Maxim Institute - real issues - No 227 19 October 2006

Making The Unlawful Lawful?
Speaking Out About Charities
The Case For Tax Cuts

In The News: IVF Could Be Restricted To One Embryo
Make A Difference In Your Child's School
British Science Curriculum Rubbished

MAKING THE UNLAWFUL LAWFUL?

This week, the Parliament of New Zealand passed retrospective legislation to validate election spending that had been found to be unlawful by the Auditor-General. Whilst making the unlawful lawful is in principle abhorrent, the detail of the law and our constitutional principles left the government with few options regarding the validation of spending.

The government was entitled to rely on Treasury advice that validating legislation going back to 1989 was required under the Public Finance Act. Treasury's advice reflects an ancient constitutional principle dating back to the Magna Carta and the Petition of Right; that the government is not permitted to raise and spend money without the consent of Parliament. Undermining this principle damages the historical basis of our system of government spending. Even if the money is paid back in full, the spending would still require validating legislation to make it lawful.

Validating unlawful expenditure may have been technically required, but the legislation passed this week went far beyond what was necessary and took New Zealand into dangerous territory. The legislation also changed the definition of "electioneering" meaning that the Auditor-General's finding that Labour's infamous pledge card and other material was in fact "electioneering" (and therefore should have been paid for from Labour's own coffers) has effectively been overruled. By passing the legislation under urgency, the Prime Minister has also avoided a court case brought against her for unlawful election spending.

The Prime Minister should have faced the court case against her and accepted whatever ruling was given. Parliament could then have validated the spending so that the legal requirements were satisfied, but stopped short of changing the definition of "electioneering". In the midst of all the confusion around this issue, the government has managed to short-circuit a legitimate court case and overrule the Auditor-General's findings on the legitimacy of their election spending. Despite all but one of the parties agreeing to pay the money back, the fact remains that the scope of the legislation passed this week went far too far.

SPEAKING OUT ABOUT CHARITIES

Charities expressed concern this week that under the Charities Act they could lose their charitable status if they become too vocal. The law has always allowed charities to engage in advocacy, as long as it is secondary to their main charitable purposes. The Charities Act preserves this position, and rightly so. As Green MP, Sue Bradford, points out, "Caring for the victims is essential work. But so is speaking out on their behalf...".

So what has changed, and why are charities concerned? From February 2007, the Act will require charities to register with the Charities Commission to claim certain benefits, such as tax privileges, and charities will face regular monitoring. If a charity does more than an incidental amount of advocacy, the Commission will not register it, or, if it is registered, will remove it from the register. But deciding when a charity passionately advancing a cause crosses the line will be an extremely difficult judgement for the Commission to make. This will mean that charities are likely to think twice before speaking out

The government is attempting to encourage charitable giving through increased tax privileges announced this week. While this is a praiseworthy initiative, it would also mean that charities would have even more to lose from de-registration.

While de-registration could be more of a fear than a reality, it is likely the fear itself will have a dampening effect, and the public square needs an involved and vocal charitable sector. The Commission must be scrupulous in ensuring that the legitimate advocacy of charities is not at risk. Charities advocate in accord with their purpose, and on all sides of the debate. In doing so, they add immeasurably to the richness of public discourse.

To read the government's proposals to increase charitable giving, please visit:

www.taxpolicy.ird.govt.nz

THE CASE FOR TAX CUTS

With the government's surplus hitting $11 billion, the case for tax cuts continues to build. Earlier this week Revenue Minister, Peter Dunne, said that there will be adjustments to the personal tax regime and cuts to business taxes from April 2008. Meanwhile Why Tax Cuts are Good for Growth, a new report from the Centre for Independent Studies, enhances the case for cuts by confirming that tax cuts are affordable.

The report says that tax cuts could help grow our economy, which would mean more jobs and opportunities for all New Zealanders and a higher standard of living. While the report acknowledges that tax cuts are not a "silver bullet" that automatically results in higher economic growth, it says they do have a significant positive effect.

As the report says, there are moral arguments for lower taxes. One such argument is that people should keep what they have justly acquired. However, the report focuses on the way that tax reductions can help economic growth. One way that tax cuts could do this is by increasing the incentives for people to work, which would boost productivity.

The report goes on to note that higher taxes decrease our international competitiveness and are likely to influence New Zealanders to move overseas. It points out a number of relevant statistics: in 2003, the government's tax take was 34.9 percent of GDP, compared to an OECD weighted average of 31 percent. Internationally, tax rates have gone down over the last 15 years, but New Zealand has so far bucked this trend. While New Zealand's top income tax rate of 39 percent is relatively low, it kicks in at just 1.4 times the average wage, one of the lowest thresholds in the world.

Despite all of this, taxpayers should not hold their breath for significant cuts in the near future with the Revenue Minister stating a preference for "incremental change". In the meantime, the case for tax cuts continues to grow stronger.

To read the report, Why Tax Cuts are Good for Growth, please visit:

www.cis.org.au

IN THE NEWS

IVF COULD BE RESTRICTED TO ONE EMBRYO

The UK's Human Fertilisation and Embryology Authority is considering recommendations that would prevent many of the women undergoing IVF procedures from using more than one embryo at a time. The use of multiple embryos is regarded as a significant health risk. The process would still involve the creation of multiple frozen embryos which would only be used if the first embryo implant was unsuccessful. The Times newspaper reports that the recommendations are widely expected to be accepted.

MAKE A DIFFERENCE IN YOUR CHILD'S SCHOOL

With the next round of elections for school Boards of Trustees approaching early next year, a recruitment campaign has kicked off to encourage more parents to get involved in their child's school by becoming a trustee. The theme of the campaign is "make a difference for our schools". Being a school trustee is indeed a great way to do just that.

For more information about standing for your school Board of Trustees, please visit:

www.trustee-election.co.nz

BRITISH SCIENCE CURRICULUM RUBBISHED

A British think tank, The Institute of Ideas, and a group of leading scientists have accused the British government of "dumbing down" the science curriculum in its new GCSE qualification. The qualification continues the trend towards asking pupils their opinion about contemporary issues, such as technology and vaccines, and away from empirical and practical experiment.

TALKING POINT

"Democracy rests on citizens who are genuinely independent of government. And a truly independent public opinion, able to check corruption or excess in government, assumes a nation made up of strong, educated and responsible people." David Green

ENDS

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