State servants cool on pay curbs, despite Robertson eschewing the “freeze” tag – but will they warm to a koha-based tax system?

Finance Minister Grant Robertson reminded us – in a speech to Auckland business people – about changes to the Public Finance Act which require him to set out the wellbeing objectives that will guide the Government’s Budget decisions this year.

The Budget will also reflect the te ao Maori perspective that Treasury has been incorporating in the budget process through a framework called He Ara Waiora.

What will this mean in terms of Budget taxing and spending?  We can’t wait to find out.

We recall that one question examined by our Treasury officials a few years ago was how tikanga Māori (in particular manaakitanga, whanaungatanga, and kaitiakitanga) could help create a more future-focused tax system.

Perhaps by relying more on koha and less on IRD demands.

Meanwhile Robertson has spelled out the Budget 2021 wellbeing objectives: Continue reading “State servants cool on pay curbs, despite Robertson eschewing the “freeze” tag – but will they warm to a koha-based tax system?”

$4bn hole in National’s fiscal programme raises questions about Treasury’s data-checking role and independent monitoring

Speaking as Labour’s Finance spokesperson, rather than Minister of Finance, Grant Robertson was quick to crow about the discovery of “a basic error” which left a $4 billion gap in National’s economic plan.

“If National can’t even do the basics required on their own policy costings, they cannot be trusted to run the country. Making mistakes like this have real world consequences that New Zealand does not need in this challenging time in our history.”

Robertson was harking back to an announcement a few days earlier, when (he gloated)

“ … National threw out a desperate economic policy that included $4.7 billion of tax cuts that would give Judith Collins $4,000 at a time when New Zealand needs to be investing in services like health and education for our future.” 

This is  a tad puzzling, prompting a question we sent to the people who despatched the press statement:  giving Judith Collins $4000 of what?  We await a response.  Continue reading “$4bn hole in National’s fiscal programme raises questions about Treasury’s data-checking role and independent monitoring”

While some people are queuing for food parcels or the dole, others are prospering from NZX investments

A slight bounce in the economy is brightening the outlook as the country heads into the winter months, Radio  NZ  reports.

Retail spending is up and NZ shares rose on  Thursday for a third day running.  Key indicators have led some economists to point to a faster recovery than expected.

Finance   Minister  Grant   Robertson,  never  afraid  to  cite how  well  the economy has  done  under his  stewardship,   told  Parliament  earlier in the week:

We are already seeing a significant lift in economic activity from moving from alert levels 3 and 2”.

Robertson reported  the  weekly   economic update from Treasury showed improvements in economic activity.

Heavy traffic movement is now only 5% below its normal levels, while electricity demand is now above pre-COVID levels, and electronic card spending during level 2 has been nearly equal to pre-COVID levels. Continue reading “While some people are queuing for food parcels or the dole, others are prospering from NZX investments”

Treasury scenarios hint at how the economy is faring in lockdown but data, too, could be weakened by the virus

Before trying to digest the economic scenarios released by the government today, it is advisable to take note of  caveats such as uncertainty.

The seven scenarios are provided by the Treasury, based on assumptions of different amounts of time under different alert levels.

Treasury secretary Caralee McLiesh said the scenarios are based on a range of times which may be spent at different alert levels, the impact on economic activity at each alert level, and the degree of fiscal support.

They have been guided by a range of previously released public health modelling and include the prospect of a return to Alert Level 4 in the future.

Finance Minister Grant Robertson, not unexpectedly, says they support the government’s decision to go hard and early in the fight against COVID-19 while putting significant measures in place to protect jobs and support businesses through the lockdown. Continue reading “Treasury scenarios hint at how the economy is faring in lockdown but data, too, could be weakened by the virus”

Forget about your election-winning Budget, Minister – the challenge now is to produce an economy-resuscitating one

Labour  MPs six  months  ago would  have been  salivating  at the  prospect  of Finance Minister  Grant  Robertson bringing down an election-winning budget.  After all, he  kept telling  the  country  the economy  was  in good  shape and the underlying fundamentals   were  strong.

Treasury  in  its  half-year  fiscal  update  in  December  predicted  economic growth  would rise  from 2.2% over 2019/20 to 2.8% over 2020/21 and 2.7% over 2021/22, putting upward pressure on wages and prices.

