Insights - The NZ Initiative

Issue 38/2013 - 11 October 2013

In this issue:

Big personalities but short on policy | Ben England
We should be grateful for the steady hand | Jason Krupp
The government is not Santa | Jenesa Jeram
All things considered ...
On the record

Big personalities but short on policy

Ben England | Communications Officer | ben.england@nzinitiative.org.nz
Twenty-four hours from now local election voting closes. Time is ticking to tick those boxes, lick that envelope and proudly post your papers off, thus exercising your democratic right to vote for your chosen local government representatives.

Too bad it’s a little difficult to pick out many of the candidates’ actual policy ideas.

Let’s take some of the Wellington candidates for example. By all appearances we have some honest, nice, pleasant folk.

Contributing to local charities is a wonderful thing. So is giving up your weekends to coach footy. It’s nice to know that our local candidates have the guts to take the plunge and raise a family. They appear to be extremely giving, they like our national sports, and know the struggles of parenthood.

The problem is, none of this builds a single new house, makes our water flow when it should, or gets us to the salt mines on time via public transport. Personal achievements tell us virtually nothing about actual grass-roots policy – what are they going to do for your community, why, and how?

Personalities are important. We do actually want to like the person we are voting for. However, a manifesto should be like a business plan. At the very least it needs to list who the person is, get straight into their vision for the community, and then take that tactical leap into why this is important for the local community and how they plan to implement their policies.

We seem to have a lot of independents in 2013, and in the absence of policy promises, voters should at least be given some clues as to where on the political spectrum the candidates are aligned. Although each candidate may have their valid reasons for not wanting to appear on the traditional left-right pendulum, it does help to know where they sit in their political alignment because many Kiwis identify themselves that way when they vote. They are trying to match the person on the paper to their own political leanings and value systems.

Local governments are important, much more so than current political fashion in New Zealand may suggest. They manage the nuts and bolts of our communities. Therefore, being able to sketch out an actual plan to build on the stated vision within an election manifesto is essential in making sure we have the right candidates to hammer the nails in.

We should be grateful for the steady hand

Jason Krupp | Research Fellow | jason.krupp@nzinitiative.org.nz
Safely perched in the obscurity of Wellington, it’s with a strange combination of boredom and fascination that I’m watching the US budgetary showdown, a bid by the Republicans to force the Obama administration to dial back state healthcare spending. This is because as a former markets reporter, I know almost with a certainty that one side will blink before too long.

One only has to look at the extreme haircuts private bondholders accepted to prevent Greece from defaulting a few years ago, to be able to extract some certainty that the US will lift its debt ceiling and make good on its debt payments. It is, quite simply, too big to fail.

Perhaps that explains why investor reaction has been so muted, with the Standard & Poor’s 500 Index having chalked-up only modest declines so far. The fascinating part comes when looking at the size of the US fiscal dilemma.

As of October 8, US Federal debt stood at about US$16.7 trillion. Putting that into more manageable terms, it represents $52,883 for each person in the “world’s richest country”.

But don’t get your hopes up of Americans paying that back anytime soon, even if the Republican bid to cut Federal spending by stymying “Obama-care” works as intended (early indications suggest it may backfire).

Firstly, according to the Roosevelt Institute (a Keynesian group) the US federal government has been in debt every year since 1776, barring one brief exception. Secondly, as a general rule the worst spenders are Republicans, not Democrats.

It seems Americans have no appetite for real budget surpluses despite what they say.

Meanwhile, in New Zealand, the government announced that thanks to a bigger corporate tax take and lower spending on the Canterbury rebuild, it had more than halved its operating deficit before gains and losses to $4.41 billion in the 12 months ended June 30.

That’s put it on track to deliver a budget surplus in 2015, a position the Americans haven’t been in since Bill Clinton was in office.

That fiscal prudence will have to be ramped-up if we’re to return the government accounts entirely to the black, and cope with the massive blow-out in spending that’s expected as an increasing number of baby boomers hit retirement age (as previously discussed).

Even so, it’s pretty solid proof of Finance Minister Bill English’s steady hand at the economic tiller – one I think all New Zealanders are pretty happy with, especially when looking at the North Americans.

The government is not Santa

Jenesa Jeram | Research Assistant | jenesa.jeram@nzinitiative.org.nz
It is a sign of maturity when children discover that Santa is not real. There is no fat, bearded man who comes down the chimney and deposits gifts under the Christmas tree. It was their parents all along.

In the same way, every taxpayer must realise that government services aren’t gifts. They are paid for by fellow taxpayers, not a faceless government gifting out of the goodness of its heart.

This is the rationale behind the Australian Treasurer’s commitment to sending every taxpayer a thank-you note and taxpayer receipt, outlining where the government has spent their hard-earned dollars.

Broken down into the budget categories, Australian taxpayers will be informed how much of their tax is spent where.

This year revealed the Australian government assigned a whopping 58% of its budget on social welfare, health and education alone. So perhaps it is timely to consider how much tax goes towards core government functions, and how much is redistributed to other members of society.

With this in mind, while a tax receipt will undoubtedly contribute to a more informed citizenry, it still doesn’t provide the full picture of the interdependent relationship between government and citizen.

If one is to receive a taxpayer receipt, surely they should also receive a taxpayer invoice outlining the costs of all government services that person consumes.

It’s all very well to demand lower taxes for yourself, or higher taxes for others, but such assertions should take into consideration how reliant you personally are on the provision of government services. Is it justifiable for a person who consumes more in services than they pay in tax to demand higher taxes of others?

Likewise, how can a person demanding lower taxes demand more expansive government services in the same breath?

It is important for citizens to realise the extent to which their wealth is either directly redistributed, or the extent to which they enjoy the redistributed wealth of others.

Obviously, quantifying every single public good and service a person consumes would be near impossible. The relationship between government and taxpayer spans across a lifetime, from attending public primary schools to receiving superannuation.

Despite only painting half the picture, a Treasury-issued tax receipt is an important first step in prompting citizens to scrutinise their relationship with government and to realise their personal stake in government expenditure. Hopefully then people will start thinking of the government not as Santa, nor the Grinch, but just like the rest of us, trying to balance a budget.

All things considered ...

Graph of the week: If Edward Snowden and WikiLeaks haven’t convinced you that the government is watching, perhaps this excellent info graphic from The New Zealand Herald will.
Speaking of secretive collusion, arch-conspiracy theorist Norman Baker has been promoted to Minister of the UK Home Office. Presumably tinfoil hats will be mandatory office wear.
The New Zealand Initiative research fellow Rose Patterson made the news twice this week, first for her education report and then for her on-the-spot reporting from Auckland Airport.
It’s long been suspected that if you played the record backwards secret meanings would be revealed. Turns out Lorde has been hiding quite a bit from the public, according to The Civilian.
Rightly or wrongly, the term “racist” gets slung around a fair bit. Watch this tongue-in-cheek video to check if you are, indeed, a racist.
Everyone’s heard the expression “don’t bring a knife to a gun fight”. As it turns out the advice is completely and utterly wrong.
ends

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ACT Leader John Banks today confirmed that he has stood down from his Ministerial positions following today’s decision at the Auckland District Court.

“Last week I indicated to the Prime Minister’s Chief of Staff that I would offer my resignation should the matter relating to my 2010 Mayoral Electoral return be committed to trial,” Mr Banks said...

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