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Hi Friend,
A mixed bag this
week. On Sunday National recommitted to no new taxes (yay!),
ACT unveiled its plan to put Parliament back in charge (stop
courts stepping over the line), Labour released its, errr, "fiscal
strategy" (i.e. even bigger government) and we had a major win on
capping council rates.
Let's get into
it.
POLICY VICTORY:
National commits to “no new taxes” 💸
If you missed
Jordan's email last Sunday, we've had a major victory.
After Nicola
Willis appeared to water National’s position down to “no new taxes on
working people”, we pushed back hard.
Thousands of
Taxpayers’ Union supporters contacted National MPs and candidates
asking them to commit to 'No New Taxes'.
On
Sunday, Christopher Luxon and Nicola Willis did exactly that,
recommitting National to a clean “no new taxes” pledge and ruling out
both an accommodation levy and a bank tax. 🙌
That is a genuine
win for taxpayers, and credit to National for listening.
You
can read my full comments on National’s U-turn here.
Of course, the
hard part now is making the books balance without reaching for new
taxes. That means spending restraint, not clever new labels for
old-fashioned tax hikes.
And speaking of
taxpayer pressure actually working, this was not the only policy win
of the week. 🙂
POLICY
VICTORY: Rates Caps are coming 🧢🪧
This one has been
a long time coming.
In June last
year, we launched our Cap Rates Now campaign at Fieldays
after years of double-digit rate hikes and council spending running
well ahead of inflation.
Our proposal was
simple: cap annual rates increases, with councils forced to get
ratepayers’ approval if they wanted to go higher.
Within
weeks, 25,000 people had signed our petition. By July it was more than
28,000, and by the end of winter more than 30,000 ratepayers were
backing the campaign.
We took the
message to the Local Government New Zealand conference, where Simon
Watts promised a rates cap was coming.
Then, when
officials and council lobbyists started arguing over how watered-down
the policy should be, we published our own How to Cap Rates
Now blueprint setting out what a serious cap should look
like.
By December, the
Government accepted the central argument: councils cannot simply keep
reaching deeper into ratepayers’ pockets every year.
That is a major policy
victory.
We now
have the details of the policy announcement from last December, and
the Bill has officially been tabled in Parliament.
One more
thing, Mr Watts 👀
You may have noticed one important word
missing from the Government’s version of Cap Rates Now:
Now.
As drafted, Simon Watts' version of the rates cap
won't kick in until 2029.
That gives councils another three years to front-load
rates hikes!
We say,
why wait? With a simple change to the drafting, and a Parliamentary
hurry-up, rates caps could come into effect before councils begin
their next Annual or Long-Term Plan process early next
year.
There are
other fishhooks too. The proposed "rates band" National have
proposed appears to risk becoming a rates floor as well as a
ceiling!
Also left unanswered is what actually happens if
(or should I say, when) a council simply ignores the
cap.
Because limiting
how much councils can charge is only half the battle.
As
we said after the announcement, the next step is getting councils back
to basics so the pressure falls on nice-to-haves, not roads, pipes and
rubbish.
Thanks to
your support, the Cap Rates Now! campaign has won the argument. Now we
need to make sure the policy detail is sorted so that it
actually works.
And with the
likes of (ratepayer funded!) anti-ratepayer sock-puppet groups like
Local Government New Zealand desperately trying to undermine the
policy, we'll be keeping a very close eye on the legislation as it
works its way through Parliament.
But at least
we're on the right track.
Meanwhile:
Labour’s “only
one new tax” promise lasts... one day 💸⏱️
Labour has been
trying to reassure voters that its capital gains tax will be the only
new tax it introduces.
But to no one’s
surprise, that promise lasted, well, less than a day.
Because the very
next time Chris Hipkins was behind a microphone, he was promptly
promising to change the law so councils could [checks notes] introduce
a brand new tax!
Hipkins
says a Labour-led Government would change the law to let councils
impose a brand new bed tax.
Now, a tax on,
say, international visitors is one thing (we
already have one of those). But a tax on Kiwis using campgrounds,
motor lodges, or hotels to visit relatives or take a summer holiday is
quite another.
