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News Worthy - 23 June 2006

News Worthy
23 June 2006 - No. 76

The health spend

There have been significant increases in health spending by the present Government. In 1999 the spend was $6.47 billion; in 2005 it was $9.7 billion. That represents an average compound increase of 7% per year.

The public however has seen little benefit from that spend. Until the Government sheds it ideological beliefs that will continue to be the case.

There must be partnerships between public system and funding, private funding organisations and various provider groups.

Countries doing this include the United Kingdom, Australia, Spain, Colombia and Chile.

Initiatives they have taken and which New Zealand could consider include:

* Public assistance for the elderly - targeted assistance, medical savings plans, new insurance policy options, discounted surgery
* Co-location of public and private hospitals - with the advantages that the District Health Board achieves financial return, surgeons are retained on-site and expensive resources can be shared

Taxation of off-shore investments

In previous email newsletters (69 and 74) I have sharply criticised the Labour Government plan to change the taxation of investments off-shore. The Government's proposals are contained in the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill 2006 which is currently before the Finance and Expenditure Committee with a report back date to Parliament of 24 November 2006.

It has now emerged that the Government will collect a paltry $8 million in its capital gains tax from individual investors with more than $50,000 of shares in the main overseas sharemarkets - the so-called 'grey list'.

Clearly this will be a bureaucratic nightmare for those individual investors - all for the sake of just $8 million in revenue which will increase the forecast tax take by just 0.01%.

Meanwhile, Labour continues to deny that anyone with investments under $50,000 will not be caught by these new rules.

That is wrong. Those investors in passive funds in grey list countries will also get caught by the capital gains tax for the first time. The Government expects to reap $27 million in revenue from those investors. There are tens of thousands of small investors in passive funds.

The Government has also admitted that the cost of administering this package of tax changes to overseas investments will be $8 million.

A wise Finance and Expenditure Committee would reject the taxation proposals outright.

Closed mind to private prisons
The Government is simply not prepared to support private prisons despite the success of the Auckland Central Remand Prison and the success of private prisons in other countries.

The main reason for these improved regimes appears to lie in the fact that management and staff have more flexibility to introduce innovative services and programmes. Public sector managed prisons are large bureaucracies where new initiatives struggle to survive.

In Chile there is a women's prison managed by an order of nuns. Prisons can be managed by not-for-profit organisations where any surplus is ploughed back into services and programmes.

Political Quote of the Week

"Frankly, I don't mind not being President. I just mind that someone else is." - Senator Edward Kennedy

Richard Worth

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