Paula “Ben­e­fit” Ben­nett has announced that:

The number of people receiving the Unemployment Benefit has dropped by 4,224 over the last month.

Great! However, this may have to do with seasonal work:

Regionally the biggest drop in Unemployment Benefit numbers was in the East Coast (20%), Auckland (16%) and Bay of Plenty (11%).

All regions with strong seasonal variations in labour demand – particularly when it comes to forestry work, fruit and vegetable production, etc.

Good availability of seasonal work in areas like Gisborne, Bay of Plenty, Otago and Hawke’s Bay is expected to remain strong through to April.

Here’s the real challenge Paula – make the decreases last longer. And let’s make sure the people on a sickness benefit actually are sick, and not just transferring off the unemployment benefit. Otherwise keep up the good work.

New blog Soap Box has posted a disturbing pamphlet from the New Zealand Prostitute’s Collective, written in Chinese. I’m not a fan of prostitution and would never pay for sex; however I supported the decriminalisation of prostitution because – like cigarettes and alcohol – prohibition could never work (technically we didn’t have prohibition before the Prostitution Law Reform Act was passed – despite what its detractors said, prostitution was legal for the purchaser but not the provider under the old law). The aim of the law to reduce harm to prostitutes was certainly an honourable one.

However, it seems from the NZPC’s pamphlets that they’re actually now promoting prostitution. What is disturbing about the NZPC’s pamphlet is that it is clearly being used to justify to a number of Chinese students in New Zealand working as a prostitute. The pamphlet doesn’t appear to state that international students in New Zealand aren’t able to work as prostitutes, surely the most basic of facts (and yes, I realise that a number of Chinese in New Zealand won’t be students – but those most likely to become prostitutes are students, not recent immigrants).

Sure, NZPC points out that plenty of prostitutes are working illegally. But not to inform Chinese students of its illegality – and the possible consequences – is critical.

Epic Win Beer Fridge.

• The NZ Herald thinks government’s being timid. Jesus, even Granny’s started to notice…
• Karori Moriori English can pick up our economic problems but doesn’t seem to want to implement the solutions to them.
• David Cunftliffe should STFU. C’mon David, you know full well that policy settings from ‘84 to ‘98 created the growth that your party squandered, before chocking the economy to near death. Or do you really think that strapping New Zealand business with red tape actually helps them somehow?
• Mainfreight managed to grow during a recession. The moral of the story? Good management often counts for more than economic factors. Which is why managers deserve greater compensation for when things go right.

Like I said, don’t get your hopes up. DPF rates Key’s Opening Statement to Parliament with a “B”. I’d give it a “C”, although I’m tempted to give it a D (i.e. fail), because Key has simply disregarded the Tax Working Group and 2025 Taskforce’s recommendations (his reactions to Capital Markets will be out next week).

Key ought to have done something about the tax status of property. That would’ve given the government better leverage to to get income, trust and corporate tax rates down (NB: I’m not totally convinced of the need for a land tax, but think LAQCs should go). Increasing GST to cut income tax was a good move, but there is little mention of cutting spending save for better enforcement of welfare rules. To do it, Key will break a promise on not increasing GST. He should’ve broken his promises on superannuation thresholds and the age of eligibility.

Bernard Hickey is saying I should get a one-way ticket to Australia because of Key’s failure to introduce a land tax. Personally I’d rather do what my parents did in the 70s and go earn the big money in Europe to save. Or join my mates in Hong Kong or Singapore. But I digress…

Sometimes I despair at the wowserism of this country. A poll in the Herald today of 1,608 New Zealanders find 49% of us want to ban the sale of cigarettes within 10 years. Apart from the financial and health costs, I think smoking is an awful habit. But does that mean I am justified in calling for a ban of cigarette sales outright? Of course not.

Not only will banning cigarettes deprive the government of tax revenue to help prop up our already ailing public health system, it will create a black market for tobacco (which already exists in Golden Bay), more than likely controlled by the criminal underworld. We will still have the pay the costs associated with health care for smokers while losing the ability to regulate the drug. Then there’s the wider issue about the rights of the individual. Now I don’t have a problem with smoke free workplaces, in fact I think they’re great (it makes it easy to find project managers as well – they’re always having a nervous ciggy in the smoker’s area); but there is the serious issue of individual freedom.

