Hard News by Russell Brown

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Hard News: Things To Do

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  • Belt,

    "Depends what you are referencing. If it's the "Don't pollute GST with exceptions" meme then I'd say it's born more of bureaucratic pragmatism than some kind of latent right wing tendency."

    I think this is true.

    It is also very practical.

    And there are also better ways to target relief to low disposable income households.

    Nelson • Since Nov 2006 • 49 posts Report Reply

  • A S,

    Of course, the fact that ordinary middle-class people see themselves as apart from 'people who use benefits', rather than potential beneficiaries of these social services can be construed as evidence that the key messages of the 1990s were fairly successful.

    Que? I'd always been of the view that the welfare system was only ever set up as a safety net, not as a universal income top up. I'm relatively confident that is fairly commonly held view. From my interactions with an awful lot of working class people, they also see themselves as apart from 'people who use benefits'. I struggle to see what the 1990's has to do with people seeing their situation as different to others. I also have no desire to be a 'potential beneficiary', I'm quite happy to take care of me and mine through my own efforts.

    If you mean the meme that beneficiaries are already catered for and don't need assistance a la WFF, then I would have to agree that this has rightish connotations.

    Like it or not, beneficiaries are already catered for via the benefit system, to the tune of somewhere in the region of $11 Billion per year.

    WFF was set up to do something quite different, that is, to encourage people to return to work, and to make it viable for those in work to remain in work. Remember the angst at the time of all those working poor who worked even though they probably would have been better off on a benefit etc. etc. WFF was set up to take care of that issue, and to emphasise that work was preferable to welfare.

    Child poverty amongst those on benefits is a completely separate issue from WFF, which should be dealt with via the benefit system.

    Wellington • Since Nov 2007 • 269 posts Report Reply

  • Logan O'Callahan,

    Every time this child poverty figure is promoted I grimace.

    "New Zealand came third-worst in the developed world in a Unicef survey of child poverty around the year 2000, with a quarter of all children then living in families earning less than 60 per cent of the median income."

    I don't doubt that poverty exists in NZ. But this measure is plain ridiculous.

    Median = the income of the 50th percentile.

    So a country with a really skewed income distribution (ie: 80% of people earn the minimum wage, 10% earn nothing, 10% earn heaps), would perform better than a country with an even income spread. Which one is actually better?

    Working for families could actually make this statistic worse because it the income of so many families is raised that WFF could raise the median income. This raises the bar, and suddenly all beneficiaries are under the bar.

    Most people think of poverty as not having an income sufficient to survive. The Unicef statistic doesn't measure that. Everyone in the country could be driving BMWs, watching big screen TVs, eating scotch fillet and Brussel sprouts every night, and according to this measure you could still have the same number in poverty.

    The statistic doesn't even measure income distribution in any meaningful way. A sizable proportion of children are always going to be in the lowest income brackets: single income familes, young parents. This doesn't mean they're living in poverty.

    Since Apr 2008 • 70 posts Report Reply

  • Don Christie,

    Good to see that a family of five on 95 grand a year are considered beneficiaries in modern day NZ. I wonder what sort of response that would have got 20 years ago. ;)

    Can't speak for NZ, but you have to go back nearly 30 years in the UK to see what "sort of response" there would have been. That is pre-Thatcher.

    At that time mothers *directly* received something called family allowance for each child they had. It was not means tested and reached the people who needed the money very effectively. Mothers and children.

    No one was stupid enough to call it a "benefit" thirty years ago. That label applied to WFF is particularly boorish and meant to be demeaning to the folks who do claim the tax rebate. In many ways it is a shame there is still a means test for WFF as it makes it less effective.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • Sue,

    Like it or not, beneficiaries are already catered for via the benefit system, to the tune of somewhere in the region of $11 Billion per year

    is that before or after tax?

    sadly the benfit system as it stands, totally blows

    I'm sure others can confirm my experience that how much you receive from the government is in direct proportion to how much you are prepared to fight (or people are prepared to fight on your behalf) and the quality of your case manager.

    that most food banks and providers of social services have staff whose only job is to advocate for beneficiaries means that something in our system is not working.

