Wellbeing budget – transformative, or just ‘variation on a them’

Peter Dunne has said that most budgets he has seen (34 while an MP)  are just variations on a theme – and he includes this year’s ‘wellbeing budget’ in that description.

@honpeterdunne:

I saw 34 Budgets in my time – twice as many as Parker.

The biggest changes were Douglas’s reforms in 1984; Richardson’s Fiscal Responsibility Act in 1994, and English’s social investment reforms after 2015.

The rest, including this year’s, are just variations on a theme.

Others (I have heard a number of people promote this theme) have said that the this year’s budget is not transformational on it’s own, but sets a framework for transformation in the future.

Glen Bennett (New Plymouth Labour Committee Spokesperson):  Wellbeing budget transformational framework for New Zealanders

This week the Hon Grant Robertson delivered the Coalition Government’s second Budget. This Wellbeing Budget 2019 is different from any we’ve seen in New Zealand.

In the past budgets have had one measure, Gross Domestic Product (GDP). Simply put, GDP measures the value of economic activity within a country, what we earn and what we spend those earnings on.

In Addition to GDP, Wellbeing Budget 2019 is measured across five other key priorities, aimed at improving the wellbeing of all New Zealanders and broadening the Budget’s focus beyond economic and fiscal policy.

The priorities are; taking mental health seriously, improving child wellbeing, supporting Māori and Pasifika aspirations, building a productive nation and transforming the economy.

In the lead up to the Wellbeing Budget, in his Budget Policy Statement, the Hon Grant Robertson said:

“Faced with complex issues such as child poverty, inequality, and climate change, we cannot hope to make the best choices for current and future generations if we do not look beyond economic growth and consider social, environmental, and economic implications together.

“While economic growth is important for creating opportunities, our recent history shows that focusing on it alone can be counterproductive and associated with poor outcomes such as greater inequality and pollution.”

Recently several people have asked me what I see as being transformational about this Government, questioning if it’s just business as usual with nothing innovative or new.

The introduction of a Wellbeing Budget is something that I see as being transformational for New Zealand over a long period of time.

The Wellbeing Budget has challenged those sitting around the Cabinet table to look differently at the funding  they lobby for, to look across all Ministries in a holistic way, measuring their long term goals and aspirations against the five priorities of the Wellbeing Budget.

This can only be good for New Zealand and our wellbeing. I can’t see a quick fix to inequality, environmental challenges, child poverty or our mental health crisis, but this is a start.

It’s a moment in time when our Government is laying out a framework that will be transformational for all New Zealanders, not only in 2019, but for years to come.

Mental Health Foundation: Wellbeing Budget 2019 a good start towards transformation

The Mental Health Foundation (MHF) are pleased the Government are taking mental health seriously by creating a $1.9 billion mental health package, announced in today’s Wellbeing Budget.

“The funding and initiatives set out in today’s budget are a fantastic start, but it’s crucial Government keep up the momentum into the future if we are to create a New Zealand where all people can experience positive mental health.”

But…

Rod Oram: Budget long on rhetoric, short on transformative funding

… the Government chose six priorities for its first Wellbeing Budget, and devised some innovative ways to bring multiple agencies of Government together to work on each.

This approach has brought about the biggest changes in the three priorities focused on people – mental health, child wellbeing and Maori and Pasifika aspirations. The investment will be substantial, particularly on mental health, and applied in some novel ways.

However, the Government has made far less progress in applying the wellbeing methodology to its other three priorities  – the productive economy, the environment and infrastructure investment.

All three are largely business-as-usual with only a few gestures to new and co-ordinated approaches; they don’t get to grips with the massive transformation all three need; and, worse, there are some serious disconnects between them.

…but it has none of the innovation in programmes or serious commitment of money that the other three capitals have. Yet it is this transition to the low carbon economy which will drive our transformation to a highly productive economy, wealth generating and strongly sustainable nation.

So, while this is a good start on the Wellbeing Budget in social areas, the Government has a Herculean task ahead in economic and environmental ones. One simple search of the Budget document illustrates this: The four new capitals used – financial and physical, natural, social and human had just 17 references in the 149 pages of the Budget document.