Even as  late  as   February 20,  Robertson  was  telling  Parliament  why he  thought the economy was in good shape:

“We have net debt levels below what we inherited,  we continue to have economic growth that outperforms most of our trading partners,  we have run Budget surpluses, and  unemployment is down to record lows, at 4%”. Continue reading “Forget about your election-winning Budget, Minister – the challenge now is to produce an economy-resuscitating one”

Light rail was promoted as a “game changer” – but govt must change gear (and the minister, maybe) to quicken the pace

We wonder if there is any surprise among readers that the  Ardern  government   has  made a hash  of  delivering    another  of its   flagship   policies, Auckland’s light  rail  project.

Ardern  labelled the project  to build  light  rail from  Auckland city to  the airport  a  “game changer”.  And  she  promised  to extend it to  Mt Roskill within four years  of taking office.

This  week   deputy PM  Winston Peters   told  Parliament “exploratory” work has  still to be  completed.

As  Point of Order sees it, those who wonder why the project  is close to  foundering should ask who is in  charge of the  project.  They will find it is  Phil Twyford,  whose  performance  with KiwiBuild  was so disappointing – and became so politically embarrassing – that the PM this year gave ministerial responsibility to someone else.

Twyford retained   Transport, though  Ardern’s  judgement was questionable.

Simply,   the  government’s  excuse  in blaming   failures  on   “nine years  of neglect”  by  the   previous   government is  coming back to haunt ministers  like Twyford.  For if  ministers  in the previous  government  didn’t  do their job,  how  come  the  current  crop  so neglected  the preparation and implementation of a better policy that  they are  failing  even more spectacularly to deliver  what they promised?

Twyford, of course, shuffles off  responsibility for  the  botch-up to the  NZ  Transport  Agency  and the  new  chairman of  the  agency, Sir Brian Roche,  concedes  it  did  “drop  the  ball” —but  where does   this leave  the  principle of  ministerial responsibility?

Opposition  Leader Simon Bridges opened   question time in Parliament  on  Wednesday  by asking the PM when construction  would begin on  light  rail  in Auckland. This  was the  answer he  got  from the  deputy PM  (standing  in for  Ardern)::

Like every person that understands both transport and business, when we have the forward costings organised, all the engineering reports, and all the alternative views are put on the table, then we will make a commercial decision”. 

That doesn’t  sound   like any  time soon.

Here’s  another  exchange  from  Parliament on Wednesday:

Chris  Bishop  ( Opposition—Hutt  South)  : Is it correct that the government is assessing only two bids for the Auckland light rail project—one from the NZTA, and one from NZ Infra—and, if so, is he confident that the Crown will receive value for money from this procurement process?

Twyford: After years of under-investment in our largest city’s transport system and the gridlock that that caused, our government is determined to build the transport networks that a modern international city needs. It’s not correct to characterise the process as containing only two bids. Cabinet has asked the Ministry of Transport (MOT) to run a competitive process between two approaches. One is the proposal from NZ Infra which would see it finance, build, own, and operate the light rail lines, and the other approach, being developed by NZTA.

According to  reports, Treasury has warned the government that getting it wrong could see the cost of the $6bn project balloon like Edinburgh’s light rail, which took six years to build and cost twice its initial estimate.

In August the government said work wouldn’t even start in 2020, as it still had to weigh up who would build and run the scheme, NZTA, its own transport agency – or the NZ Super Fund, which made a surprise, unsolicited offer to build and run the project in April last year.

A   report  by Stuff  contended Twyford was warned by officials the NZ Super Fund bid wasn’t up to scratch. In fact, the initial bid was just six power-point slides.

Twyford now says Cabinet has asked the Ministry of Transport to run a competitive process between  two approaches. One is the proposal from NZ Infra, which would see it finance, build, own, and operate the light rail lines; the other approach being developed by NZTA would include the more conventional public-private partnership (PPP), or design and build models.

Early next year, Cabinet will decide which of these two approaches it prefers.

Clearly   it will be a  slow  march to  end   Auckland’s  gridlock.

Stats NZ – struggling with its census data – is aiming higher and will measure our spiritual well-being

The public service has gone all touchy-feely as it gets to grips with the well-being message from the PM and her government.  Or maybe it simply wants us to think it has gone all touchy-feely.