    Wellington • Since Nov 2006 • 527 posts Report Reply

  • Jimmy S,

    From my interactions with an awful lot of working class people, they also see themselves as apart from 'people who use benefits'. I struggle to see what the 1990's has to do with people seeing their situation as different to others.

    As I understand it, the 1990's introduced 'beneficiary bashing' to NZs political discourse - the idea that a person on the benefit was basically a waste of space... My parents were beneficiaries during the 90's (and I was experiencing childhood). I don't know if there was a total change of attitude to beneficiaries in the '90s as opposed to 70's and early 80's, but my shallow reading on this suggests that this might be true. In anycase, the anti beneficiary message got through - for example the question: 'what do your parents do for a living?' inevitably induced a cringe. What A.S. sees in his dealings with the 'working class' is the continuation of the shame associated with receiving a benefit.

    I can't blame them either. After ten years, the middle classes and the rest of the "rich pricks" in the top tax brackets are quite entitled to ask when they get treated as something other than a group to be exploited.

    ...... If you're in the top tax bracket surely you're winning?

    North Shore - Akl • Since Apr 2008 • 1 posts Report Reply

  • Idiot Savant,

    Looks like Russell got under somebody's skin...

    Palmerston North • Since Nov 2006 • 1716 posts Report Reply

  • WH,

    Russell's other point - that introducing a food exception to GST would not reduce food prices by 12.5% - is still valid.

    In other words, this proposal may not represent the most efficient use of the government's money. There's probably a more effective way to help people dollar for dollar - whether by changing other tax rates and thresholds or by lowering the cost of other goods and services.

    Since Nov 2006 • 797 posts Report Reply

  • A S,

    As I understand it, the 1990's introduced 'beneficiary bashing' to NZs political discourse - the idea that a person on the benefit was basically a waste of space... My parents were beneficiaries during the 90's (and I was experiencing childhood). I don't know if there was a total change of attitude to beneficiaries in the '90s as opposed to 70's and early 80's, but my shallow reading on this suggests that this might be true. In anycase, the anti beneficiary message got through - for example the question: 'what do your parents do for a living?' inevitably induced a cringe. What A.S. sees in his dealings with the 'working class' is the continuation of the shame associated with receiving a benefit.

    If you look back through NZ's history, there has always been a stigma attached to receipt of benefit. Lets not try to characterise this as anything new. The 90s attitudes to 'dole bludgers' etc. were simply the extension of a fairly generic point of view that has been present throughout the history of this country.

    ...... If you're in the top tax bracket surely you're winning?

    Winning what? The right to pay more tax, and get sweet FA in return?

    The top bracket starts at $60k. Try paying a mortgage and living a normal life with/without kids on this sort of salary (then for kicks add student loan repayments into the mix) without receiving much in the way of assistance because you're "rich". Then wonder why National and co are having such a resurgence in the polls.

    Being nice to those less fortunate and not complaining about paying a lot of tax is admirable and desirable, just don't expect people to keep doing it when they start hurting financially.

    Wellington • Since Nov 2007 • 269 posts Report Reply

  • tim kong,

    We went for the fruit bowl on classroom tables.

    Thing was - who paid for the fruit? Was it to come from the school budgets? Or should parents supply said fruit? And if no parents sent in fruit with their child - would their be enough fruit for everyone. So the teachers bought bags of fruit from the roadside stalls - but they couldn't get gst receipts - so they couldn't claim it back.

    And then you have to do a bit of health promoting type activity, then you've got to set up the system to prepare the fruit - washed, cut properly - students hands washed - then fruit served.

    Then we had parents write non-subtle letters requesting their child not partake of the fruit - as they were not comfortable with other students hands touching said fruit. Not sure where the little brown hands had been after all. Then we had to institute a policy of hiding cutting implements after a knife was used to threaten a child. Then the damp tea-towels weren't getting cleaned and dried properly and that caused another health hazard. Which meant another several hours of writing up Risk Assessment Policies for the healthy fruit bowl exercise.