David Hall (senior researcher in politics at the Auckland University of Technology): Ardern more transitional than transformational:

New Zealand Prime Minister Jacinda Ardern saddled herself with the word “transformational”. She used it heavily in the heady days of the 2017 election campaign, although less so in the compromised reality of a coalition government. Still, it is the aspiration she is held to. The 2019 wellbeing Budget is held to it by association.

But how do we know transformation when we see it?

Obviously, transformation must go beyond the status quo. But to be transformative, it must also go beyond mere reform.

A reform agenda recognises that trouble is brewing, that social, economic and environmental trends are on the wrong track. It accepts that major changes to policy and lifestyle may be required. As sustainable development research shows, it does “not locate the root of the problem in the nature of present society, but in imbalances and a lack of knowledge and information”.

It tends to reach for existing policy levers, and to hang its hopes on technical solutions. It reacts to the toughest choices by devising new frameworks for analysing them.

The wellbeing Budget easily goes this far. Finance minister Grant Robertson is entitled to say, as he did in his Budget speech, that this is a government “not satisfied with the status quo”.

A transformative agenda goes further. It sees problems as rooted in the present structure of society. It isn’t only about managing the flaws and oversights of the dominant system, but overturning the system itself. This involves an order of ambition that the wellbeing Budget lacks.

There is another word for change that the Prime Minister sides with: not “transformation” but just transition. This is the idea that socioeconomic change should be guided by principles of justice, such as equity and inclusivity, to minimise the disruption change can bring. The aim of a just transition is to achieve revolution without revolt.

Ardern obviously sees the idea of a just transition as more broadly relevant, contrasting it with the “rapid, uncaring change” of structural reforms in 1980s New Zealand. To my mind, this better captures the temper of this Government – not transformational, but potentially transitional.

But transformation and transition are just simple labels.

Labour ministers and MPs have kept saying that they can’t change ‘9 years of neglect’ (I think an unfair label) with a single budget, but this was their second budget.

Transformation or revolutionary change takes longer than a three year term in an MMP Parliament.

The Government’s third budget will be trying to balance a carefully nurtured image of financial prudence with further signs of transformational intent – as long as they are re-elected.

Much my depend on whether voters chose to keep the transformation-resistant NZ First party in the mix to moderate changes, or dump them and take a risk with a Labour-Green Government. (Returning National to power looks a long shot at this stage but is an option for those preferring more incremental change than Labour/NZ First).

NZ troops to be withdrawn from Iraq

Beehive:  New Zealand to withdraw from Iraq in June 2020:


New Zealand will conclude its non-combat Building Partner Capacity (BPC) mission at Taji Military Complex in Iraq in June 2020, when full responsibility for basic training will be handed over to the Iraqi Security Forces (ISF), Prime Minister Jacinda Ardern, Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark announced today.

New Zealand currently deploys up to 95 personnel to the BPC at Taji. Following recent Cabinet decisions this will reduce to a maximum of 75 from July 2019 and 45 from January 2020, before the mission’s completion by June 2020.

New Zealand and Australia have been jointly delivering training to the Iraqi Security Forces (ISF) at Taji since 2015, when New Zealand first deployed to Iraq as part of the multinational Defeat-ISIS Coalition. Over 44,000 ISF personnel have been trained at Taji since 2015.

“Four years ago New Zealand made a commitment to the Iraqi Government and to the Coalition to train the ISF at Taji and lift their capability to defeat and prevent the resurgence of ISIS. Over the next 12 months, New Zealand will be able to wind down and conclude that commitment,” Jacinda Ardern said.

“The New Zealand and Australian troops at Taji have worked hard, not only to provide training, but also to ensure that the ISF are well placed to take over this commitment at Taji in the near future. The goal of any training mission is to ensure that it becomes a sustainable programme.”

“Significant progress has been made in this area, which will allow the mission to reduce in numbers and conclude within the next year, having successfully achieved what we went in to do. This is an encouraging evolution and a success not only for us but also for the ISF personnel who have trained hard to gain the skills to become a modern military force,” said Ron Mark.

