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Newsworthy 4 August 2006 - No. 82

Newsworthy 4 August 2006 - No. 82

Rates furore

The rates furore continues without proper consideration of the funding mechanisms available to local authorities. Caught up in the argument are a range of issues. The present Government changed the law to provide local authorities with a power of "general competence".

That meant they could do whatever they like, subject to certain accountability provisions in the legislation. Some Councils have become involved in housing projects for example, which I do not believe are an appropriate local government function. There is a need to review funding mechanisms for local government.

This is complex but the possibilities include public/private partnerships, debt financing, asset realisation, Crown contributions in lieu of rates, development contributions etc. One thing is for sure - rating is a crude (albeit effective) funding mechanism. Clearly the rates paid by a property occupier may bear no relationships to the services supplied or consumed.

A new website has emerged which identifies illustrations of local government waste.

Capital Gains Tax Bill

One of the justifications for scrapping the Upper House then called the Legislative Council in 1951, was the scrutiny which the Select Committees would bring instead to the Parliamentary process. Under the Standing Orders of Parliament all bills go to. select committees and the default provision is that such committees must report the bills back to the House within six months. 3,500 submissions have been received to the Government's Bill introducing a capital gains tax on many overseas share investments. That is an extraordinarily high number.

IRD estimates that about 20,000 people who have shares in companies in the US, Britain and five other 'grey list' countries will be hit by the tax. They will also be hit by substantial compliance costs. This is a complex system to understand, and advice from accountants is that it could cost affected people some $500 in accounting fees each year. That makes a total of $10 million in costs, and all for a paltry $8 million in taxes for the Crown. And it is not only these 20,000 people who will be hit by the capital gains tax. Anyone who has savings - no matter how small - in funds which directly or indirectly make passive investments in those grey list countries will also be affected.

Potentially hundreds of thousands of ordinary savers will be caught up in the new tax net.

Languages in the House

In statutory terms there are only two official languages - Maori (the Maori Language Act) and sign language (the New Zealand Sign Language Act). In Parliament the Standing Orders provide for speeches to be given in English or Maori. For speeches in Maori an interpreter is available - not to give a definitive translation but rather an "interpretation".

On routine basis Members of Parliament are treated to a farce where Mäori speakers collaborate in advance with the interpreter and provide the text of their planned comments for a rehearsed interpretation. Such theatrical orchestration is not what the Parliamentary rules contemplate. Rather the interpreter is there to give an oral version in English of words that have been uttered orally in Maori.

Auckland water prices set to surge

Finance Minister Michael Cullen and Judith Tizard (The Minister with responsibility for Auckland issues) are actively collaborating with the Auckland Regional Council to expropriate the assets of Watercare Services Ltd from the local authorities. Watercare Services Ltd is the wholesale distributor of water in the region. The significance of the expropriation is that the plan is to remove a statutory cap on water prices in the Local Government Act. That cap maintains prices for water and wastewater services at minimum levels. To date, the activities of the two Ministers have been covert - now they have been exposed. The actual exchange in Parliament on 2 August 2006 involved Dr Cullen answering questions on behalf of Ms Tizard:

Question: "Does she not realise that her covert support for the ARC proposal to take over the asset of Watercare from the constituent TLAs and the removal of the statutory cap on water prices in the Local Government Act will hugely increase water prices for consumers in the Auckland, and why doesn't she back off?"

Answer: "I have never seen the Minister back off".

Winning literati The fifth correct entry to the National Party philosophy quotation has been notified and invited to Bellamys. The quotation was: "You cannot strengthen the weak by weakening the strong. You cannot lift the wage earner by pulling down the wage-payer. You cannot keep out of trouble by spending more than you earn You cannot build character and courage by taking away a man's initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves."

The author was Rev William Boetcker who was an American religious leader and influential public speaker. The above quotation famously known as the The Ten Cannots was originally published in 1916 and often mis-attributed to Abraham Lincoln.

Auckland infrastructure dinner - Wednesday 9 August 2006 at 5.30pm The dinner is the second in a series on Auckland's infrastructure with guest speaker Don Huse - Chief Executive Officer of Auckland International Airport Limited.

Venue: Remuera Bowling Club - 6 Market Rd Remuera Cost: $40 in advance - $45 at the door (cash bar open) Tickets: Elizabeth - Ph: (09) 623 2598 or by email

Political Quote of the Week "The care of human life and happiness, and not their destruction, is the first and only object of good government." Thomas Jefferson - 3rd US President

Richard Worth

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