    After all that - no-one knew how to assess the benefits of the fresh fruit in a bowl under accepted standardized procedures.

    And the teacher realized he'd run out of time to teach the class how to use a ruler properly - and most were still not sure when to use a full stop or a comma.

    But he smiled and waved them off at the school gate, some to their bus, most to an SUV and the rest to the dairy where they all bought cans of V, a bag of lollies and a packet of chips.

    So the teacher shrugged, figuring that $67million over four years would mean something to someone.


    ps. I'm all for healthy eating - but if you add something to the schools - something else HAS to go. If you sense any cynicism in the above story, it's only because I am slightly. If the Ministry started by providing baristas in staff rooms in might be a different story. ;)

    Wellington • Since Nov 2006 • 153 posts Report Reply

  • Russell Brown,

    Looks like Russell got under somebody's skin...

    Heh. Jolly good.

    Auckland • Since Nov 2006 • 22849 posts Report Reply

  • Russell Brown,

    In other words, this proposal may not represent the most efficient use of the government's money. There's probably a more effective way to help people dollar for dollar ...

    That was exactly my point.

    Auckland • Since Nov 2006 • 22849 posts Report Reply

  • Craig Ranapia,

    Heh. Jolly good.

    And I've never seen you drink a latte... but I guess cheap shiraz socialist doesn't quite have that sch-wing. Still, nice to know that you're with with every crack-brained scheme RAM comes up with or you hate poor people. Depressingly typical, from what I've seen of these marshmallow Marxists.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Danielle,

    After ten years, the middle classes and the rest of the "rich pricks" in the top tax brackets are quite entitled to ask when they get treated as something other than a group to be exploited.

    At this point in our national life, it appears that everyone's 'entitled' and no one's empathetic.

    Charo World. Cuchi-cuchi!… • Since Nov 2006 • 3828 posts Report Reply

  • Don Christie,

    That was exactly my point.

    In which case I missed it. Apologies, but this statement:

    Critically, such a policy would benefit relatively well-off people who spend more money on food -- that'll be me -- far more than the poor people RAM claims to represent.

    was so misleading it did deserve some comeback.

    and as for this:

    Who'd bet against the 12.5% saving on food being at least partially swallowed up by increased margins,

    Well, that's an admission of the anti-competitive nature of our food industry and an issue for the Commerce Commission, surely.

    I am definitely a fully paid up member of the latte set but removing GST from food would help the poorest sections of society, no question. It would do so without the need for means testing, tax rebates and a whole swag of more complex ways of trying to target poverty- which also fill buildings with bureaucrats.

    And yes, the middle classes, childless and even rich pricks would also benefit, but not in the same proportions.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • Steve Withers,

    Mikaere: I agree. Exempting the first "X" amount of taxable income is the best way to give benefit to those who can make best use of it. Anyone suggesting tax cuts at the top end of the income scale is making it VERY clear who they intend to benefit and it won't be the low-income folks who are already struggling.

    Auckland • Since Mar 2008 • 312 posts Report Reply

  • Steve Withers,

    tim kong: Brilliant! Love the apple-bowl story. :-)

    Auckland • Since Mar 2008 • 312 posts Report Reply

  • Craig Ranapia,

    At this point in our national life, it appears that everyone's 'entitled' and no one's empathetic.

    Danielle: I'd rather be effective than empathetic.

    Thanks to the genii who run TVNZ, the sublime BBC adaptation of Bleak House has been safely tucked away where nobody will see it. And just to make sure, no precious time or effort has been wasted promoting it.

    But I'd strongly recommend picking up a copy of the novel, and considering the splendid example of Mrs Jellyby whose "Telescopic Philanthropy" doesn't require any empathy to be extended to her own family -- or any other close than Africa.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • A S,

    At this point in our national life, it appears that everyone's 'entitled' and no one's empathetic.

    Quite possibly. That is a point that runs multiple ways, with the majority of our society appearing to be fixated on their 'entitlements'.

