Saturday, February 26, 2011


I see that Mr Norman, co-leader of the Greens, in a Pavlovian response to the disaster, has called for the introduction of a special tax levy to help fund the recovery.

It may be that the shear scale of the disaster may require extreme measures but I would urge the Government to think very carefully before deciding to do a 'Gillard'.

I say that for two reasons. First, much (not all) of the ensuing expenditure is likely to be of a capital nature which has a very long pay back period. Second, taking money out of peoples pockets is likely to have an adverse impact throughout the rest of the country where economic recovery is dependent on continued spending.

But it certainly does bring into sharp focus the dilemma that Labour is facing with its me too, Johnny come lately, first $5,000 tax free election bribe. Phil Goff must spell out in specific terms where the money is coming from given the certain adverse effect the earthquake will have on the Crown accounts.

Perhaps he can turn to Mr Cullen for sage advice.


Anonymous said...

sp! try sheer.

I think we may be in for a long dark economic winter methinks. The May budget aint gona be pretty and is likely to involve a fair bit of cutting and chopping.

Might be unusual but I don't think the electorate will penalize John Key too much if he does do some real cuts, as most people can see that the earthquakes are going to cause real hardship - and wont hold it against National

Gooner said...

I think a special levy/tax is inevitable and is one I would gladly pay. The other option is to divert Auckland's infrastgructure spend and leave Len to fund his gold-plated dreams via user pays.

Inventory2 said...

I agree Gooner, and that's how it should be. Len Brown wants to build his legacy with OPM (Other People's Money); he needs to realise that the ther foreseeable future, Auckland will NOT be at the head of the queue.

Oswald Bastable said...

I don't see any current laws forcing folks to keep their wallets in their pockets.

JC said...

I'm waiting to see if some sort of infrastructure investment fund is set up. I'd rather *we* do the investment rather than the Govt. The Govt's role would be to provide the mechanism to administer it and support it modestly to give a return not much better than a bank deposit.


Anonymous said...

There is no need to have a reconstruction levy. It is the losers answer to a problem to create a tax to answer an issue.
A bit of lateral thought is what is required. Most of the funds can be found by delaying other infrastructure projects, removing corporate welfare, WFF, interest free loans, redirecting the unemployed into clean up units...doesn't take much skill to weild a shovel/broom/wheelbarrow, suspend the minimum wage and youth rates legislation, generate new jobs (and thus more tax dollars) by allowing open cast mining. Imposition of a wage freeze for public servants, a 10% reduction in salary for politicians, suspension of travel subsidies for politicians for 5 years unless on official business which could improve NZ balance of payments. Basically taking a line by line approach to every single piece of expenditure and asking the hard questions of is there any benefit generated from this expense, if so what are the payoffs, how can we get a better result from the same or a lesser expenditure, then making the really hard decision and following through with your answer. But that will take real leadership, guts and determination, along with a winning smile, and a great wave, I hope Key is up for it.

Anonymous said...

Man, some of you guys see this tragic disaster as a gold-plated opportunity to usher in your radical right wing utopias, or at least shamelessly push your little ideological barrows. As tasteful as selling life insurance at a funeral. Nice.

Anonymous said...

Why aren't you all asking the obvious question, are we so short of funds in EQC and insurer coffers that a new tax like this is even necessary. The answer to that question is no they aren't, move on comnmie.

Simo said...

Off the topic here - if you read Matt McCarten in the HOS today about the mofo up north, I say do what the Romans did by building Hadrians Wall and let Hone lead his followers to hell. No welfare, no hospitals, no roads,no nothing -take ya treaty money and fuck off. The left and Maori sovereignty is fucked if this is the example these two losers are setting.

Never has such an unfortunate crisis shown up the wreckers and haters for what they are and never truer words as TiTake and TiGivee when it comes to all New Zealanders getting in behind the folk of CHCH.

There will be a clash of wills and egos up north like there was in 1865.....problem for Hone and his followers is there are half a million armed NZ'ers if push comes to shove this time.

Psycho Milt said...

But that will take real leadership, guts and determination...

No, it would (note the conditional there, we're not talking about something that will happen - how hard can it really be for people to learn English?) take the voters of NZ electing a leader who combined the characteristics of Adolf Hitler and Ebenezer Scrooge in one personality, which is really not very likely.

Adolf Fiinkensein said...

Milt, are you talking about the people who elected Muldoon?

The Veteran said...

Gueez Gooner ... you arguing for increased taxes.

Isn't that akin to heresy in the ACT dynamic?

The Gantt Guy said...

The fact is people, New Zealand is broke. Flat out, maxed-out, use-a-personal-loan-to-play-the-pokies broke. The "velvet glove" socialism experiment has been an abject and utter failure and the only people who can't see that is those who are drunk on welfare.

