Posts by steve black
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I’ve been travelling around Australia for the past 3 months or so and it is interesting to see what’s going on here politically. With a partially proportional system (it’s complex what with two houses and all) they have managed to recapitulate most of the issues which we have travelled through with MMP in one year. Since NZ is virtually ignored in the media (exceptions being Sports and Earthquakes and Snow in odd places) nobody ever makes any comparisons across the ditch. Well, not that I've seen...but then I'm here on holiday and typing this at the beach :)
The electorate is blamed by the conservatives for “not voting properly” and the current government is claimed to be “illegitimate”. Which basically means the conservatives don’t like the Aussie Rules for how one counts votes and forms a government. Amusing.
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Just two observations…
I was shocked when I saw a voting paper in Australia. They required you to rank every candidate from 1..N with no duplications, no rankings left out, and the full ranking from 1..N. Make the slightest error and your vote is wasted. You can't just go 1,2,3 and leave the rest out. If one cares about vote wastage in FPP then it seems to me one ought to care about vote wastage due to the complexity of the task of ranking. Bear in mind that there are mathematical algorithms which don’t require every candidate to be ranked, can handle gaps in the rankings, and probably (I can’t remember exactly) equal rankings. I don’t like putting the onus on the voter when the computer can sort it out afterwards.
And the solution in the case of the Australian ballot I saw worried me even more. They have the ballot paper divided into two sections. You can either tick a “vote whatever National wants” or “vote whatever Labor wants” single box and that gives all your votes (and preferences) to be used in whatever back room deals (they may no longer be smoke filled) are done. This gives even more power to political parties and less power to individuals. If you think we have problems with party lists which are not constructed in a democratic fashion, imagine what happens when ACT gets to do back room deals with National regarding inter list preference issues.
I’m in favour of a voting and selection system which gives more power to individuals and less power to parties. I’m in favour of a voting system which is as proportional as can be. What to do?
And thank you for keeping an eye on things Graeme.
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Hard News: The Wall and the Paper, in reply to Rich of Observationz,
I would think it was a civil matter not criminal. Although we know from recent history that it becomes criminal if you kill the artist.
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Clarification. When I first mentioned real estate I was thinking of rents. I think rents are exempt. Is that true? If so, it does seem to make an interesting case of an exemption. In the bill (or the commentary when it was first introduced) it might say why.
Yes if you have bought a house since GST came in, it will have had GST reflected in the price. With the exception of a few "home builders" who are outside the system and pretending to not be a business, GST is in there. For those who are pretending to not be a business GST is in materials and subcontracting. Higher prices for new houses flowed through into the used house market.
BenWilson: we are on the same track. Simplicity of implementation (compliance costs) is important. Especially when you are using volunteer tax collectors (eg businesses).
But you know Economists. Having to fix every piece of code where GST is calculated (and lookup tables) increases the GDP (same as pollution). That's why I try and take a broader approach. (wink).
As to financials being exempt, yes if you add GST to them and change nothing else about the tax system then this results in a nonsense. That's why you can't discuss any one tax change in isolation. But we can once again look to Australia for information on where not to go. When Howard brought in GST he promised that many of the other taxes would be dropped. They weren't. Or do you remember a few which were dropped?
It's nice to see some discussion on NZ tax and public policy since I've had to endure such a lot of "he said" "she said" things about tax (never mind forming Governments) while I've been over here. Adding to Lange's original quip: At least New Zealand isn't just a large [Chinese] quarry.
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If there was a tax on selling houses it should be set low, like 1%, or put only on the capital gains.
The Aussies still have stamp duty (even on car sales as well as houses I think), which is part of the complex array of taxes over here. I'm not implying anything about whether I think a particular tax is good or bad. I just like simple implementations which flow from simple regulations.
I'd imagine if every time you sold your house you had to hand over 10/12.5/15% to the government of your sale price, on top of the $15 - $30 grand to your real estate agent, house sales would head towards the floor.
Which the Government does seem to want to do sometimes when they think there is a housing bubble and inflation is too high. But the GST as currently constituted would only be on new houses, not used ones. GST costs are already reflected in materials to make new houses.