Alongside the deployment to Taji, the New Zealand Defence Force will continue in a reduced number of support roles within the Defeat-ISIS Coalition in the region. Cabinet will consider these positions again by next June.

New Zealand will however increase its stabilisation funding contribution to Iraq to approximately NZ$3 million per annum for the next three years (from NZ$2.4m in 2018-19) to help affected communities recover and rebuild following the conflict with ISIS.

Stabilisation funding will come from within MFAT’s overseas aid and development fund, and will contribute to what has been estimated to be a US$87 billion rebuild of Iraq.

“Despite its territorial defeat in Iraq in December 2017 and Syria in March 2019, it is clear that ISIS remains a threat and Iraq requires ongoing international support as it moves towards recovery and stabilisation,” said Winston Peters.

“As large numbers of Iraqi people return home and begin to rebuild their lives and communities, New Zealand’s targeted funding support can make a meaningful contribution towards this.”


National have sort of supported this – with a catch.

RNZ: National supports troop withdrawal – if partners do same

The National Party is on board with the government pulling Kiwi troops out of Iraq next year – on the condition Australia and the United States also withdraw.

National Party defence spokesperson Mark Mitchell said the decision to leave was the right one, providing everyone went at the same time.

“It looks okay with us, it would be dependent on whether it’s in line with what our partners are doing – especially the Americans and the Australians,” he said.

Australia is yet to make a formal announcement but Mr Mark told media yesterday the New Zealand decision was part of a carefully planned exit strategy alongside partners.

“We took a role of about a third/two-thirds contribution in partnership with Australia. This reduces down to a quarter/three-quarters and we will be downsizing alongside them and working with them, not just walking away from the mission,” Mr Mark said.

In a statement Australian Defence Minister Linda Reynolds said Australia and New Zealand “consult closely on their respective deployments in Iraq and Afghanistan”.

“Australia is proud to support the Iraqi Security Forces, alongside its New Zealand counterparts. We will continue to work closely with New Zealand as it gradually draws down its footprint in Iraq,” she said.

“Australia regularly reviews its overseas operations, taking into account the needs of the Iraqi Government and the operational context on the ground.”

Whether National backs the withdrawal probably won’t make any difference, as the drawdown will have largely happened by next year’s election.

I doubt there is much public support for staying in Iraq, and there will be much stronger support for a withdrawal.

 

Head of Safe and Effective Justice calls for cross-party consensus

While Chester Borrows was an ex-National MP he is also an ex police officer and lawyer, so was a good appointment as head of the Safe and Effective Justice advisory group set up by the Labour led government.

The group has just released it’s report after extensive consultation – see Te Uepū report – Transforming our Criminal Justice System

Borrows is now calling for cross-party consensus on reforming the justice system.

RNZ: Time for cross-party consensus to transform justice system – Borrows

The head of a group that found racism embedded in every area of the criminal justice system says it’s now time for a cross-party consensus to tackle to the issue.

Māori were over-represented as both victims and offenders of crime, with Māori making up 51 percent of the prison.

Chairperson of the government’s Safe and Effective Justice advisory group, Chester Borrows, told Morning Report the report highlighted the need for “transformational change” and said any political party would be foolish to disregard the report’s contents.

He said the legacy of colonialism had meant Māori entered prison after being socially and economically disenfranchised.

“People tend to think that this is something that is really historic,” he said. “In fact, if you take away the economic base of a community and them under-educate them in a foreign language it’s not surprising that a few generations down the track they are corralled into the lowest decile suburbs failing in every area of the social sector.

“What we have in New Zealand is people don’t really touch the justice system until they’ve been failed by all those other areas such as health. education, welfare, the economy and employment… We’ve allowed that to happen. It’s a pattern and we’ve done nothing about, in respect to prisons, in 30 years.”

The former National minister said it was now time both political parties and government departments came together to untangle the legacy, so that policy and its implementation reflected one purpose. He said a transformational change in the way government and political opposition looked at justice was key to success.