Turns out Baroness Thatcher was right (who'dathunkit?) Eventually, you *do* run out of other people's money.

So New Zealand has two choices, catalysed by the tragedy in Christchurch. It can admit that velvet glove socialism has failed, and try iron fist socialism. Not likely. Or, it can turn to the sensible policies of Conservatism. Make those who are able, work. Close down the multiple government agencies and quangoes whose role is to further the goals of cultural marxism. Privatise some SOEs. Get out of industries the government has no business being in. Pay down some debt.

Those are the only two choices remaining. The status quo is simply not working. Although I wouldn't expect any of our current "leadership" to admit such a thing.

Anonymous said...

i'll give you the would instead of will Milt, but instead of arguing the grammar, why not argue the points trying to be made. Explain to us why it would be better for us to have an additional levy on top the current taxes, GST, indirect and direct levies, property taxes/rates etc than to think outside the marxist square.
What real options are there beyond a tax and spend approach are there? Keynesian economics is an abject failure, and has led us to the point of a global financial precipice.

Gooner said...

Vet, true. But TINA applies.

The next thing is to amend/scrap the Resource Management Act so that year-long delays for resource consents are gone.

Then scrap the ETS and divert that tax to Christchurch.

Then marshall 500 able, young male unemployed from the dole and fly them to Christchurch to assist as labourers. Pay them $500 per week, and put them up in Army tents. The Army can supervise them.

Then as I say, put user pays roading in place in Auckland, along with a congestion tax, and divert Auckland's trnsport spend to ChCh also.

Anonymous said...

I meant 5,000 labourers.


The Veteran said...

Gooner ... not too much of an argument there except that the 'scrap the ETS' mantra of ACT just isn't going to happen.

Neither I hope will there be an earthquake levy.

It was fascinating to hear the CEO? of Orion? comment that under the State of Emergency resource concent applications that may have taken two years to process was signed off by the Director in 20 minutes. There is a balance in all these things and while some work has been done in amending the RMA I agree there is still some way to go.

Interesting too that in a briefing I received this morning the delay being experienced in reconstruction work following the September quake, caused in part by ongoing arguements over the preservation of 'heritage' buildings, will not happen this time. Any brick building showing any sign of damage will, in all likehood, come down. Until that happens the CBD will remain substantially closed as people safety cannnot be guaranteed.

Christchurch, for better or worse, will never be the same.

Psycho Milt said...

The fact is people, New Zealand is broke.

If you mean public sector debt, ie the bit govt can actually do something about, we weren't broke when National took over in 2008, so if we're broke now they really should be given the sack come November.

If you mean private debt, the ability of the govt to affect that is limited, so it has little bearing on the subject under discussion.

Explain to us why it would be better for us to have an additional levy on top the current taxes, GST, indirect and direct levies, property taxes/rates etc than to think outside the marxist square.

I haven't noticed any Marxists contributing to debate on this. Regardless, to explain:

1. Govts rely on voters to vote for them, which means some kind of fascist accountant isn't ever likely to be running the country (again, if we take Adolf's point).

2. Most people don't have an extreme right-wing agenda (including the govt, despite what The Standard might say), so it's not likely the Chch quake could be used to impose one.

It was fascinating to hear the CEO? of Orion? comment that under the State of Emergency resource concent applications that may have taken two years to process was signed off by the Director in 20 minutes. There is a balance in all these things and while some work has been done in amending the RMA I agree there is still some way to go.

So, you're thinking, "balance" would be reached when the guy signs it off in 10 minutes? 5? Without even looking at it? It's not obvious how launching into rebuilding on the cheap without giving any consideration to the environment or the interests of the community is something we should be looking forward to.

The Gantt Guy said...

"I haven't noticed any Marxists contributing to debate on this"

If that's the case, you don't know what a Marxist looks like. Try looking in a mirror.

Simon said...

“Phil Goff must spell out in specific terms where the money is coming from”

You National party types don’t have fucking clue.

That’s easy it comes from inflation. It is fairly obvious where future left wing govt money will come from. Govt borrows to 80% of GDP and prints money to inflate the debt away. (Blame inflation on big evil American oil corporations.)

Fucking girly 3% CPI. Ramp inflation up to 10% open up immigration cant lose.

The NZ $ becomes the NZ peso, living standards fall and all the productive people head overseas but hey you have paid for all your promises and brought the election.

If you can control the printing presses there is no stopping the Gooffy promises.

NZ First
Hone’s Maori Party

There is no stopping this shower of shit.

Psycho Milt said...

Gantt Guy: sorry, when anonymous idiot wrote "marxists" I thought he meant Marxists, not the dumbass pejorative version "person with political ideas to the left of mine." If you're happy to deal in terms of dumbass pejoratives rather than the actual meanings of words, I don't mind thinking of you as a fascist, or "person with political ideas to the right of mine."