The International
Visitor Levy is forecast to collect $229 million this year, but only
$173 million has been allocated for spending.
Before
inventing another tax, perhaps politicians could start by using the
money they already collect.
As
we said when Hipkins first opened the door, his “only one new tax”
promise was gone by lunchtime.
Better
Starts Now... apparently 😏
There was at
least some entertainment to be had from Labour’s new campaign slogan,
“Better Starts Now”.
It lent itself to
a meme, so naturally this is what our team did with Labour’s new
slogan here.
The only problem
was that a day later, National's social media team apparently had the
same bright idea.
To whoever
makes the social media graphics for the National Party, we simply say,
'imitation is the sincerest form of flattery'. 😘
Dear activist
judges – ACT wants to put the elected Parliament back in charge ⚖️🏛️🖕🤭
This week, ACT
unveiled a constitutional reform package aimed at answering a pretty
basic question: Who should make New Zealand’s laws: elected MPs or
unelected judges?
The party wants
to explicitly affirm parliamentary sovereignty, the rule of law, and
equality before the law in the Constitution Act. It also wants
property rights added to the Bill of Rights Act and tighter rules
around how courts interpret legislation.
The underlying
principle is important.
Judges have an
essential job interpreting and applying the law. But when
courts begin to develop fundamentally new legal duties or make major
policy choices, democratic accountability begins to break
down.
MPs have to put
their names to the laws they pass, defend them publicly, and
eventually face voters at the ballot box, but judges quite rightly do
not.
Recent Supreme
Court decisions have shown how blurred the line can become:
- In
Ellis, the Court recognised tikanga as part of New Zealand’s
common law and left its development to future cases.
- In Smith v
Fonterra, novel climate claims were allowed to continue despite
the Court of Appeal concluding they involved economic and social
choices better suited to Parliament.
Whatever you
think of those individual cases, the constitutional point matters.
If New
Zealand is going to create a fundamentally new legal duty, change the
rights attached to property, or make some other major policy choice,
there should be a Bill, a parliamentary vote, the public should be
able to submit, and voters should know who to blame or reward
afterwards.
That
is why we welcomed the focus on judicial law-making, strengthened
property rights, and ensuring law-making remains a parliamentary
responsibility.
Labour’s fiscal
plan: spend big, promise balance, hope the numbers behave 💸📉
This week, Labour
set out its fiscal strategy, promising to, in effect, lock in the
COVID-spending bonanza permanently.
Under Hipkins, Labour wants to grow core
Crown spending to around 33 percent of GDP while somehow getting the
books back into surplus on the same timeframe as National.
Here’s the problem:
getting Government revenue to 33 percent of GDP by 2031 would require
around $10.3 billion ($4,971 per household) a year in additional
revenue.
Without new taxes,
Chris Hipkins' promises don't add up 😬
Labour’s
capital gains tax is forecast to raise just $1.3 billion.
So
where does the other $9 billion ($4,344 per household) come
from?
Either
spending comes down (which Labour has ruled out), your taxes go up, or
Labour finds a very large rabbit to pull from the fiscal
hat.
But credit
where credit is due.
Labour's finance
spokesperson, Barbara Edmonds, has ensured that there are some
sensible institutional bits in Labour's package. Labour is backing our
calls for an independent Parliamentary Budget Office and wants to
return to the conventional OBEGAL measure rather than Nicola Willis'
OBEGALx fudge (Willis invented this new measure to ignore exclude
ACC deficits).
But then
Labour, again, blew the fiscal credibility meter to bits with a dopey
rerun to excuse higher inflation via shifting the goalposts for the
Reserve Bank. 🤦♀️
Labour wants the
Reserve Bank to ignore inflation again 🎈
Labour also
announced it wants to restore the Reserve Bank’s "dual mandate" asking
the Bank to target both inflation and “maximum sustainable
employment”.
That comes
at the cost of accountability. The Bank should have one job: keeping
prices stable.
We've been here
before. Grant Robertson ran this policy the last time Labour was in
Government.