“Any party would be foolish to disregard this report, which is so comprehensive, I think this is where people in the middle of the political spectrum are. The changes that need to be made are fundamental.

“We have no single driver of the justice sector and yet we’ve got five different departments who are in it, all measuring themselves against their own KRA, but not with one single goal in mind and that’s a ridiculous place to be… If they are not all facing the same thing and heading towards a common goal then they are stuck but they start.”

He acknowledged this would be difficult, due to the criminalisation of Māori and a punishment-based focus on the criminal justice system being made political positions at election time. But said the public was now sick of that approach. “It is too important for it to remain political all the time,” he said.

It will be difficult reaching political consensus on major reforms of the justice system, but it shouldn’t be difficult for all parties to work together on this.

Simon Bridges is a lawyer and has been a Crown prosecutor. He could use that experience, and show real leadership by ensuring that National engages positively on seeking reform.

Mark Mitchell is National’s spokesperson for justice. I haven’t seen either him or Bridges respond to the Safe and Effective Justice report. I hope that means they are seriously considering contributing to finding solutions.

Kermadec Ocean Sanctuary Bill appears to be still stalled

National MP Nick Smith introduced the Kermadec Ocean Sanctuary Bill to Parliament in March 2016.

The sanctuary was a part of both governing agreements between Labour and NZ First and the Green Party, but after the bill was transferred to incoming Labour Minister of the Environment David Parker the bill seems to have stalled. In nearly three years it hasn’t progressed from it’s Second Reading.

Smith recently stated:

“It is embarrassing for the Coalition Government that it has made no progress on the Kermadec Ocean Sanctuary after 18 months in Government.  The Kermadec Ocean Sanctuary Bill, originally in my name but transferred to David Parker with the change in Government in 2017, has sat on the bottom of Parliament’s Order Paper for 18 months.

Timeline:

8 March 2016 – Bill introduced to Parliament

15 March 2016 – First Reading

22 July 2016 – Select Committee

15 September 2016Govt remains committed to Kermadec sanctuary

The Government is disappointed it has been unable to reach agreement with Maori fisheries trust Te Ohu Kaimoana (TOKM) on the Kermadec/Rangitahua Ocean Sanctuary, despite lengthy negotiations, Environment Minister Dr Nick Smith says.

“We have tried very hard to find a resolution with TOKM, with 10 meetings involving ministers during the past 10 months. TOKM wanted to be able to maintain the right to fish and the right to exercise that at some time in the future. We wanted to protect the integrity of the sanctuary as a no-take area.

“The Government has amended the Kermadec Ocean Sanctuary Bill to provide a dual name, the Kermadec/Rangitahua Ocean Sanctuary Bill, to include Maori in the new Kermadec/Rangitahua Conservation Board, and to provide for their inclusion in the 25-year review. We remain committed to the changes to the proposal despite not being able to secure an agreement with TOKM.”

24 October 2017: Governing Agreements

Labour NZ First Coalition Agreement:

    • Work with Māori and other quota holders to resolve outstanding issues in the Kermadec Ocean Sanctuary Bill in a way that is satisfactory to both Labour and New Zealand First.

Labour-Green Confidence and Supply Agreement (24 October 2017):

8. Safeguard the healthy functioning of marine ecosystems and promote abundant fisheries. Use best endeavours and work alongside Māori to establish the Kermadec/ Rangitāhua Ocean Sanctuary and look to establish a Taranaki blue whale sanctuary.

11 May 2018Winston Peters says the Greens can have a Kermadec Sanctuary – with a catch

Hope for a Kermadec Sanctuary is back on the table and NZ First leader Winston Peters is confident he can do a deal with the Green Party by the end of the year.

The deal would involve a compromise from the Greens though – accepting that the sanctuary won’t be a 100 per cent no-fishing zone.

While the previous government’s bill to establish it passed its first reading unopposed in 2016, iwi bodies and fishing companies subsequently filed legal action against it. NZ First, which has close ties to the fishing industry, raised serious concerns about the legislation.