Anonymous said...

Once again Milt you fall back to the standard leftist tactic of playing the man instead of the arguing the ideas. Is someone who advocates self responsibility and minimisation of govt intrusion into the populace's lives a Facist?
Simon says has the Left's answer to affording anything pretty much summed. The truth however is that Keynes and his 'economics' are fundamentally broken. The fact the charade is able to carry on for longer than a more extreme version, namely Marxism/ Communism, is simply down to the flexibility that the remnant capitalist component has been able to support it. The time where that support can sustain the lies that the printing of money covers is coming to an end. There is only so much that the productive sector can maintain. There has to be a limit.
The productive sector are turned to and expected to just suck it up. Admittedly, the CHC events will actually be something that most of them will be prepared to shell out for, but the next crisis the govt needs to raise a levy for may not have the same response.

The Veteran said...

No PM ... please don't attribute to me 'balance' in the terms you describe.

Fact. The RMA became part of the problem, not part of the answer.

Fact. It has been amended but the 'balance' is still biased towards the status quo rather than growing the cake.

Much like Pivacy Act. Great and good intentions but the reality is that it has a become a hiding place
for lazy officialdom.

Anonymous said...

The law of unitended consequences, pretty much determines that what ever objective the govt legislates for, results in more of what ever it is they didn't want.
Look at the DPB, great idea to start with, but the result is rampant teen pregnancy, the breakdown of the family, initiation of intergenerational welfare depedency etc

Anonymous said...

"Is someone who advocates self responsibility and minimisation of govt intrusion into the populace's lives a Facist (sic)?"

In the same way that someone who advocates a role for the state in reducing hardship and ensuring a decent standard of education and healthcare for its citizens is a marxist/communist yes, my moronic chum.

However, someone who uses a terrible tragedy to push their radical right-wing political agenda is just a tool.

Judge Holden

Anonymous said...

once again Holden, you prove that the Left are bereft of ideas which actually work and fall back to denigrating the people of opposing ideas, rather than addressing the ideas themselves.
What is your solution, or do you espouse the tried and failed strategy of tax and spend one more time?

If you would rather just sling names, then I'll abstain from your mutual felatio session

Anonymous said...

Well I don't think tax cuts, slave labour and shrieking about commies is the answer chief. EQC and insurance will cover a fair chunk. A levy and redirecting infrastructure expenditure will cover another fair chunk. Abolishing some organs of state will achieve sweet FA.

Judge Holden

Anonymous said...

Slave labour?
what is so wrong with utilising the labour that is currently being wasted in CHCH prison? Why not give them an opportunity to help give back to the community they offended against? Of course some of those prisoners are not going to be safe enough to risk being even chain ganged together, but those ones could be used to in house (prison) cultivate nurseries to replant the public spaces which have been destroyed.
As for the unemployed, why not give them the opportunity to learn new skills like truck driving, concreting, masonry cleaning, and other ancillary roles which don't take much education. Rather than the ridiculous scenario that currently has those unskilled people hopeless lost because the govt has priced them out of the market. (Why is youth unemployment so out of whack with the rtest of the population? What was the result when the previous govt legislated that work programmes for the intellectually impaired had to be paid at minimum wage levels? These are just 2 examples of unintended consequences of leglislation).
As for EQC, how much is really left in the coffers? What has EQC been investing in for the last 56 years?
Why is the current pool of funds left in EQC coffers so small given the marvels of compounding interest?

The rebuild of CHCH will cost something in the order of $10b. Admittedly the CBD will be rebuilt by the world's insurance industry, however the size of the buildings will likely be smaller given that most people (companies being simply an entity representing their owners) underinsure themselves.
"Abolishing some organs of state will achieve sweet FA." Ultimately the country has to face the fact that it can't continue borrowing $300m per week to support its welfare addiction. So the options are either cut the welfare bill or find a different way to cut your cloth according to your purse, while at the same time recognising that the people who generate wealth are no longer transfixed into one country and if you make things too hard for them at home, then they will leave, i.e. you kill the goose laying the golden eggs. (I am the only one of my group of 10 friends who earn over $150k/annum who still remains in NZ, the rest having already given up and not yet seen a reason to return; yes I have donated already to the CHCH relief fund volutarily, and plan on giving more).

Anonymous said...

EQC has enough funds in reserve to cover its liabilities here. Private insurers will meet theirs. More funds will be needed sure, but there are many options other than punishing those who can least afford it so you don't have to pay a slightly smaller chunk of your $150k (ROFL).

Judge Holden

Anonymous said...

