Buzz from the Beehive: while FPA bill is examined, we’ll ask Carmel for a grant to craft (artfully) a new tax-paying system…

While Finance Minister Grant Robertson was having his monthly brag about the resilience of the economy and the state of the government’s finances, Michael Wood (Workplace Relations and Safety) was bragging about legislation that may well affect the tax drain from private-sector companies and their staffs and Carmel Sepuloni (Arts, Culture and Heritage) was bragging about a mass of money being doled out to artists, craftspeople and what-have-you.

Robertson was commenting on the interim Financial Statements of the Government of New Zealand for the eight months ended 28 February 2022, released by the Treasury yesterday.

Reported against forecasts based on the Half Year Economic and Fiscal Update 2021 (HYEFU 2021), published in December, they show –

Core Crown tax revenue for the eight months to 28 February 2022 was $1.8 billion (2.7%) above forecast, at $68.0 billion. The key drivers were higher than forecast variances in corporate tax ($1.2 billion), other individuals’ tax ($0.6 billion), source deductions ($0.5 billion), and offsetting these was GST revenue which was below forecast ($0.3 billion).

Core Crown expenses at $81.4 billion, were $1.4 billion (1.7%) below forecast, mainly attributable to lower than forecast COVID-19 support payments ($1.0 billion), lower economic and industrial service expenses ($0.7 billion), and lower core government service expenses ($0.5 billion). These variances were partly offset by the top-down adjustment of $1.4 billion.

The operating balance before gains and losses (OBEGAL) deficit of $8.3 billion was $4.4 billion better than the forecast, mainly reflecting the core Crown results discussed above. In addition, the results of Crown entities and State-owned enterprises were stronger than forecast by $0.5 billion and $0.4 billion respectively.

Net core Crown debt was $123.1 billion (35.2% of GDP) at 28 February 2022, below forecast by $1.9 billion due to the core Crown residual cash variance described above and issuance of circulating currency being $0.4 billion more than forecast.

Gross debt at $118.1 billion (33.7% of GDP) was $3.0 billion higher than forecast. This is owing to issuances of $2.3 billion in euro-commercial paper which was not forecast and financial instrument valuations.

Net worth attributable to the Crown was $133.7 billion at 28 February 2022, $0.5 billion less than forecast. Most of this variance relates to the operating balance discussed above.

But will the corporate tax flow (mentioned above) be sapped by the effects of the Fair Pay Agreement Bill, which passed its first reading yesterday?

The Government apparently thinks not because Wood warbled:

“Fair Pay Agreements level the playing field by enabling employers and unions to negotiate a basic floor under the pay and conditions of workers in a sector. This will be critical in stopping the ‘race to the bottom’ we have seen in many sectors, which can see good employers undercut.”

FPAs would shift the focus from competition based on low labour costs and instead would incentivise a focus on things that improve productivity and economic performance including skills and training, innovation, and the provision of better goods and services.

Let’s wait and see how things pan out.

Meanwhile Arts, Culture and Heritage Minister Carmel Sepuloni was doing her bit for increasing government expenditure in the name of recovery from COVID-19.

She announced the Government is funding 41 arts, culture and heritage projects across the Hawkes Bay, Waikato and Nelson regions, following the latest round of Te Urungi: Innovating Aotearoa events.

The Government is committing nearly a half billion dollars to the arts and culture sector, firstly through the $374 million Arts and Culture COVID-19 Recovery Programme announced in May 2020, and more recently with the $121 million Omicron support package for the arts and culture sector. 

Since May 2021, Sepuloni said, 146 “innovative projects” across New Zealand had been supported to bring proposals to life.

Great, although we are left wondering about the worth of the projects she specified:

  • Small Hall Sessions – awarded $250,910 for a project which will bring musicians of national and international repute to the community halls of Hawke’s Bay
  • Toi o te Tau Hou – awarded over $145,454 to develop a digital platform enabling Māori and Pasifika creative practitioners to strengthen and leverage Matariki as a time to celebrate creative practitioners’ role in communicating mātauranga.
  • Te Āwhina Marae – awarded $500,000 for a project to revitalise knowledge base for the restoration of Ngā Toi Māori in Te Tauihu, foster an inter-generational succession plan, protect regional mātauranga Māori, and create recognised pathways for visual and practical arts communities.

Sepuloni’s announcement was made just a few days after the Taxpayers’ Union updated its comments on the Ministry for Culture and Heritage’s COVID “Innovation Fund“.

The fund at that time had granted 105 projects a total of $15.9 million, and (the Taxpayers’ Union observed) “many of the spending decisions are truly bizarre”:

“Common themes in the funded initiatives include virtual reality, storytelling, digital installations beside rivers, and bespoke IT projects.

