finance

A Guest Post – Life Le$$ons

A Guest Post about Financial Compatibility.

I love my significant other but we are not a good fit for each other financially.

Ask yourself how many times have your fights been about or related to money? How it was spent, why it was spent, whether or not you could actually afford the purchase, whether or not to save and so on.

Despite the important role money plays in a marriage or long-term relationship many couples are reluctant to discuss finances before moving in together. My husband and I did a marriage compatibility questionnaire before we married. It said that we were more than 80% compatible but I do not recall it asking much about money. It may have asked if we were going to have joint or separate bank accounts but that was all.

At the time I thought that a joint bank account was the way to go. I handled all the finances and as I was a risk averse, deadline-focused individual I thought we would be fine. How na√Įve I was.

I wanted to invest in investment property but he wanted to put money every week into a long term Superannuation scheme. That was not what I wanted to do, as I preferred property. However I decided that if my impulsive free spending partner wanted to commit to a conservative scheme then I should support him in that. It was made very clear to us what would happen if we took money out within the first 3 or so years. No problem I thought, we are in this for the long term.

A year or so later my impulsive partner took me out one weekend. We ended up at a car yard. Next thing I know my fully paid for economical hatch back had been traded in for a red convertible. The next day in order to be able to make the payments on the new car we pulled out of our scheme losing thousands in the process. Now I am not blaming my partner totally for this. He did NOT twist my arm. I agreed in the whirlwind excitement of it all.¬† Read more »

Hosking points out the obvious flaws in Labour’s wood policy

Mike Hosking sees right through Labour’s wood policy…another that they will no doubt claim is a “game changer”.

In what the Labour Party will hope is some sort of turning point in their poll run, they’ve started talking wood. They’re pro-wood. They’re getting into and involved in the wood industry.

The potential upside of this is it differentiates them from the Government. It gives them a point of difference. What they’re up to is incentivising the industry Рthere will be tax breaks for it.

Now the immediate problem I had with the idea is that it originated from their manufacturing inquiry they held a couple of years ago. That was the cross party ‚Äėcrisis‚Äô inquiry where Labour, the Greens and NZ First wandered around the country listening to people complain about manufacturing. The big problem being that while they were all in a room together wringing their hands and moaning, manufacturing was going gang busters. Manufacturing has been expanding for the past 18 months in a row and across all sectors. Manufacturing levels are at record highs.

The single best thing Labour could do is declare that the wood industry in crisis and hold an investigation into it.¬† Read more »

Let’s have a living tax on companies

David Farrar discusses a “living tax” proposal for offshore companies who pay little or no tax in New Zealand…like APN and Fairfax.

This old fashioned concept of paying tax on profit must be disposed of. We should demand a fair tax system. Let‚Äôs calling it a living tax ‚Äď the level of tax a company should pay so that it no longer feels wretched and is helping fund a civilised society.

I think a 15% tax on revenue would be a fair living tax. ¬†Both the Herald and the Dom Post have repeatedly run stories and editorials comparing tax to turnover, not profit. So we should start the living tax campaign with them. Here‚Äôs how it would work:¬† Read more »

A Guest Post – Equality vs Inequality

A reader emailed this today:

Labour and the Greens are making a lot of noise at present about the widening gap between the rich and the poor.  So I have put a few thoughts down on this matter.

1.       Labour and the Green Taliban talk much about the rich getting richer and the poor getting poorer.  What they are in effect doing is driving a wedge  into our society as they harp on about this and are in effect creating a divide in our society.  Those who are poor should hate those who are successful because the implication the left want to spread to their useful idiots is that those who are successful must have done so by taking the resources off the poor and exploiting them.

2.       The left harp on about the fact that those who earn the high salaries are not paying their fair share of tax.  This is utter bulls**t.  Those earning $100,000 are paying significantly more multiples of  tax than the people earning $40,000 or $50,000.  Someone earning $200,000 per annum is probably paying in excess of $60,000 income tax per annum.  It is bulls**t to say that person is not paying his / her fair share.  The reality is that the 12% are paying 75% of the tax.  Effectively to prop up the spending promises of successive Governments, but especially the last Labour Government.

3.       The rich cannot help but get richer.  If I have $1,000,000 in assets and invest those assets at 5% (very modest I know but hold with me) then in 12 months I will have $1,050,000 in assets.  If I have $1,000 invested a 5% then in 12 months I will have $1,050. The rich cannot help but get richer. That is a fact of life.  Of course those with the $1,000,000 use their money to create jobs and capital investment so the whole pie for society can grow bigger.  22 years ago I came back to NZ without a cent to my name.  In that time with very hard work, careful management and setting goals I have managed to accumulate a reasonable asset base. More about that that later.

