Dear Supporter,

Jordan’s up in Auckland this week, and Louis is down with a stomach bug today, so I’m filling in for this week's newsletter.

Should National be running in local elections?

Despite pockets of success for ratepayers around the country, the signal from local body elections is clear: the centre-right need to become more organised and offer clear ratepayer-friendly alternatives. 

Phil Goff resoundingly beat John Tamihere (176,000 votes to 80,000 votes), with Craig Lord coming a distant third (29,000 votes), so Auckland ratepayers can expect 3.5% hikes to general rates for at least the next three years. 

In contrast, Wellington ratepayers have some cause for celebration. Andy Foster, who ran on slowing down rates increases in the capital narrowly beat Labour-backed Mayor Justin Lester by less than a thousand votes. 

Meanwhile, ratepayers in the South Island can expect more of the same for the next three years. Labour-backed Mayor of Christchurch Lianne Dalziel had her majority slashed from 62,000 votes to 16,000, but was re-elected. In Dunedin, retiring centre-left Mayor (and Local Government New Zealand President) Dave Cull was replaced by the Green Party's Aaron Hawkins. In Invercargill, Jonesie Lifetime Achievement Award Winner Tim Shadbolt was re-elected for another term of largesse at the ratepayers' expense.  

Reflecting on the results, Jordan has written a piece for the NZ Herald, arguing that the National Party should stand candidates in local elections like Labour and the Greens do.

If you believe in your cause, why wouldn't you take advantage of the most valuable commodity in marketing – name recognition?

National's refusal to fly its colours in local elections is timidity bordering on negligence. Long suffering ratepayers and businesses in neglected territories from the Far North to Invercargill are more than capable of rallying behind change: they just need to see that choice on the ballot paper.

If you don't have a NZ Herald subscription, you can read the full piece on our website here.

Government finally scraps funding for Clinton Foundation

Two years ago we launched a campaign against the Government handing over regular donations – totalling over $10 million so far – to a subsidiary of the Clinton Foundation.

After repeatedly pestering the Government about it, it has finally listened. The Ministry of Foreign Affairs has abandoned an existing agreement to continue its funding for the Clinton Health Access Foundation.

The NZ Herald reports on the good news here.

Cabinet proposal to favour ‘indigenous’ procurement will punish taxpayers

Buried in a briefing to Phil Twyford as incoming Minister for Economic Development, we have discovered perhaps Cabinet’s maddest idea yet: ‘indigenous procurement’ policies that ‘seek to actively increase government contracting to indigenous firms’. Read for yourself:

When the Government decides who to hire, its focus should be value for taxpayers. It should not use procurement as a way to do favours for particular groups.

Iwi authorities like Ngāi Tahu and Tainui are not little guys in need of a handout. Māori authorities already enjoy a special discounted corporate tax rate. This policy will inflate prices for taxpayers, and punish Kiwi businesses trying to compete fairly for government contracts.

This proposal has not received any media attention. We're working to change that...

Petrol taxes funding art

It was revealed earlier this week that the New Zealand Transport Agency decided to spend $200,000 on "the largest 3D-printed sculpture in New Zealand" at a roundabout in Rotorua.

But it gets worse. 

When asked by Stuff, NZTA could not answer how much money it spends on artworks across the country. It's often said that what gets measured gets managed, so it's no surprise that art spending at NZTA has become an unmanageable mess.

NZTA has its priorities all wrong. Focus on fixing and upgrading our roads first, and then worry about the nice-to-haves. 

Tax cuts needed to heat up the economy

There's been a lot of talk recently about the need for fiscal stimulus to support the economy. With the global economy cooling substantially and interest rates already so low, there's not much room for the Reserve Bank before unconventional measures (like printing money or negative interest rates) would need to be deployed. 

Yesterday Interest.co.nz published my piece making the case for tax cuts as the best form of stimulus. I argue that from an economic perspective the best bang for buck would be tax relief for those earning just above $48,000, who face an excruciatingly high 30% marginal tax rate.

I argue that there's certainly room for fiscal stimulus - public debt is very low and we are running healthy surpluses. The question: what's the best form of stimulus? 

Infrastructure spending takes a notoriously long time to plan and implement (KiwiBuild, anyone?), while tax-free thresholds are extremely expensive with limited economic benefits (since tax rates at the low-end are already very low). 

A decent cut to the 30% rate which applies to the average income earner ($52,000 a year according to Stats NZ) would put some heat back into the economy and give a nice incentive to the squeezed middle class to skill up or pursue a promotion. 

Enjoy your weekend, 

Joe Ascroft Economist New Zealand Taxpayers' Union