    Perhaps the surprise is that it took so long for the latte-sippers to get to that point too....

    I am definitely a fully paid up member of the latte set but removing GST from food would help the poorest sections of society, no question.

    Wouldn't the logical end point to this argument be to get rid of GST altogether? That would go a significant way to addressing the issues identified via reduced costs.

    Looking at the global food situation and food price inflation, I thnk that removing GST now, will have no impact on prices in the medium/long term. All it will do is reduce government revenue, which may or may not be a good thing.

    From where I'm sitting, if we take the long term view, food costs are going to keep going up, and things are going to get considerably worse before they get better.

    We are all going to have to get used to the idea that food is going to be a problem for quite a few years to come....

    Wellington • Since Nov 2007 • 269 posts Report Reply

  • Steve Withers,

    Idiot / Savant : I left them a comment suggesting they make a case instead of spewing abuse, but like good freedom-loving folk, they have comment moderation turned on. It will be interesting to see if the facts I presented and the advice to reduce to abuse and instead make a case is will meet their approval.

    Auckland • Since Mar 2008 • 312 posts Report Reply

  • Mikaere Curtis,

    Don Brash has a good summary of why we shouldn't start piling exemptions into our GST system here. His examples of the complexity involved in calculating exemptions leaves me, a regular GST return filer, somewhat cold.

    Hey also says:

    If the Government sees a need to help those families most adversely affected by rising food bills, then the best way of doing that is by reducing the income tax levied on low-income families, or adjusting the Working for Families policy to help those on low incomes.

    I wonder if this means he would support the Green's $5000 tax-free threshold ?

    Tamaki Makaurau • Since Nov 2006 • 528 posts Report Reply

  • mark taslov,

    Why not just cut personal income tax altogether, and introduce a hefty tax on spybases?

    Te Ika-a-Māui • Since Mar 2008 • 2281 posts Report Reply

  • Rich of Observationz,

    Or, since it's New Zealand's spy base and not under US control or anything, we could sell the data collected to the highest bidder, like China, or the Russian mafia.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Rich of Observationz,

    Brash is being a bit disingenuous, or just ignorant.

    I filed VAT as a consultant in the UK when I lived there, and the multiple rates made little difference. I just took the VAT amounts from the invoices as my input tax (which allowed for things like mobile phone bills, where overseas roaming components were tax free).

    Food in the UK isn't "exempt" it's "zero-rated" which means that the output tax is zero, but food manufacturers and suppliers can still claim all their inputs.

    The only exempt supplies are things like financial services and education, which are typicall the only business of an organisation.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • BenWilson,

    Boil down on flat GST:
    Advantage: Simple
    Disadvantage: Not progressive

    So the decision is simply 'Is the added complication worth the increase in progressiveness'?

    Since we already have existing mechanisms for controlling the progressive taxes, we could just tweak those.

    Someone said:

    Just don't do what Australia does, I was over there when the GST was introduced and it's a complete shemozzle.

    I was too, and I totally agree. The project to make the organisation I was in GST compliant dwarfed Y2K. Calculating GST is no longer 'Multiply by the GST constant'. It was 'Query gigantic database for GST rate, passing parameters indicating your breakdown of the class of this item, and multiply by that, if applicable'. You only need to think of how often transactions happen to understand the overhead this kind of taxation system creates.

    It was a bit of a running gag. The GST team were very proud when they announced that their server could deliver on 100 GST calculation requests per second, and went live. Everything ground to a halt in seconds. They had a look at the number of requests per second and found it was in the many thousands per second during the day, and during the overnight processes millions of calculations were being made. Some people had spreadsheets hitting the server harder than it could handle, and there were thousands of such applications throughout the company.

    They eventually came to a compromise solution which created and 'acceptable degradation' in the performance of all their computer systems.

    The problem is not that the poor can't afford food. It's that they can't afford, period. Tweaking income tax is a perfectly sufficient mechanism to handle this kind of inflation. And adjusting benefits. These systems already have the complexities built in, and just need to have values altered.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

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