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Hi Friend,
As
predicted by your humble Taxpayers' Union last week, the
Government is well and truly 'taking out the trash' with bad news –
and Nicola Willis is hoping that with the festive season in full
swing, you don't notice!
But before
we get to the depressing fiscal news bundled into the half-year
opening of the books, we need to tell you about another set of policy
wins in local government.
So
let's start this Taxpayer Update with the good!
Yet More
Policy Victories: Simeon Brown gives ratepayers an early Christmas
Present 🎁🎉
Yesterday's
final Cabinet Meeting of 2024 delivered much Christmas joy here at the
Taxpayers' Union (we watch the weekly livestream – so you
don't have to 🤓 ).
The Prime Minister and
Local Government Minister announced a new reform package for
local councils to get local government "back to
basics".
Friend, the
announcements go even further than the PM's speech back in
August to the Local Government NZ conference. The package is a huge
win for our Local Government Campaigns Manager, Sam Warren.
 Just a few weeks ago, Sam and Jordan
(pictured) went to see Local Government Minister Simeon Brown with the
Taxpayers' Union wish list of local government reform,
including:
- Adopting a UK or Australian-style rates cap
connected to inflation, population growth (or both). This is
a no brainer. While households have struggled with the cost of living
crisis, town halls haven't cut back at all. This year, the average
rates bill is being hiked by 14% and most of the extra money isn't
even going on infrastructure, but rather unaffordable
nice-to-haves.
- Scrapping the "four well-beings" in the Local
Government Act. These have lead to an explosion in the scope
of what councils have been doing (you can fit almost any boondoggle
within the excuses, sorry, well-beings of social,
economic, environmental,
and cultural.
-
Changes to council financial disclosure
requirements to enable better accountability and enabling better
benchmarking and financial comparisons between councils.
Since 2014, the Taxpayers' Union has published
league tables of councils financial and democracy data.
While
some councils use the Taxpayers' Union data to
benchmark, unfortunately many others do their darnedest to obfuscate
and undermine the process. For example, the Minister did not know that
there is not a uniform expenses classification or general ledger
accounts across different councils. Nor are the councils even applying
the same accounting policies (such as how assets are valued in their
annual accounts) which makes it far, far harder to do
meaningful comparisons.
We think a lot of that is not
by accident, and needs central government to come in over-the-top and
set a uniform set of accounting, classification, and asset valuation
policies across the sector.
- Giving elected officials the ability to require
information from council CEOs and officials. It is difficult
to expect good governance when, unlike company directors, local
councillors do not currently have statutory rights to demand
information from the organisations they are supposed to be
governing.
Friend,
the very policies announced yesterday are the same policies your
humble Taxpayers' Union have been championing for
ratepayers!
And not
only has the Government listened, officials have even been instructed
to work with the Taxpayers' Union to develop some of the
finer details of new information disclosure and benchmarking
requirements given our staff's experience in local government freedom
of information and league table
benchmarking.
I
call that a nice Christmas win!
If you're
facing rates bills that are eye watering, you may want to watch
the full Post-Cabinet press conference available here.
Journalists question whether local government is actually
wasteful 🤣🤣🤣
You can
imagine the astonishment in our office when
the PM struggled to give examples of local government 'white
elephants' and waste.
Yes,
seriously, Wellington's journalists were really questioning whether
local government is 'wasteful'. Wellington, of all
places...
Rest
assured Sam is printing out just the first [million?] examples to rush
down to the Beehive – and we'll be sure to invite Mr Luxon to our Jonesie
Government-Waste Awards scheduled for early in the New
Year...
Simeon
Brown's media release summarising the reforms is here.
Also, we
are reliably informed from a very senior source in the
Minister's office – which may or may not be the Minister himself –
that further Cabinet decisions regarding the disclosures are to be
made in February. Sam and the team will be working over the summer for
a good cause then! 😉
Now for
the bad news:
Nicola
Willis gets petty: tells Treasury to ban CTU economist she doesn't
like from Treasury briefing lock-ups 🤪
This
morning a small group of media (and a few analysts from the Australian
banks) were at Treasury's half year "lock-up" to work through the
latest Treasury forecasts in the Half Year Economic and Fiscal Update
(HYEFU).
We would
normally be in the room, and asking questions of the Minister and
senior Treasury Officials. But, having been invited to submit
names, last week we
learned that having 'consulted' with the Minister, Treasury had
decided to ban all of
those who might criticise the Government's fiscal management
pressure groups, unions, universities, NGOs, major corporates (except
the banks), and think tanks.
Reliable
sources in the Treasury tell us that the Minister specifically wanted
the Council of Trade Unions' Economist Craig Rennie (who used to work
in Grant Robertson's office under the last Government) from being in
the room and able to easily give commentary to media.
But the
only way Treasury could justify that was to ban every one of
the groups who provide expert analysis to the media: including
Business NZ, Federated Farmers, the NZ Initiative, and
us!
Basically,
the Minister's thrown us (and others) under the bus to avoid a critic
having early access to the information designed to ensure the
Government's fiscals are transparent!
It's not
often we agree with the Council of Trade Unions, but here we are...
Earlier
today, we
wrote a joint letter with the NZ Initiative think tank, echoing the
CTU's own letter sent yesterday.
