News that the Swiss have voted to ban minarets only goes to show how stupid binding citizen initiated referendums are. The move was is supposed roll back “radical Islam” in Switzerland. Of course it won’t – all it will do is give Muslims in Switzerland a sense of grievance. That will only fucking help radical Islam, not stop it. It strikes at the heart of freedom of religion – you know, the thing our grandparents died fighting Nazi Germany for. Oh that’s right, those holey-cheese eating cuckoo-clock-and-miniature-knife making  Swiss sat out the Second World War, choosing instead to be the banker for Jewish refugees, Russian Communists and the Nazis themselves. So the Swiss must’ve missed the memo on religious freedom.

Given that the country is often cited as an example for New Zealand to follow by advocates of binding citizen initiated referendums, it’s worth taking notice of. With 57% of those who voted supporting the proposition,  just 31% of the people actually supported the proposition.

It should be pointed out that the issues usually picked up on by advocates of binding citizen initiated referendums are the result of some sort of legislative change – section 59, Electoral Finance Act, Civil Unions Act, Prostitution Law Reform Act, etc. The recent “March for democracy” emphasised the multiplicity of options.

So here’s my answer to direct democracy on odious legislation, by amending the Citizens Initiated Referendum Act 1993 to the People’s Veto Act:

• Reduce the threshold for referendums to 5% of registered electors;
• Questions to follow the form “Do you vote to veto the xxxxx Act 2009?”: Yes / No;
• Referendums only to be held by secret ballot at either general or local elections (to ensure turn-out – none of this postal vote BS. It also saves money);
• Bills of Money and Supply (i.e. the Budget) cannot be vetoed – so we don’t end up like California;

What do you guys think?

John Key has predictably stated that the Government will “keep its promises”, and therefore won’t be implementing the report of the Taskforce 2025. The Standard gives the cookie-cutter response of the left – Dr Brash is evil, ridiculous and silly all at once. One quote really says it all for me:

The neoliberal agenda has never been about growing the pie. It’s about taking a larger slice for the rich; stealing from the poor. Look at the ‘nuggets’ and you see that’s exactly what they want do. It’s all about weakening workers’ rights, lowering their wages, and cutting the social wage to enable a transfer of wealth to the wealthy.

Herein lies what I think is the key contradiction of social democracy: if you want better wages, better conditions for workers and better social services, you need a wealth-generating economy to pay for it. While The Standard might whine that the “neoliberal agenda” is about taking a larger slice for “the rich”, the fact of the matter is that wealth disparity has been getting worse in New Zealand since our economy began to under perform – at least a decade before 1984 (albeit, things did get worse post 1984 – when we had to pay for the previous ten years’ pissing around). Labour might’ve talked about getting New Zealand into the top half of the OECD, an admirable goal, but they did precious little to go about reaching it. Their lack of fiscal restraint has pumped up inflationary pressures in the economy.

Anyway, here’s the reports recommendations, from the NBR:

• Replacing the top tax rate of 38 cents in the dollar and business rate of 30 cents in the dollar with a top tax rate of between 20 and 25 percent;
• Limitations on some universal benefits. Those included interest-free student loans and subsidies for early childhood care education;
• The Government to reduce operational spending to 29 percent of gross domestic product by 2012-13;
• Use the NZ Superannuation Fund to pay back borrowing and change the age of entitlement;
• Impose congestion charges in cities to pay for roads;
• No capital gains tax.

These recommendations are made on the report’s following principles:

• Sharpening private incentives to invest, to save, and to work;
• Minimising the regulatory obstacles the government puts in the way;
• Managing the public sector’s own huge assets much more effectively;

All good starting points. The report also recommends that some policies not be implemented:

• Greater research and development support (i.e. tax credits for R&D);
• A new government financial institution;
• “Sectoral-based” growth strategies (i.e. tax credits for certain sectors of the economy)
• Initiatives to lift workplace productivity;
• Compulsory private superannuation savings scheme;
• Exchange rate regime; (we’re looking at you Labour)

All interesting proposals. I’ll comment further once I’ve had a chance to read the report in full.

Radio New Zealand is reporting the Taskforce 2025 will recommend cutting government spending to 2005 levels, to achieve a flat tax of 20 – 25%.

That would mean reducing expenditure from $64 billion to $44 billion (that’s right, government expenditure grew $20 billion over four years).

As you’d imagine I’m rather excited about the Taskforce 2025 report’s announcement tomorrow at 1:30pm. It appears some of the recommendations have already been leaked to the media – apparently there’s plenty of spooky tax cuts, spending cuts and privatisation.

This looks like Politricks 101 to me – leak the “extreme” recommendations of the report (i.e. what Espiner has reported) and disassociate yourself from them, only to accept the more moderate recommendations (perhaps some tax cuts and base re-allocation, sinking lid spending cuts, etc). Key’s argument that National campaigned on not privatising or cutting spending is credible from this perspective, but not if he wants to close the gap with Australia. The moderate path will be enough to win National another term in office – but then what?

Key ought to use the Taskforce report, and the Tax Working Group, to form the basis of his campaign in 2011. That would give a National-led government a mandate to make change, inject vitality into business and the economy at large.

Parenting Fail

FAIL

• Security at the White House.
• Dubai (worryingly, their foreign liabilities are roughly the same as ours)
• Tiger Woods driving. On the road, not the fairway.
  

WIN

• Smartpay finally gets into the black.
• Those efficient Swiss, getting Polanski’s house ready for his impending house arrest
• Jaguar Landrover, also back in black.

Marty G at The Standard complains that income tax cuts help the wealthy the most. There’s a simple explanation for that: in a progressive tax system, the wealthy pay proportionally more of the tax burden. That’s the whole point of progressive taxation.

So naturally it’s very difficult to cut income taxes so that cuts only benefit poorer New Zealanders.

I know I’ve been silent this weekend – I’ve finally got around to reading Business New Zealand’s excellent paper “Setting NZ Apart”. My thoughts will follow…

Thank God It’s Friday:

• Tongan Monarchy to become more democratic. Good.
• Goff’s race card beaten by Key’s set of “we’re actually in government” cards.
• The Pussy cat dolls break-up.

Colin Espiner reports that the Tax Working Group has put out its ideas to transform New Zealand’s tax system. Let’s look at each:

* Cut top personal tax rate in line with corporate and trust tax rates

Good – the difference between personal and corporate tax rates encourages director-shareholders of businesses to arrange their business affairs to avoid tax. Reducing personal tax rates would ensure this doesn’t happen.

* Cut taxes on capital income and remove ability to offset wage and salary income

Half good and bad – offsetting wage and salary income enables small business owners to get a return from their operations they otherwise wouldn’t receive. However, cutting tax on capital income means more capital investment, as returns would be better.

* Close tax shelter loopholes

Bad if you’ve got a tax lawyer or the Cook Islands Government. Neutral if you don’t. Good if you’re the New Zealand Government.

* Raise property taxes and/or GST

Neutral – if personal tax cuts come into place at the same time, this would be of benefit to first-time home buyers and would increase the Government’s tax-take on consumption.

* Adjust tax rates on interest payments for inflation

Neutral – would be difficult to implement, and complicate the tax system.

* Increase rates to push down property prices and ring-fence losses on rental properties

Bad – would probably make John Key unelectable, but more importantly hurt “mum and dad” investors with rental properties.

* Make income on capital investments tax-free until money is withdrawn

Good – will encourage investment in shares, bonds, etc. In conjunction with raised property taxes it would be very good for the “tradeables” (i.e. export) sector. However, again that would hurt mum and dad investors.

Saturday Night Live mocks you.