“Needless to say, none of these projects have any relevance to COVID-19, despite the money coming from Grant Robertson’s rapidly-dwindling “pandemic fund”. The spending decisions are almost funny until you remember that every dollar could have been spent bolstering our health system, or returned to a struggling taxpayer.”

 At the time that analysis was published, there was still another $44 million to be spent from the fund.  The Taxpayers’ Union ventured

“… and it is clear to see that the Ministry has run out of worthwhile projects to bankroll. It’s only a matter of time before taxpayers are literally funding underwater basket weaving.”

The fund’s basic “seed funding” grants were all set at $20,000, said the Taxpayers’ Union, with no apparent regard for whether the project justifies the full sum.

“Regardless, the sheer quantity and variety of projects funded means there is little realistic possibility for follow-up analysis to ensure each project delivers value for taxpayers.”

Project descriptions from successful grant applicants include:

To scope and test a new interactive social gaming experience meant to democratize content creation and e-sports, increasing commercial opportunities, sector sustainability and improving access and participation
Awarded: $20,000

Atawhai Interactive
To develop an accessible online game, Toroa, that gives tamariki and rangatahi an experience to fly as Toroa on its journey from the Pacific Ocean back to its home on Taiaroa head. It will explore the themes of whakapapa as the Toroa soars over the ocean, deified as Takaroa, on the winds of Tāwhirimatea.
Awarded: $250,000

Good Company Arts
To create a series of immersive virtual reality journeys that celebrate the sound and form of Taonga Pūoro [traditional instruments], thereby connecting a wider audience to the artform and to the whenua.
Awarded: $20,000

Te Rūnaka o Ōtākou
Scoping the use of a web platform to leverage pūrākau [myths and legends], and traditional and contemporary technologies to connect with the Ōtākou diaspora.
Awarded: $20,000

Dr Rory Clifford
To develop a business plan for virtual reality recreations of current Māori wāhi tapu [sacred places] with an initial focus on Kāi Tahu marae and their historic sites of interest.
Awarded: $20,000

Maata Wharehoka
To further develop a project focused on transmitting, revitalising and providing accessible ways of learning tikanga Māori practices surrounding deathing, death and after death.
Awarded: $20,000

Dinnie Moeahu
To undertake research and engagement to support the development of Te Āhua o Te Tangata, a cultural competency framework for local government.
Awarded: $20,000

Rehua Innovations
To build local capability by repurposing two under-utilised waka ama [outrigger canoes] into waka tere [racing canoes] and increasing traditional sailing capabilities through wānanga
Awarded: $250,000

Māoriland Charitable Trust
To deliver Purita, a capability system to enable identification and development of Māori potential through the creation of content, but also a platform for this content to be distributed and seen around the world. Purita will also platform an extensive library of global indigenous content.
Awarded: $1,015,300

Maungarongo Marae
To hold wānanga [classes] to brainstorm the design and content for a system for embedding mātauranga [Māori knowledge] in ngā toi [the arts] to safeguard it and provide access to it in a managed and safe way that aligns with the kaupapa of Maungarongo Marae.
Awarded: $20,000

To develop ‘Atuatanga’, an interactive virtual reality gaming experience that will use te Reo Māori and mātauranga Māori to engage players through challenges as they navigate through an ancient world restoring the taiao for future generations.
Awarded: $585,000

Narrative Muse
To support the development of Narrative Muse, a digital platform to help Aotearoa audiences access books, movies and television content that reflects intersectionality and gender diversity.
Awarded: $500,000

Taki Rua Productions
The development and delivery of two immersive live productions of large-scale contemporary Māori performing arts pieces. By presenting mātauranga Māori within contemporary performances the project will increase access and participation to both mātauranga and contemporary performance art.
Awarded: $1,323,000

NZ Festival
To develop a new values-driven ticketing platform, empowering audiences to choose their own ticket price, thereby increasing access and participation in the cultural sector.
Awarded: $200,000

Here at Point of Order, we have been musing on a variant of that last one.

We would develop a new values-driven tax-paying platform, empowering people to choose their own tax liabilities, thereby increasing access and participation in the taxpaying sector.

That’s got to be good for $200,000.

Latest from the Beehive

Innovation leading Aotearoa’s arts and culture recovery

The Government’s ground-breaking COVID-19 recovery programme Te Urungi: Innovating Aotearoa is continuing to revitalise arts and culture through innovation in more regions across the country, Arts, Culture and Heritage Minister Carmel Sepuloni said.

Accounts reflect resilient economy amid Omicron

The resilience of the economy has continued to be reflected in the Crown’s accounts, though the full effects of the Omicron outbreak have yet to show up in the books which reinforces the need for balanced financial management.

Everyday workers take centre stage as FPAs Bill passes first reading

Stories from the frontline of some of New Zealand’s most critical workforces were front and centre as the Government’s Fair Pay Agreement Bill passed its first reading today.

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