Seriously
Nicola, New Zealand deserves better.
The
Minister is, at best, employing a cheap PR ploy to attempt to control
today's media narrative. At worst, it’s a petty and vindictive move to
exclude a Labour Party-aligned economist the Minister has taken
umbrage with.
It doesn't
come easy to say this, but we need Nicola Willis to get over herself
and stop being so, well, political.
Instead,
New Zealand needs a Minister of Finance to get on with the job:
cut wasteful spending to balance the
books.
In an
interview last week, Nicola Willis said that she does not want to be
"slave to getting back to surplus". That's a cute line, but unless she
cuts spending, all
New Zealanders will soon be a "slave to debt". I know which one I'd
rather...
Even before today's new figures, for every New
Zealand household the Government, sorry, taxpayers, are
paying more than $5,000 in interest this year alone.
And it's
getting worse. Nicola Willis is borrowing at an even faster rate than
[yes, that's right] Grant Robertson.
We know the Minister of
Finance reads these Taxpayer Updates, so we have a message for her:
Minister, banning critics is not a path back to
surplus.
What
Willis was hiding: a worse fiscal strategy than Grant Robertson
🤫💸
Friend,
because of Nicola Willis's pettiness we don't have our usual
comprehensive report to cut through the spin and highlight what the
Minister's press releases are deliberately not mentioning.
But that's the way Nicola Willis wanted it today.
So with the
very limited time, here are the immediate take aways:
❌ The surplus has been pushed back, yet
again. It's now at the very end of the forecast period
(2028/2029).
❌ Total government spending has gone up
- and Nicola Willis is choosing to continue to increase it each and
every year in cash terms. Total government spending is 43.6% of GDP
this year (compared to 'just' 41.0% last year and 35.9% in
2017).
❌ Net Core-Crown Debt has exploded. It is
now forecast to peak at at at least $115,000 for every NZ household by
2028/2029.
❌ Interest costs will be just shy of $7k
per household by 2028/2029.
❌ All of this is despite revenue being a
higher proportion of the economy than in at any point under the six
years of the last Labour Government. It now sits at 40.5% of GDP.
Under Ardern/Hipkins, it never topped 39% of GDP.
❌ There are no signs of meaningful reform
that would boost New Zealand's lagging productivity in both the
government and private sectors.
And the
ugly:
Cooking the books: Willis
changes how surplus is calculated 🧑🍳📚
But the
real news is that Nicola Willis has instructed Treasury to change the
way surplus/deficits are measured using what's called "OBEGAL"
(the Operating Balance Excluding Gains and Losses).
Despite
the union "lock-out" a concerned source within Treasury gave us the
heads up that Nicola Willis was working with the Treasury Secretary to
change the calculation so it all doesn't look quite so bad. Basically,
because ACC's books are in dire straits, instead of confronting the
problem, Nicola Willis is pulling a sleight of hand and excluding
it.
Make no
mistake Friend, this is the Public Finance equivalent of cooking the
books.
When Grant
Robertson manipulated the fiscal indicators back in 2022 (changing how
Net Core-Crown Debt was calculated to make the debt numbers look
better), the then Opposition Finance Spokesperson jumped
up-and-down.
And to
give Grant Robertson some credit, at least he had the excuse of coming
into line with international precedent.
But who was
that Opposition Finance Spokesperson? One Nicola Willis. 😱
The fact
is, despite the Government being elected on a platform of cutting
spending, they continue to spend even more than Grant Robertson, and
kick the fiscal can down the road.
In the
coming days, our economic team will work through the material and give
you a more thorough analysis.
Another
Minister takes out the trash: announcing a tax hike just in time for
Christmas 🎅💵👆
Speaking of
ACC, ACC Minister Doocey is set to get coal in his stocking this
Christmas, after a massive ACC
levy hike was announced this week effective from 1
April.
So if you
get a crisp $20 in any Christmas cards, hold on to it, because next
year's looking like it's going to be a tight one, and the hikes keep
coming until at least 2027.
By
2027, ACC's jobs tax will be another $140 per employee.
As ever,
small businesses are going to get hammered because a ACC can't keep
costs down.
So much
for 'no new taxes'...
At least
Judith Collins makes Santa's good list...🎅🏻🛷
Marsden
Fund grants have long been a woke slush fund. You know it, I know it,
and thanks to our taxpayer-hero of the week Judith Collins, everyone
knows it.
Incredibly,
the
Government's decision to take up the Taxpayers' Union's call
and narrow the remit of the Marsden Fund – returning it to focus
solely on science rather than the social science nonsense of
(to pick just one example) $360,000 study of “big things” such as
large vegetable sculptures placed next to state highways – hasn't been
supported by all.
The media
ran with the usual
complaints from self-entitled academics and their proxies. But,
sadly, the Opposition followed suit.
In
Parliament, the Science Minister was able to easily knock it back –
using the example above, Judith Collins appeared to have been
forwarded this and other grants highlighted by the Taxpayers’
Union to supporters calling for the very change in policy Labour
was criticising.
Check
out the video of Judith Collins using our examples of waste
here.
Enjoy the
rest of your week.
 |
James
Ross
Policy and Public Affairs Manager
New Zealand
Taxpayers' Union
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