To keep the fishing industry happy and to ensure iwi with fishing rights under the Treaty of Waitangi are on board, Peters is proposing a mixed model that allows for roughly 95 per cent marine reserve and 5 per cent fishing.

Peters says it’s entirely possible to preserve species while allowing a small percentage of fishing to keep interested parties on side.

He said the Greens would need to decide whether it was more important to have the best part of a sanctuary, or no sanctuary at all.

23 June 2018 – David Parker address to the Forest & Bird Annual Conference

I am also trying to progress the Kermadec Rangitāhua Ocean Sanctuary, which I have Ministerial responsibility for. I am working to see if I can find a way through that.

24 July 2018Winston Peters confident of Kermadec Marine Sanctuary deal by end of year

Acting Prime Minister Winston Peters is confident the deadlock over the Kermadec Marine Sanctuary can be broken by the end of the year.

Environment Minister David Parker and Mr Peters have been working on a compromise for the best part of this year.

Mr Peters insisted an end-of-year deadline was realistic.

“If we keep working on this issue with the level of commitment that has been exhibited thus far then it’s very likely we can have it resolved by the end of 2018.”

Green Party co-leader Marama Davidson said there was more than one way to uphold Treaty rights and keep the Kermadec Islands a sanctuary.

“We’re committed to a sanctuary, it’s with our confidence and supply agreement with Labour and that’s what we’re committed to keep working towards. I haven’t actually seen details of exactly what Mr Peters and Mr Parker might be working on.”

Greens seem to have been sidelined.

12 February 2019Prime Minister’s Statement at the Opening of Parliament

Cabinet will also consider options to resolve outstanding issues around marine protection for Rangitahua/the Kermadecs.

While the sanctuary Bill seems to have stalled since 2016, despite the coalition and C&S agreements, it seems to remain stalled.

Nick Smith: Kermadec sanctuary lost at sea

World Oceans Day today highlights the Government’s failure to make any progress on the Kermadec Ocean Sanctuary in the past 18 months, Nelson MP Dr Nick Smith says.

There seems to have been little progress since mid-2016, nearly three years ago.

“New Zealand has responsibility for one of the largest areas of ocean in the world, yet less than one per cent is fully protected. The Kermadec Ocean Sanctuary would protect an area twice the size of New Zealand’s land mass, 15 per cent of our ocean area and it would benefit hundreds of unique species, including whales, dolphins, turtles, seabirds, fish and corals.

“Nothing has been done by the Government to progress the Sanctuary, despite commitments in the Coalition Agreement with NZ First and the Confidence and Supply Agreement with the Greens to establish the sanctuary.

“National will continue to push for the Kermadec Ocean Sanctuary. There is strong public support and between National and the Greens, there is a clear majority of Parliament in favour of its establishment.

“We support progression of the Government Bill now at second reading stage. I also have a Member’s Bill in the Ballot to make progress if necessary. The Government needs to make progress on this Sanctuary a priority.”

So why has this bill stalled?

Is David Parker not doing enough to push it?

Are negotiations with Maori interests still getting nowhere?

Are NZ First holding out for their deal or no deal?

Andrew Little – New Zealanders want a better justice system

Minister of Justice Andrew Little in response to the Te Uepū report – Transforming our Criminal Justice System.


New Zealanders from across the country are calling for the criminal justice system to be overhauled, says Justice Minister Andrew Little.

The Minister today released the interim report He Waka Roimata from Te Uepū Hāpai i te Ora Safe and Effective Justice Advisory Group, which captures feedback from New Zealanders on the current state of the justice system and offers insights on how it can be improved.

“I welcome the first report from Te Uepū, which clearly demonstrates a public appetite for long-term sustainable and enduring transformation in the justice system,” says Andrew Little.

“This report follows comprehensive engagement with the community and shows New Zealanders want to see less offending, less re-offending, and fewer victims of crime, who are better supported.

“The report provides sober reading. There are many stories and examples shared by victims, families, offenders and organisations that are upsetting, especially those that demonstrate failings in the system that could be avoided through simple, early and appropriate interventions.

