finance

The lunatic left all promote a ‘Robin Hood’ tax, aka a Tobin Tax or Financial Transactions Tax. Matt McCarten, himself a stranger to paying tax, even promoted it in the Herald on Sunday.

The problem with such a tax is that it doesn’t work, and it has been tried before with disastrous consequences..

James Tobin, a Nobel-prize-winning economist and disciple of Keynes, first proposed the idea of a global transactions tax—on foreign exchange—in 1972. This newspaper has regularly criticised it on two counts: it would be unworkable unless all governments signed up to it (and perhaps even if they did); and a levy would harm the liquidity of financial markets, making asset prices more volatile. Now there is a third, equally valid objection: that a Tobin tax is a poor solution to the problems in banking—too much leverage, too little care taken in assessing risks and banks that are deemed too big to fail.  Read more »

Bob Dey has an interesting article about Auckland Council and stormwater.

Cameron Brewer also raises some interesting points.

Today’s heavy downfalls and surface flooding around Auckland is a reminder of just how much investment Auckland needs to make to improve its stormwater network. Yet Mayor Len Brown has not committed the necessary money despite pleas from experts, says Auckland Councillor for Orakei Cameron Brewer.

Auckland’s stormwater network needs a financial investment of $9.9 billion over the next 50 years according to an official report presented to Auckland Council in 2011. However in the council’s 10-year budget, or Long Term Plan signed off last June, the council only ‘plans to spend up to $768 million on capital (stormwater) projects’ over the coming decade.

“Despite all the issues that heavy rain causes this council is only spending less than 10% over the next 10 years of what’s actually required. It’s not good enough. We need to address Auckland’s inadequate underground infrastructure.

Both articles are interesting. But here is a question for you:

Council collects depreciation of its infrastructure assets in rates as depreciation. This is a cash collected revenue stream. Currently Council and Watercare depreciate assets at 17% per annum based on an annual replacement valuation of its assets with each asset in each catchment having a line in the ledger and depreciation carried for each asset. Some assets have been carrying depreciation for the life of the asset.

Some infrastructure is 80 years old.

So where has all cash gone?

If the ratepayers have already paid for replacement assets through depreciation in cash – where is the money?

Answer: Council has spent it.

So what?

Well that means they have mis-managed income and funds. And they are now asking for ratepayers and developers to pay them again so that they can replace assets that are over capacity.

Given the length of time and the direct income source associated with infrastructure assets there should be billions available in accrued CAPEX income to spend on upgrades.

So where is the cash?

Trustpower has seen the value of their assets diminish significantly because of the Green/Labour economic hand-grenade.

On top of supporting hundreds of community groups with grants and support up and down the country, Trustpower pays a dividend to its shareholders. 33% happens to be owned by the customers in Tauranga and the Western Bay of Plenty.

And guess what their payout was last year – $385 – way more than Labour’s bribe.    Read more »

The more I look at the video of David Shearer’s Q+A interview the more I think it was a train wreck.

Far from providing clarity on any issues or any policy in fact it clouded anything and raises the possibility that he certainly doesn’t know what he is talking about.

Take his answer on capital gains tax:

We’re not putting our money in the profitable sector; it’s going into the property market because we don’t have a capital gains tax that will help us direct money into those areas. And if you’re wanting to raise money, then at least put money into businesses- invest in businesses through the incentives of capital gains, and that brings, obviously, money into the government as well.  Read more »

Earlier today I posted about student loans and why interest free student loans need to go. The author of the source article has emailed a response.

For whatever reason my comments are not being published on the blog – I would be surprise if you censored my mild response so perhaps there’s some glitch. [WO: It was a glitch, comments are now enabled]

Re:student loans. Your post is a bit of a misfire – we seem to hold similar views.

I have written extensively about the student loan scheme and concluded that there has to be some kind of interest rate reintroduced.

I urge you to read this previous article which I linked to in the one you have attacked:

Here’s a sample quote:

“Students have now been sucking on the election lolly for more than six years. One thing’s for sure – it will be a bitter pill to swallow.”

I myself have a reasonable sized student loan and would be perfectly happy to pay interest on it.  Read more »

The difference between our politicians and overseas politicians is stark. Here in New Zealand we had the leader of the opposition keep an offshore bank account, reportedly with millions of dollars  in it secret instead of declaring it on the Register of Pecuniary Interests.

In France a secret offshore bank account, with much less loot in it than David Shearer’s, has cost a government minister his job and now threatens to bring down the government.

What a difference having a media who holds politicians to account makes.

The French government is in crisis after François Hollande’s former budget minister and tax tsar was charged with tax fraud following a shock confession that he had held a secret foreign bank account for 20 years and had repeatedly lied about it.

Jérôme Cahuzac’s sudden admission that he hid €600,000 (£510,000) offshore for more than two decades is the biggest scandal to hit Hollande’s presidency.  Read more »

If ever there was a need for an explanation of why interest free student loans need to axed it is the entitlement essay written by Richard Meadow on Stuff.

Monday was a day of new beginnings. We celebrated the good lord’s rise from the grave with a three-day chocolate and hot-cross-bun binge.

In less joyous news, a new tax year began, and with it came a series of changes to the student loan scheme.

Monday marked the closure of a 10 per cent bonus for voluntary repayments made to your loan balance.
The minimum repayment was also raised from 10 cents to 12c in every dollar earned above the $19,000 threshold.

With these changes now in place, it’s time to reassess the smartest method for casting off your student debt millstone.

So what should you do?

Nothing at all.  Read more »

David Shearer is a big fan of Finland…perhaps he will soon start suggesting this solution, taxing unpaid work:

FINLAND’S tax authority is trying to find new ways to increase revenue and is considering going so far as to tax unpaid labour, an official has told public broadcaster YLE.

The tax office was looking at service exchanges in particular, such as time banking, where reciprocal services are exchanged using units of time as currency, or more informal arrangements such as that between two neighbours.  Read more »

The Labour/Green proxy blog at The Standard has a post by Anthony Robins where he generously quotes an article by some womble university professor. He says the article proves that the government is short sighted and at the same time proves that he has no idea what he is talking about.

Wayne Cartwright says:

The Government’s plan to sell publicly owned hydro-energy resources is a huge strategic blunder. This is not due to the objections raised so far, such as worries about the public-private ownership model or transgression of Maori water rights. The reason is arguably much more important than both of these concerns.

The Government has grossly underestimated the value of hydro-energy assets to New Zealand citizens. The assets are likely to be worth at least double the amount the Government is prepared to accept. This is because the valuations have apparently ignored the implications of clear signals that global energy costs and prices will increase greatly and permanently within the next 7 to 10 years.

Robins claims that this is proof that the government is doing the wrong thing. But he fails investing in shares 101.  Read more »

Finally, the government is going to start tracking down student thieves who have absconded without honouring their debt repayments on student loans.

The Government plans to hound student loan holders who have gone overseas leaving big debts behind.

Australian-based borrowers in particular will be targeted, as the Inland Revenue Department increasingly uses legal action or debt collectors to claw back money from the most reluctant payers.

Overseas-based borrowers are responsible for 80 per cent of overdue repayments, which amounted to $418 million in October.  Read more »