This includes the number-crunching Government Statistician, whose agency is struggling to crunch the latest census data, and – good grief! – the bosses of The Treasury, an outfit we thought was hard-nosed about things like government spending and fiscal rigour.

What’s more, as we were drafting this post, ACC Minister Iain Lees-Galloway announced the Government was able to improve the well-being of older working New Zealanders and those working overseas with the passing of the Accident Compensation Amendment Bill.

“The legislation passed last night helps ensure we improve the well-being of New Zealanders by addressing a number of gaps and technical issues in the ACC scheme to help keep the system fair, transparent and accessible for all claimants,” says Iain Lees-Galloway.

The changes are outlined in his press statement,

Meanwhile Stats NZ – still struggling to publish hard census data – has set about trying to measure things such as our spiritual health (which, in the case of the writer of this post, is strongly linked to gin-and-tonic consumption).

We suspect the statisticians have other forms of spiritual health in mind as they pump resources into their well-being measures, presumably diverting them from the less consequential task of producing census results.

Michael Reddell, at Croaking Cassandra, is appropriately scornful: 

The Government Statistician can’t manage a census competently, and won’t tell us (let alone MPs) just how bad the situation is (about a census taken more than a year ago), but today – aiding and abetting the government’s Wellbeing Budget branding – she was out with the final list of indicators to be published in this brave new world.   It goes under the label “Indicators Aotearoa”, and in addition to not being able to run a census, she seems –  in common with many public servants –  to have forgotten the name of the country: New Zealand.

Among the list of indicators –  many of which are already published (and thus you wonder what value there is in one set of bureaucrats prioritising them and putting them in one place) –  was this snippet.

indicators

I don’t have too much problem with suicide rates.  They are reasonably hard and somewhat meaningful data (but comparisons across time and across countries are hard).

But the other three made almost no sense.

Take that “spiritual health” indicator –  well, there is no indicator yet, but an aspiration to have one.  Real resources are being wasted on this stuff.    Who knows what business it is of the government to be measuring “spiritual health”, whatever it means?  And, strangely, it appears that the Government Statistician believes that only the “spiritual health” of Maori people (or was that “Maori society”?) matters.  Are we back in taniwha territory again…?

Reddell sent us to look at the Stats website which explains:

Indicators Aotearoa New Zealand is being developed by Stats NZ as a source of measures for New Zealand’s well-being. The set of indicators will go beyond economic measures, such as gross domestic product (GDP), to include well-being and sustainable development.

The well-being indicators will build on international best practice, and will be tailored to New Zealand.

This work supports many cross-government initiatives and international reporting requirements, including the Treasury’s Living Standards Framework and the United Nations’ Sustainable Development Goals (SDGs).

Indicators Aotearoa New Zealand will be delivered by Stats NZ and will support the government’s ambition to use a well-being approach to strategic decision-making.

Indicators for which we have information will be populated with data when we release our website in late June 2019. 

The selection of indicators to be reported on from June this year (in an attempt “to understand the most important aspects of well-being for New Zealanders”) significantly was not driven by the availability of data.

The initial set of indicators includes gaps in data, ranging from a complete absence of data to limitations on the ability to break information down to useful and meaningful levels for different communities.

Stats NZ is working with stakeholders to prioritise understanding data gaps and how they can be addressed. We’re feeding this information back to Government for their consideration.

The indicators signed off by the Government Statistician include:

Culture
Engagement in cultural activities; inter-generational transfer of knowledge; te reo Māori speakers

Health
Health equity; health expectancy; mental health status (psychological distress); amendable mortality; self-reported health status; spiritual health; suicide

Identity
Language development and retention; sense of belonging

Knowledge and skills
Core competencies (non-cognitive skills); early childhood education (ECE) participation; educational attainment; inequality of educational outcomes; literacy, numeracy, and science skills of 15-year-olds

Land
Active stewardship of land

Leisure
Leisure and personal time; satisfaction with leisure time

Safety
Domestic violence; experience of discrimination; harm against children; injury prevalence; perceptions of safety/feelings of safety; victimisation

Social connections
Contact with family and friends; loneliness; social support

Subjective well-being
Ability to be yourself; experienced well-being; hope for the future; life satisfaction; locus of control; sense of purpose, whānau well-being

Human capital
Health expectancy; literacy, numeracy and science skills of 15-year-olds; te reo Māori speakers

Social capital
Generalised trust; institutional trust; volunteering

The Treasury’s contribution to the push for compassion comes from the development of its Living Standards Framework (LSF) to help it advise governments about how the policy trade-offs they make are likely to affect everyone’s living standards.