“The report also offers hope. The overwhelming sense is that we can make change for the better, and deliver safer and more effective justice for all New Zealanders.

“I’d like to thank everyone who has given their voice especially those who have been victimised.

“Te Uepū is now developing reform options for the Government that it believes will contribute to a safer and more effective justice system,” says Andrew Little.

The interim report can be found at: http://www.safeandeffectivejustice.govt.nz/about-this-work/te-uepu-report

Te Uepū report – Transforming our Criminal Justice System

Te Uepū Hāpai i te Ora – the Safe and Effective Justice Advisory Group – has released a report after consultation around the country.


The overwhelming message from New Zealanders is that regardless of how they come into contact with the justice system, it is failing them and their families and there is a need for transformative and sustained change, according to a new report released today.

The report from Te Uepū Hāpai i te Ora Safe and Effective Justice Advisory Group, He Waka Roimata (A Vessel of Tears), provides valuable insights into public attitudes and ideas about New Zealand’s justice system, says Te Uepū’s Chair Chester Borrows.

“Our advisory group was set up by the Justice Minister to conduct an honest and constructive conversation with New Zealanders on how we can deliver safer and more effective justice,” says Chester Borrows.

“We listened to thousands of New Zealanders from all over the country at our public events, through our website and social media, and at events we attended. We heard from interested members of the public, as well as those who have been victimised, prosecuted for offending or who offer services to communities that have been affected.

“The overwhelming impression we got from people who have experienced the criminal justice system is one of grief. Far too many New Zealanders feel the system has not dealt with them fairly, compassionately or with respect – and in many cases has caused more harm.

“We heard that the current system simply isn’t delivering effective justice, and a 60 per cent reoffending rate within two years of a person leaving prison is some evidence of its ineffectiveness.

“We’re hearing that many victims are left with a sense that justice has not been done. People are feeling let down at their most vulnerable time.

“And for Māori the legacy of colonisation comes in many forms, many of them with tragic consequences, as is the case in all colonised countries where indigenous peoples are over-represented in prison. This legacy is a gross unfairness and something we should not tolerate in New Zealand.

“There is widespread recognition that at every point in their lives, and over generations, Māori experience disadvantage that increases the risk they will come into contact with the criminal justice system.

“We’re convinced from what we’ve heard that solutions already exist and that people from all sectors of society want to be actively engaged in building a justice system that all people can be collectively proud of.

“We’re now developing a response to the themes and ideas raised by the public, which we will provide later this year,” says Chester Borrows.

Te Uepū’s report complements ongoing work by the Hāpaitia te Oranga Tangata: Safe and Effective Justice Programme and the recent Victims Issues Workshop and Hui Māori: Ināia Tonu Nei Safe and Effective Justice forum.

Read the full report

Rainbow Wellbeing Legacy Fund

Government establishes Rainbow Wellbeing Legacy Fund

Improving the mental health and wellbeing of young members of the rainbow community is at the heart of the establishment of the Rainbow Wellbeing Legacy Fund, Prime Minister Jacinda Ardern said today.

The Fund is an acknowledgement of those New Zealanders who were convicted for homosexual acts before the law was changed in 1986. In 2017 the Government apologised to them and in 2018 passed a law to allow for convictions to be expunged.

“In the wake of this the suggestion was made by some of the men involved that a fitting legacy would be to establish a fund that supports the young people of the Rainbow community. That is exactly what this fund will do.” Grant Robertson, Minister of Finance said.

“This is a community proposed and driven idea that has come from one part of the community for another and the Government is proud to make it happen,” Jacinda Ardern said.

“The Government is proposing to establish a charitable trust with a one-off endowment of $1 million. The trust will administer the payment of annual grants to support organisations that improve mental health and wellbeing outcomes in New Zealand rainbow communities, with a particular focus on organisations that support young people.

“The Government takes mental health seriously and this fund helps to tackle one of New Zealand’s long-term challenges of mental health,” Jacinda Ardern said.

A million dollars is a very small part of the budget (compared for example to the $1 billion a year Shane Jones political wellbeing fund). It should be money well spent.