We could use the Reserve Bank, the govt could issue debt free money, rebuild and then extract that extra money from circulation over time with a short term tax soley for that. Its been done at least once before, in the Channel Islands as I recall, where they had resources and labour but no cash.

Anonymous said...

I should be offended, but instead it is becoming ever more evident that you Holden, are a pitious creature, whose attitudes and envies are holding him/her back. As for me, I just pay my accountant, and think, "Ah the miracle of legitimate tax minimisation through legal entities".
So 9 out of 10 people who earn in excess of $150k have been driven offshore due to previous tax policies, and you see that ameans to roll on the floor laughing out loud?
Think about it for a second, That is over $500k in lost taxes for your precious welfare state (probably closer to 2m if you really want to know), but oh no, you'd rather scoff at the lowliest paid of that group of people. The stats themselves make it that this entire group of people are in the top 4% of income earners, and represent the next wave of business leaders, 9 out of 10 of which are lost to the country, having taken their skills, investment and tax dollars along with their wealth attitudes with them; things that your policies are pretty short on when it comes down to actual results. Instead you would rather we have more of the same, an endless pit with which we try to fill with tax dollars, and then heaped on top the tragedy that is the wasted lives of the intergenerational welfare dependent, and all those whose function in life is to molly coddle those wasted lives to make things easier yet for them. It is the attitude of people like you who drove those wealth creators offshore in the first place, and until you realise it, many more will join them, leaving NZ all the poorer for it.

Lou Taylor said...

Well said.

Anonymous said...

"So 9 out of 10 people who earn in excess of $150k have been driven offshore due to previous tax policies, and you see that ameans to roll on the floor laughing out loud?"

Ah no, although that claim is almost certainly false. It was your assertion that someone with such a slender grasp of logic, basic maths and reading comprehension could claim with a straight face that they're worth 150K a year. That's hilarious.

Anyway I see you've shifted the discussion from a sensible way to fund earthquake reconstruction towards a tasteless gloating of how rich you think you are. Nice.

Judge Holden

Anonymous said...

Mr Holden is completely wrong. EQC does NOT cover the Crown (and all entities operating under Crown delegation - local authorities, quango's, etc). Local Authorities organise their own insurance - most urban authorities used Risk Pool which is a T.L.A. owned self-insurance scheme and the others used LGCIC which was a common bokered re-insurance scheme. Unfortunately both schemes are severely in the crap ex leaky homes (mainly from Auckland T.L.A's)- C.C.C. reduced cover from 1.8 billion to 0.8 billion in 2009 to reduce exposure. Hence after Sept-4 were 210-million short and were going to have extra via special loan/sinking fund/gov grant, etc. By my rough estimate they are now 1.62 billion short. Most Crown core entities (Police, Justice, MoSD, MoD, IRD, MoE, MoH, etc) were SELF-INSURED unless they were leasing privately, liability here approx. 2.73 billion. Total government liability at 4.35 billion just to replace infrastructure/property. Then we get on to the fact that 3.5 billion of the EQC was in NZ Government bonds (absolute stupidity) which must now be cashed/dumped on the market on top of the existing biggest offering in NZ history to fund the 2011 budget operating deficit. Also wait and see for the future major disputes/lack of coverage of the EQC re-insurance and private insurance. Quite apart from the very limited coverage EQC gives which many found out after Sept.

Anonymous said...

"Mr Holden is completely wrong. EQC does NOT cover the Crown..."

Where did I ever say that? Learn to read chief.

Anonymous said...

hows that sieve of an argument holding up Holden?
The jealousy knot getting tighter too I see

Anonymous said...

"hows that sieve of an argument holding up Holden?"

You mean the argument that unless earthquake reconstruction is paid for by the poorest New Zealanders you're going to leave the country? That's actually the best case for an earthquake levy I've heard, and you made it. Well done.

Of what am I jealous? Your wicked non sequiturs and and sick syntax?

Judge Holden

Anonymous said...

That someone with "such a slender grasp of logic, basic maths and reading comprehension" earns in the top 4% on income earners in NZ.
Shows how little you really know about income, wealth and wealth creation.

Anonymous said...

There you go again with this silly wee boast about how well off you would like everyone to think you are. A wee bit insecure methinks. Poor thing.

Judge Holden

Anonymous said...

Not at all, in fact, entirely the opposite.
But still you have a point, this thread was about paying for the disaster recovery, the thread got deviated a little, but, ultimately you are right in one sense, the rich will pay for the recovery. Therein is where I think our methodology for the payment comes in.
I want the business and property owners to rebuild the city in the fashion that they see most appropriate, using their insurance and or capital funds.
I don't want to see the city rebuilt by Govt/ local body decree, funded by yet another round of forcibly taking more off people, thus stifling the dynamic nature of free enterprise.