4.¬†¬†¬†¬†¬†¬†¬†The good news is that here in NZ we generally have equal opportunity to succeed.¬† That is what counts.¬† True some have more opportunity than others and different circumstances.¬† But I ask this.¬† Is it possible for a kid from NaeNae or Otara to become a partner in a law firm, a business owner, a policeman, a teacher, an artist, a member of the military, a civil servant, or even the Prime Minister.¬† The answer is yes. That kid can do whatever he/she wants so long as they have a game plan, some life goals and the intelligence.¬† All jobs have different pay scales and the outcomes will be different, but it is the opportunity that counts.¬† While Labour and the Greens seem intent on focusing and splitting the nation with their envy of success, and hatred of the poor,¬† the National Government is getting on with doing what it reasonably can to ensure all our kids can follow their life dreams.¬† What the Labour/Green envy and hatred does is tell the kids from Otara and NaeNae that you can‚Äôt be successful because you are poor.¬† The Labour and Greens suppress self-responsibility and ambition and think only the Government can help those at the bottom of the heap. ¬†¬† Read more »

Why is Len Brown seeking to raise rates when council is projecting a $100M surplus?

Len Brown has been categoric in insisting that he will be increasing rates yet again…just by not as much on average as he has been stiffing Auckland ratepayers.

But you do have to question why he is pushing for rates increases when Council is projecting a surplus in documents leaked to this site via the tipline. If there is a surplus that means Council has taken too much in rates and other charges.

Unfortunately the politicians will likely claim that cash to spend on their pet projects AND still stiff ratepayers with increases.

Council’s furtive and sneaky behaviour will likely try to stifle any investigations into this matter but it is certain that council intends to run an operating surplus in 2014-2015. That at least initially makes for a headline in MSM and blogs about a surplus being budgeted. But it should also raise questions on rates and other income and perhaps suggest there is no need for Len to put rates up this year?

An email, obtained via the tipline, from Ross Tucker, the manager of Financial Planning and Strategy for Auckland Council reveals the details.

From: Ross Tucker
Sent: Thursday, 23 January 2014 3:00 p.m.
To: [REDACTED]

Cc: Andrew McKenzie; Matthew Walker

Subject: RE: 2014-15 Annual Plan

Hi

Andrew has asked me to respond to your queries. ¬†¬† Read more »

Another “wretched” corporate busted

David Farrar busts Fairfax’s chops today, just a day after the fools at the NZ Herald decided to draw attention to their own tax issues. The NZ Herald says tax dodgers, like them, are “wretched”.

The Dom Post editorial:

Taxes are what we pay for a civilised society, according to the great American Supreme Court judge Oliver Wendell Holmes.

If that is so, then aggressive  is an offence against civilisation.

I’d love to know what the Dom Post defines as aggressive tax avoidance. I presume it means tax avoidance done by other companies, but not by ourselves.

Google, for instance, whose slogan used to be ‚ÄúDon‚Äôt be evil‚ÄĚ, in 2012 paid a mere $165,000 in tax in New Zealand. Amazon paid $1.6m tax on sales of $46.5m. And Apple paid $2.5m on sales of $571m. Does anyone think these companies are paying their fair share?¬† Read more »

Tagged:

Auckland Council pays interest at $1 million per day

The Auckland Council 2013 Pre-election Report (PDF 477KB) makes for sobering reading. Especially Page 6.

Here, the CEO’s report lists the Council’s debt parameters including the fact that now, and over succeeding years Auckland’s borrowings amount to “Net interest on Council debt at 20% of annual rate revenues”.

councildebtNow that’s a lot of dosh and in understandable terms, given that current debt totals around $6 Billion, at a 5.75% interest rate this is an interest payment to the banks of just under¬†$1 Million per day. Yes, every day. ¬†¬† Read more »

I wonder if Nicky will spill the beans on his own Trust?

Hager

Nicky Hager

I see Nicky Hager is being promoted by the Fabian Society:

Nicky Hager recently participated in a multi-country investigation of a huge leak of tax haven information. He will speak about what they discovered and the implications for New Zealand and other countries. He believes that tax havens play a central role in undermining the rule of law internationally: facilitating corruption and crime, hiding unethical activities, assisting powerful countries and companies to rip off poorer countries and enabling wealthy individuals and companies to avoid paying their share of taxes.

Nicky Hager has his own trusts…”in undermining the rule of law…enabling wealthy individuals and companies to avoid paying their share of taxes.

Hager wants us to believe he has an amazing international scoop thanks to stolen documents from the Cook Islands.

He is part of a team of authors releasing a worldwide expose telling us what we already know, using this stolen property, that people use trusts and offshore companies to own stuff.

Even old men like Winston Peters know the Cook Islands is a tax haven and that it has been for years. Read more »

Why a Robin Hood tax won’t work

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‚ÄĒon foreign exchange‚ÄĒin 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‚ÄĒtoo much leverage, too little care taken in assessing risks and banks that are deemed too big to fail.¬† Read more »

As the rains pour down and the flooding continues, where is the cash?

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‚Äôs 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‚Äôs 10-year budget, or Long Term Plan signed off last June, the council only ‚Äėplans to spend up to $768 million on capital (stormwater) projects‚Äô 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?