If someone chooses to light up – especially in their own home – what right does the government have to intervene with their choice, particularly since the risks of smoking are so well spelled out? How many precious hours of our already stretched police forces will be wasted chasing illicit tobacco sellers, staking out “rolly” houses?

Simply put, banning smoking won’t stop it. That 49% of New Zealanders think it should be banned is an embarrassment.

Nikki Kaye MP and Prince William

Ok, ok, I know it’s the second one in the last few days… but so worth it. Remember keep it clean, nothing nasty

One rule: keep it clean.

Basically what Whale said.

Labour’s “proposal” reminds me of a great story from Finland some years ago: Nokia boss gets record fine. Finland is one of those funny Scandinavian countries that follow crypto-socialist policies – their traffic fines are proportionate to the latest available data on an offender’s income.

So poor old Anssi Vanjoki, CEO of Finland’s iconic Nokia, was ordered to pay a fine equal to 14 days of his income in 1999, which was about 14 million euros (NZ$28 million) because he was going 75km in a 50km zone on his mid-life-crisis bike. His income was unusually high in 1999 because he hadn’t taken up share options in Nokia, due to a share price slump.

This example shows, for me, why greater fines for the wealthy are stupid. Of course Vanjoki fought the fine to the bitter end. The real problem with our system of fining people is that we don’t properly enforce it, and our cops hand out speeding tickets as if they’re at a Nascar rally. This ensures plenty of people just keep on breaking the law and running up massive fines, until they’re so great that the courts write the fines off for community service, usually at hourly rates the perpetrators could only dream of earning in the real world.

The Mayor of Newmarket, Cameron Brewer, writes in The New Zealand Herald again today on GST. This time, Brewer takes aim at the Tax Working Group’s proposal to increase GST to 15%, arguing:

If an increase in GST is to lead to a fall in consumption, a tightening of business margins and a Government being hurt politically, it is hard to imagine the Finance Minister announcing it in his second Budget.

Cameron’s right that increasing GST on its own will lead to a fall in consumption -that is inevitable as prices rise. However, when combined with a cut to corporate and personal tax rates, it is likely consumption would remain unaffected. This is acknowledged, with an interesting rider:

An increase to GST could help to offset any cuts to the corporate and personal tax rates, but it would mean Kiwis’ pay-packets would shrink overnight.

Now this rider isn’t exactly correct. Increasing GST won’t hurt Kiwis’ pay packets, but it will mean we pay more on transactions. What would hurt pay packets would be not cutting income tax and corporate tax at the same time. That’s the real issue with raising GST – the only other valid issue is the potential to hurt inbound tourism, although I suspect a higher-valued Kiwi dollar versus the US dollar is hurting our tourist trade more, as it makes New Zealand less attractive (besides, a 15% sales tax is not that huge compared to other countries – I think the Japanese have a 25% sales tax from memory). That issue could also be easily remedied by allowing tourists to claim-back GST on their large purchases, as Cameron has previously proposed (and already occurs in Australia).

The real problem with raising GST is not cutting income and corporate tax rates at the same time. The Minister of Finance has ruled out cutting income tax, and may be forced to cut corporate tax because the Australians are going to in their next budget. The $2 billion raise from increasing GST could easily go towards cutting income tax towards 30% for top earners, and to get our corporate tax rate down. Since GST is a more efficient flat tax (and you can easily introduce measures to ensure the poorest members of society aren’t hurt too badly by an increase) increasing the amount of GST while cutting income and corporate tax increases the overall efficiency of our tax system. Sadly, it doesn’t look like the Minister of Finance will do that, so Cameron’s fears of a moribund retail sector may be well founded.

So, 2009 came to a crashing end for me as soon as work stopped – the worst ‘flu of the year. Typical – as soon as the stress is off your immune system is up the creek without a paddle.

So due to my illness I’ll be writing up some long, meandering posts on the year ahead.