 

 

Budget falls short of child poverty targets

This year’s budget was promoted as a Wellbeing Budget, but it has been criticised for not moving far enough towards addressing things that will improve the well being of the less well off, especially children.

Newsroom:  Budget moves not nearly enough to meet child poverty targets

This is the first Budget under the new Child Poverty Reduction Act rules. The Act is perhaps one of the most concrete and far-reaching changes the Government has introduced. From 2019 on, the Minister of Finance must report each year on progress towards preannounced three-year and ten-year child poverty reduction targets.

So how did Grant Robertson go first time out? How much progress towards cutting poverty was there actually in the Budget? The short answer is a bit, but almost certainly not enough to meet all three short-term targets by the deadline of June 2021.

The big Budget announcement was to index main benefit rates to changes in average wages rather than just the Consumer Price Index. It’s a great move, one which the Welfare Experts Advisory Group, and many other commentators in the field have called for. It means that part of the welfare system will keep pace with growth in wages instead of slipping further and further behind.

Approximately 55 percent of children in poverty live in households reliant on benefit as their main source of income. Indexation of the benefit to wages is an important long-term change, but indexation to inadequate basic rates is not enough. It will simply not be feasible to address child poverty without either (or both) raising benefit rates or the Working for Families tax credits paid to parents on benefit. We did not see either of these in this first Wellbeing Budget.

A budget is a budget, not an open chequebook as some seem to want it to be, Minister of Finance Grant Robertson has done a pretty good job of balancing economic prudence with the pressures to spend more on a wide range of things.

The last government was already nudging things towards more ‘social conscience’ spending. The current government has nudged things a bit more. Perhaps they will push things further towards wellbeing in the next budget, which is in election year.

Digital services tax proposals to target multinationals

The avoidance of paying tax by multinational companies is well known, but an effective solution is difficult to come up with. The Government has proposed two options.


Ensuring multinationals pay their fair share of tax

Finance Minister Grant Robertson and Revenue Minister Stuart Nash today proposed two broad options to ensure offshore digital companies no longer enjoy tax breaks which are not available to local businesses.

“Our number one preference remains an internationally agreed solution through the OECD,” says Mr Robertson. “However if the OECD cannot make sufficient progress this year we need an interim solution. Other nations have already taken this step.”

“The UK has announced it will introduce a two percent DST from April 2020. Austria, the Czech Republic, France, India, Italy and Spain have also enacted or announced DSTs.

“We need to protect our economy and the integrity of our tax system. Modern business practices, digitalisation in particular, mean that a company can be significantly involved in the economic life of a country without paying tax on income or turnover.

“Multinational companies like social media platforms and e-commerce sites generate income through cross-border digital services rather than face-to-face retail,” says Mr Robertson.

The DST outlined in a discussion document released today would apply to:

  • platforms which facilitate the sale of goods or services between people, such as Uber and Airbnb and eBay;
  • social media platforms like Facebook;
  • content sharing sites like YouTube and Instagram; and
  • companies which provide search engines and sell data about users.

“A DST would be narrowly targeted at certain highly digitalised business models. It would not apply to sales of goods or services, but to digital platforms who depend on a base of users for income from advertising or data.

“The value of cross-border digital services in New Zealand is estimated to be around $2.7 billion. The estimated revenue of a DST is between $30 million and $80 million, depending on the design,” Grant Robertson said.

Revenue Minister Stuart Nash says the Tax Working Group concluded New Zealand should continue to participate in the OECD discussions but also stand ready to implement a DST if a critical mass of other countries move in that direction.

“The OECD is seeking approval for its digital economy work programme from the G20 group of large economies at a meeting in late June. The progress made at the OECD to date has not been sufficient to allay the concerns of several countries, who have announced or introduced DSTs as unilateral interim measures.

“Any DST in New Zealand would be an interim measure. The Government would look to repeal it if and when the OECD’s international solution was implemented,” says Mr Nash.