And we
all know what happened: the policy resulted in the cost-of-living
crisis we're all still paying for.
Monetary policy
cannot sustainably create jobs. What it can do is lose control of
prices.
As our Chair, Hon
Ruth Richardson (who knows a thing or two about tackling inflation!)
put it: when the Reserve Bank has two goals,
accountability gets conveniently blurry.
As
Ruth argued in The Post earlier this month, a single mandate
gives everyone one clear test: did inflation stay near target or
not?
With two
mandates, there’s always somewhere else to point the finger –
inflation is blamed on employment, and weak employment on
inflation.
As
we said in response to Labour’s fiscal strategy, price stability is
the Reserve Bank’s job. Creating the conditions for jobs and growth is
Parliament’s.
NZ First also
needs a brickbat here. Winston Peters announced a policy of broadening
the Bank’s mandate too. 😔
After the
dreadful experience of Grant Robertson and Adrian Orr, we should be
making the Reserve Bank more accountable for inflation – not giving it
another reason to explain it away.
Work and Income
NZ’s $236 million bond-grant black hole 🏠💸
Earlier this
week, the Taxpayers' Union investigations team revealed that the
Ministry of Social Development has no idea how much of the $236
million it handed out in rental bond grants has been recovered.
For
background, Work and Income (WINZ) provides rental bond grants to
people who can’t afford the upfront cost of moving into a rental. The
bond is paid on their behalf, but it isn’t free money – it is
recoverable assistance that is expected to be repaid.
When the
tenancy ends, you'd expect WINZ to know what happened to the bond and
how much of the taxpayer-funded grant was ultimately
repaid.
WINZ
could tell us how much had been handed out, but to our astonishment,
they could not tell us how much had actually been
recovered.
Since
2023, WINZ has approved 155,103 rental bond grants worth $236,121,897,
but cannot report the total debt repaid.
To be
clear, that doesn't mean $236 million has disappeared. But if the
department handing out the money can't tell taxpayers how much came
back, that's a pretty extraordinary accountability failure.
Before WINZ
hands out the next bond grant, it should be able to answer a pretty
basic question about the last one: did taxpayers get their money
back?
It's almost
as if they don't value our money...
Futureverse goes
bust – taxpayers pick up $6 million tab 🐇💸
Here’s something
that caught our eye in the NZ Herald late last week.
It's
been revealed that Kiwi crypto darling (past tense) Futureverse has
collapsed, owing around $40 million – after receiving nearly $6
million of taxpayers’ money.
Futureverse was once touted as one of New
Zealand’s great tech success stories.
Haven't we
heard that before?
The crypto and
metaverse roll-up claimed a billion-dollar valuation, raised tens of
millions from private investors, and was even celebrated by government
agencies as a Kiwi tech ‘unicorn’.
(A ‘unicorn’,
for those fortunate enough not to speak venture capitalist, is a
start-up valued at more than $1 billion.)
A few years
later, the unicorn is looking rather more like a donkey.
Futureverse is now in liquidation with around $40 million in
debts and practically no assets left to repay them.
For taxpayers,
Callaghan Innovation is owed more than $432,000 from a loan to a
Futureverse precursor, while NZ On Air handed Futureverse $5.3 million
in game development rebates in 2024 and 2025.
That's
close to $6 million of taxpayers' money sunk into a company that
collapsed just months after receiving its latest payment.
Sound
familiar?
Just last month,
we warned that Callaghan
Innovation’s mounting loan losses were exactly what happens when
bureaucrats try to pick commercial winners with other people’s
money.
Futureverse is a pretty good case study.
At its peak, it had big-name investors, grand plans for the metaverse,
and digital rabbit NFTs changing hands for eye-watering sums. By
the time it collapsed, those rabbits had lost almost all their
value.
When venture capitalists get it wrong, they lose
their own money. When Wellington gets it wrong, you lose
yours.
Enjoy the rest of
your weekend, Friend, and thanks for your support.
 |
Tory Relf
Head of
Comms
New Zealand Taxpayers’ Union
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