The LSF looks across the human, social, natural and financial/physical aspects of those things that affect our well-being – the ‘four capitals’. It is a tool that emphasises the diversity of outcomes meaningful for New Zealanders, and helps the Treasury to analyse, measure and compare those outcomes through a wide and evolving set of indicators.

Read more about the Treasury’s approach to living standards here: The Treasury Approach to the Living Standards Framework

But hey – Eric Crampton, on the Offsetting Behaviour blog, tells us what else they are up to.

He draws attention to an invitation to pay a $35 registration fee for an event at Treasury,  which is helping to promote a small business involving a former Treasury staffer by hosting the event and encouraging folks to buy its products.

We are teased to attending by a flyer which is headed:

Imagine surprising Aotearoa with a strain of compassion so delightful that it re-wires our collective consciousness!  

Come and join us in our social lab

The Treasury promoters are Fiona Ross, The Treasury Chief Operating Officer, David Dougherty, The Treasury Manager Strategy and Performance, and “24 curious and creative people at The Treasury” who have been “experimenting the social lab”.

They have

 … created a “compassion starter culture” – a network of people who want to create a more compassionate culture in Aotearoa, starting where we are – in our workplaces.

We’ve been playing and rapidly prototyping with the Heartwork Wellbeing Card Game* – now available publicly.

We know that the intention for what we want to create has a huge power.

We don’t have all the answers. And we can’t do this mahi alone.

So we’d like to invite you into this social lab.

So we can grow an even more beautiful, and more resilient strain together.
We’ll share what we’re learning while we’re still metabolising.

Fiona Ross will tell attendees about what she’s been learning from her experiments with the Heartwork cards in her work as Chief Operating Officer of the Treasury.

We don’t know much about Heartwork cards.

We do know a full house (three of a kind with a pair) beats a flush in a poker game.

And we are sure too many New Zealanders are not as flush as they would like to  be.

We must wait to see how their lot will be improved by Treasury’s fascination with compassion and Heartwork cards.

Oh look – we are not alone in watching how the $3 billion PGF trough is being emptied

The Point of Order Trough Monitor isn’t alone in keeping an eye on Shane Jones and his coalition government colleagues as they dish out oodles of vote-nurturing dollars from the $3 billion Provincial Growth Fund.

Treasury officials, working within spitting distance of the Beehive (when the wind is in the right direction), do their scrutinising before PGF announcements are made.

It seems they don’t share Jones’ enthusiasm in all cases and can get a bit antsy about some proposals.

No matter.  In the upshot, it’s the government that decides how taxpayers’ money should be dispensed.

And governments aren’t obliged to heed the advice of Treasury number-crunchers or any other critique of PGF investments, grants or whatever.

A good example has provided fodder for headline writers in recent days, including this from Newshub: Continue reading “Oh look – we are not alone in watching how the $3 billion PGF trough is being emptied”

NZ foresees slowdown in Chinese growth – but Kenneth Rogoff warns of a financial crisis

Finance Minister Grant Robertson has delighted in responding to patsy questions from his colleagues about the state of the economy.   Last week – for example – he referenced Treasury forecasts prepared for Budget 2018 (some months ago) which showed economic growth of about 3 per cent on average over the next four years.

He said “actually, they’re very reliable”, although the accuracy of a forecast can never be known until the end of the forecast period.  Meantime all sorts of things can happen.

One grim possibility is China going into recession.

Continue reading “NZ foresees slowdown in Chinese growth – but Kenneth Rogoff warns of a financial crisis”

Capital gains: the taxing task of balancing economic and political considerations

 So  will  Sir Michael Cullen’s  Tax Working Group in its interim report due out soon  propose  the government  implements  a  capital gains tax?

When  the  TWG  was set up most people  believed  its main purpose  was to  design  a  broad-based capital  gains  tax,   not  just to capture  a new source of revenue  but  to  make the tax system  fairer and reduce  inequalities.

But a report in Stuff   this week  speculated the  TWG has  stopped short of recommending a broad-based capital gains tax. Continue reading “Capital gains: the taxing task of balancing economic and political considerations”