that disagree on tax policy?
Let’s take a look at the NZ Tax brackets.
And compare them to the Australian Tax brackets.
In Australia those on the lowest incomes, below $18,200 AUD pay no income tax. If we introduced that here and made the first $20,000 NZD (the rough currency conversion) tax free that would mean every tax paying NZer earning over $20,000, every nurse, teacher, minimum wage worker, everyone - would receive a tax reduction of $2,520 a year.
An extra $50 per week in the hand. And all paid for by charging those earning over $150,000 a bit more tax. Those earning over $180,000 would pay an extra $6,000 on each additional $100,000 of income they have.
Pretty simple really, and exactly the message that Labour should be taking to the electorate. Under our tax plan you will pay less tax if you earn under 100k, if you earn between 100k and 150k you’ll pay about the same, and if you pay above $150k you’ll contribute a bit more. Seems fair, and it would benefit a large majority of the population.
Right wing politicians and media people are always telling us how much better things are in Australia. Some even threaten to move there if they don’t get what they want, yet they never seem to go. So let’s just copy Aussie’s tax brackets. It’s be fairer, and stop the usual suspects from complaining that it’s better across the ditch. Although no doubt Mike Hosking would still claim Australia’s system was better, even if it was exactly the same.
As I said at the start, budget week is not only for the government to lay out their priorities, but also for opposition parties to offer alternate ideas to voters.
For example, yesterday I saw an interview with Brian Tamaki, Freedoms Party leader. He is considering a ban on pornography. It might sound impractical in the age of the internet, but to be fair I was impressed that they actually have a climate change policy.
National’s big initiative.
Yesterday Christopher Luxon announced that his government would provide a receipt from the government to taxpayers. So that sounds cool, we all like a bit of transparency and want to know our taxes are being used on worthwhile things.
A receipt has two purposes. The first is proof of purchase, a record of payment. I’m assuming that isn’t the reason Luxon is promoting this. I don’t think there’s a lot of question if you paid your taxes or not, this isn’t a he said/she said type situation.
The other purpose is as a guarantee. If the goods are faulty, or not as expected, you take your receipt back for a refund. Is that what this latest idea from Christopher Luxon is? That if the taxpayer is unhappy with what they get they can ask for their money back? That would work really badly.
It doesn’t do that, it’s just a gimmick. A way of filling media space as part of Luxon’s pre-emptive strike on the budget. Maybe he should wait? Maybe he might find he likes what’s in the budget on Thursday. Ha Ha - yeah right. Although if you put a different author on the cover, Willis instead of Robertson, he’d be singing its praises.
If you want to know what tax is being spent on look it up, it’s all available to the public online. National make it sound like this is a personal breakdown for people on where their tax is going. It’s not, can you imagine if it was?
Bob, as a taxpayer your contribution has funded the following. One third of your contribution went on superannuation, here are the names and addresses of the folks that you have funded. Please don’t go around to their houses asking them to thank you personally for their payments.
You also paid for one month of cancer medication for a 45 year old mother of four who lives five doors down the road from you. You’ve never met her but your tax is this month paying for the medication prolonging her life. She dreams of seeing her youngest boy start high school before she goes. Again best not to introduce yourself with that information, it could be awkward.
Just quietly if we were to reduce the tax you pay, without increasing it on say the richest folks in town, then we’d have to make some cuts. No more winter energy payment for the oldies we mentioned, maybe you could drop some firewood round to them so they don’t get cold. As for the mum down the road, her favourite flowers are sunflowers so perhaps send a few of those, although to be honest it isn’t really going to matter what kind you send.
ACT are fighting really hard for two groups of voters. One gun enthusiasts, and two the rural community. We’ve seen an example of the latter recently with the announcement that Andrew Hoggard, the Federated Farmers President is standing for ACT at the election. Very much taking on National in the heartland for their traditional voting base.
This is mental, who could possibly be opposed to a register tracking guns other than perhaps those with them illegally? For goodness sake we have registers for everything else, your kids, your dog, your car - why the heck would anyone think we didn’t need to have one for guns?
ACT are libertarian, they stand for individual freedoms and not having the state interfere, so they want to reduce bureaucracy. Sure. Their tax policies indicate a need to make cuts of $7.2 billion, which is an awful lot of registers. But if you’re going to cut red tape by removing a register, wouldn’t you start with something a bit less important than guns?
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It is a curious bottom line for ACT, you’d think they might go for something like freezing the minimum wage, or for-profit prisons - not cancelling a gun register. It is a strange thing to say you’re prepared to die in a ditch over. The idea certainly did not appeal to Police Association President Chris Cahill, who had the following to say.
"The reality is you're going to get votes but the expense is the dairy owner who gets shot in a robbery or the young child who is killed when their house is shot up by gang members because they mistook the address or the police officer like Matthew Hunt who is gunned down in the streets."
Of course when push comes to shove, if National don’t accept their bottom line - and they are currently promising to keep the register, ACT will ditch it after the election quick smart. Seymour will shrug his shoulders, give a “what are yah gonna do” grin. They just want those rural votes and those gun toting votes.
National Party Advertisement
Following their disastrous polling on Sunday night, especially the leader ratings, National have put out a rah rah video. Holy Heck it’s hilarious. It's like they had a focus group tell them Kiwis don’t believe Chris has a plan and they’ve responded with this video...
Er, how are we going to convince them?
How about we tell them Chris has a plan?
Then another one of us tells them Chris has a plan.
Ok, but then what?
Then another one of us tells the..
Ok, let me stop you there. After we've all told them Chris has a plan what happens then?
A close up on Chris behind a desk.
Then what? What's the plan? What does he say?
He says - make it so.
Alright, he doesn’t actually say “make it so”. He actually says “now let’s get it done”. Either way it isn’t much of a contribution. It makes him look the type of CEO who sits back while everyone else does the work, and then takes all the credit. Hard to believe Kiwis aren’t warming to him!
The real star of the video below is Mark Mitchell, that boy has a career on the stage ahead of him! Bravo! Before this I could never work out why he kept putting his hand up to be party leader. Maybe it wasn’t to use the bathroom after all.