Same thing with banks, you'll kill the flow of money.
We prefer to leave that to the wizards of Wall Street themselves. (wink)
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I would like to keep GST simple and the same on everything. However, travelling a lot in Australia as I do (4 mos a year) I admit that the computer systems make it easy. At the IGA I shop at while house sitting in Maleny, Qld, the computer not only puts GST on the things the Government decided should have GST, but it gives me a 3 cent "plastic bag reward" for every plastic bag I don't use since I bring my own reusable bags!
Buggered if I know how banks and real estate (are there others?) escaped GST other than voices in high places. But I ask myself: would Labour introduce a capital grains tax?
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Oh, I think they knew a lot. It's striking how much they relied on others having imperfect knowledge to keep the situation stable.
Which is why three dudes got a Nobel prize in Economics for their work in looking at how asymmetric information explains some of the workings of the "market".
Asymmetric infomation: it cuts both ways...public good, private greed...these are just hard words.
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Hmmm. That Cullen budget reference from 2008 says that
The scheme will be free for institutions with total retail deposits under $5 billion. A fee of ten basis points per annum will be charged on total deposits above $5 billion. This means that a bank with $20 billion in retail deposits would pay $15 million in fees per annum.
So SCF wouldn't have had to pay anything to be in the scheme. But all the big banks will have provided the money which goes out the door to investors. Bet the big banks won't be pleased.
My take on the incredibly rapid payout is that Treasury is very scared. If the guarantee scheme didn't pay up quickly in this case, then it isn't a guarantee scheme at all. Thus people would stop saving and putting money into financial institutions and those financial institutions wouldn't have money to lend on houses or businesses... That way lies a second credit crisis.
BTW, something I ran across when the 2008 credit crunch hit (probably in The Australian because we were over here travelling about) was the only explanation I've ever seen of why Standard and Poor (or other rathing agencies) gave such bogus safe ratings to those packaged up house loans. It was because AIG underwrote them. Apparently if a big financial institution underwrites some financial paper then that paper takes on the rating of the insurer. That explains both why the ratings of the junk CDOs were wrong, and why AIG nearly went under and was (that phrase again) too big to fail. That's also why lots of people were annoyed when the US Government gave all the bucks to bail out AIG and they passed it on to the chief culprits in the whole affair! Contracts in place.
I mention all this because here we have Treasury playing the role of AIG. Contracts are in place, and the money goes to the investors. Is Treasury too big to fail? Hope so!
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Excuse me if this question has been done to death elsewhere in the media but...if South Canterbury Finance has poor record keeping, poor lending policies, questionable governance and probably lacks the financial resources to pay back its investors then how did it get the ok to join the guarantee scheme in the first place? Don't they check on the viability of an organisation before they guarantee it? And if somebody did check them out, who is it who does the checking?
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Granted, Australia is more progressive than New Zealand on issues like abortion rights.
Provided you aren't in Queensland!
I've been over here for a few months (come over and go camping for about 4 months each year) and was careful to be in the bush and away from any radio, etc. as election day drew close. Imagine my horror when the first thing I heard when I got out a day or so later was that now there will be weeks of discussion about what might happen next. Sigh.
Today I bought a Weekend Australian and was amused to see that NZ actually gets a mention. Normally the only mention made of NZ is some joke article, nothing serious. But this time there is an article by Michael Stutchbury (Economics Editor) which reviews the situation in NZ since we went MMP. So far so good. Except that his sole informant seems to be Roger Kerr. You can imagine the rest: Australia will go down hill like NZ if you have minority governments and the environment gets any standing whatsoever. This claim seems to have the standing of a law of physics over here. Sigh. No wonder Lange said at least we aren't just a large quarry.
The most interesting observation I've made here is that a lot of people loathe the Greens. On occasion I've been somewhere in the bush where there is a political conversion going on and I've casually mentioned that I am a member of the Green Party in NZ and all conversation stops. After an embarassing silence something else like footy gets to be the topic of conversation. Spooky. Like one of those scenes where the stranger comes into the pub.