The two options are:

  • Changing the current international income tax rules, to allow more taxation in market countries.  This option is currently being discussed by the OECD and the G20 group of large economies.
  •  Applying a separate DST of three per cent to certain revenues earned by highly digitalised multinationals operating in New Zealand. The discussion document seeks feedback on how a DST might work in practice.

“The Government is committed to future-proofing the tax system to ensure it can handle changes to how people work and how business is done,” Mr Nash says.

“The significance of the digital economy is only going to grow over the coming decades. We need to keep adapting to ensure multinationals who do business here are paying their fair share of tax.

“We’ve passed legislation to collect GST on remote services, and to ensure multinationals pay their fair share of tax if they have a physical presence in New Zealand, and we have legislation before parliament to ensure we collect GST on low-value imported goods,” says Mr Nash.

The discussion document can be found at taxpolicy.ird.govt.nz. Consultation closes on 18 July 2019.

 

Second inquiry by State Services over budget leak

The State Services Commission has announced they investigate statements made and actions taken by the Secretary to the Treasury Gabriel Makhlouf following the leak of budget data two days before budget day last week.

This is in addition to an inquiry into the leak itself, announced last week.

Makhlouf seems to have handled things poorly, and the Government was messy with their handling as well.

But two inquiries as a result of the National Opposition ferreting for something so they could grandstand and embarrass the Government.

What has been achieved overall? More self inflicted discrediting of Parliament and politics in general. I don’t see anything positive from all of this.

There is no benefit to the public.

Last week:  Inquiry into unauthorised access to Budget material

The State Services Commission will undertake an inquiry into how Budget material was accessed at the Treasury.

The Secretary to the Treasury, Gabriel Makhlouf, asked the Commissioner to inquire into the adequacy of Treasury policies, systems and processes for managing Budget security.

“Unauthorised access to confidential budget material is a very serious matter,” said State Services Commissioner Peter Hughes.

“Mr Makhlouf has asked me to investigate and I am considering my options. This is a matter of considerable public interest and I will have more to say as soon as I am in a position do so.”

While there is no evidence of a system-wide issue, Mr Hughes has asked Andrew Hampton, the Government Chief Information Security Officer, to work with the Government Chief Digital Officer, Paul James, to provide assurance that information security across the Public Service is sound.

“This is an important issue because it goes to trust and confidence in the Public Service and in the security of government information,” said Mr Hughes.

“The inquiry will seek to understand exactly what has happened so that it doesn’t happen again.”

Today:  Investigation into statements made and actions taken by the Secretary to the Treasury

State Services Commissioner Peter Hughes has today announced an investigation into recent questions raised concerning the Chief Executive and Secretary to the Treasury, Gabriel Makhlouf, and his actions and public statements about the causes of the unauthorised access to Budget material. 

The investigation will establish the facts in relation to Mr Makhlouf’s public statements about the causes of the unauthorised access; the advice he provided to his Minister at the time; his basis for making those statements and providing that advice; and the decision to refer the matter to the Police.

Mr Hughes said the questions that have been raised are a matter of considerable public interest and should be addressed.

“It’s my job to get to the bottom of this and that’s what I’m going to do,” said Mr Hughes.

Mr Hughes has asked Deputy State Services Commissioner, Mr John Ombler QSO, to lead the investigation. It will be done as quickly as practicable and the findings, and the Commissioner’s view of them, will be made public.

“Mr Makhlouf believes that at all times he acted in good faith,” said Mr Hughes. “Nonetheless, he and I agree that it is in everyone’s interests that the facts are established before he leaves his role on 27 June if possible. Mr Makhlouf is happy to cooperate fully to achieve that. I ask people to step back and let this process be completed.”

Neither Mr Hughes or Mr Makhlouf will be making any public comment until the investigation is finished. Mr Makhlouf will be working as usual during this period.

The investigation announced today is separate to the inquiry announced last week into the unauthorised access of Budget information. The Terms of Reference and who will lead this inquiry, which is expected to take some months, will be announced shortly.

What about an inquiry into why politicians waste so much time (and public service time) doing negative crap that has no real benefit to the country?