ACT versus National on tax

This week’s ACT Free Press is highly critical of National “boasting that they’ve increased wealth redistribution”.

From a press release from Steven Joyce – Significant income redistribution after tax reforms:

New data from the Treasury shows that income redistribution across New Zealand’s income tax and support system continues to increase, with the top 10 per cent of households forecast to pay 37.2 per cent of income tax in 2016/17, compared with 35.5 per cent in 2007/08.

“This latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Acting Finance Minister Steven Joyce says.

The rich are paying a bigger proportion of the income tax:

“Higher income households are paying a larger share of income tax than they were in 2008, and lower income households are paying less – the 30 per cent of households with the lowest incomes are forecast to pay just 5.4 per cent of income tax, compared with 6.3 per cent in 2007/08.

“This is before the effect of redistribution from Working For Families and benefits. The Government has increased support for low income families to help New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr Joyce says.

“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.”

And 42% of households will pay less income tax than they receive from than they receive from welfare benefits, Working for Families, New Zealand Superannuation and accommodation subsidies. This is up from 39% in 2007/2008.

This won’t include what GST they pay though, which can be where about half of the income of the poor people now goes.

ACT Free Press:

Housing is the Underlying Driver
Also last week the Ministry of Social Development released its update of household income inequality from 1982-2015.  It measures income inequality before housing costs and after housing costs. 

Specifically
Dr Bryce Wilkinson of the New Zealand Initiative says there has been no significant change in income inequality over the last 10, 15, 20 or even 25 years depending on the measure used, before housing costs.  However the bottom 20 per cent of households (by income) spent 29 per cent of their income on housing in the 1980s compared with 54 per cent now.

Free Press concludes:

The National Party is taxing top earners hard, then shovelling the money at low income earners who pay more for housing.  Free Press suspects that it is mostly top earners who benefit from rising house prices, so completing the money-go-round.  This is nuts.

When the money-go-round is spinning fast it can be hard to slow down and difficult to hop off.

What would ACT do?

It is time to give taxpayers relief.  As ACT has said before, the best way to do this is to index tax brackets to inflation (this would have saved the average household $2,500 in tax since 2010 by ending bracket creep).  Ideally we should cut the top rates, clearly the ‘rich’ (read hard working PAYE earners) are paying their share. 

I agree that tax increases by stealth – allowing bracket creep without adjustment – should be dealt with differently.

At the same time, there needs to be serious land use and infrastructure funding reform to get the housing market functioning again.

There’s been a lot of talk but little tangible change on housing, apart from prices continuing to escalate.

However if National reduced income tax for higher earners and if they reduced tax redistribution to poorer people there would be political hell to pay.

 

 

ACT in Ohariu?

In their Free Press newsletter ACT say:

ACT to Contest Ohariu?
Like Epsom, Ohariu voters are aspirational, successful, and understand the power of using their candidate vote to get an extra MP into Parliament.  The voters there might well be open to an energetic ACT candidate.  National might be open to cooperating with a candidate who actually believes in the National Party’s values.

With the possibility that Dunne is just about ready to retire anyway this could be a smart move by ACT. And National probably wouldn’t be unhappy.

ACT: Labour or PPTA “wholly owned subsidiary”

In their latest Free Press newsletter the ACT Party refers to links between the Labour Party and the Post Primary Teachers’ Association:

Not Labour
Labour have asked more parliamentary questions about Partnership Schools than any other education topic this year.  Despite the fact that Partnership Schools are getting exceptional results for disadvantaged children.  Savage and Fraser were giants who built Labour to give the disadvantaged a fair go.

Today’s Labour are more interested in their PPTA supporters.

Wholly Owned Subsidiary
Last Wednesday Labour’s education spokesperson asked a question on Partnership Schools.  After the primary question, which is published before question time, questioners try to surprise the Minister with supplementary questions.

Labour’s whole line of questioning was revealed in a PPTA press release that came out minutes after he asked his questions.

Here’s the questions in Parliament, Labour’s Education spokesperson to Minister of Education Hekia Parata:

9. Partnership Schools—Contract Funding

[Sitting date: 01 July 2015. Volume:706;Page:15. Text is subject to correction.]

9. CHRIS HIPKINS (Labour—Rimutaka) to the Minister of Education : Does she stand by her statement “I am satisfied that all the contract funding to partnership schools will be spent on meeting the contracted outcome for each school, which is to deliver educational achievement”?

Hon HEKIA PARATA (Minister of Education): Yes, I do stand by my full statement, which I gave in this House in February last year: “I am satisfied that all the contract funding to partnership schools will be spent on meeting the contracted outcome for each school, which is to deliver educational achievement. In exchange … partnership schools get greater flexibility to raise student achievement, are subject to a higher degree of scrutiny … and have greater accountabilities than schools in the mainstream system.”

Chris Hipkins : How can she claim that the funds being given to partnership schools are being used for education, when He Puna Marama Trust received $3.9 million in Government funding to the end of last year, yet its audited accounts show it spent only $1.4 million on education, leaving $2.5 million unaccounted for?

Hon HEKIA PARATA : I think that the member is quoting selectively from the accounts. The first distinction to make is that He Puna Marama Trust is a trust that is the sponsor of Te Rerenga Parāoa Whangariki Te Rerenga Parāoa, and that is only one of the entities that it is responsible for. It also is responsible for 5 to 6 early childhood centres. It also runs an academy, and it is responsible for delivering outcomes, and I am happy to read to the member the 100 percent of National Certificate of Educational Achievement level 1 achievement that that school delivered. I will need to find the specific—something like 93 percent for National Certificate of Educational Achievement level 2, which is what it is contracted to deliver. [Interruption] To educational achievement—at nearly 100 percent on all three.

Chris Hipkins : Does she think it is a good use of taxpayers’ money to provide He Puna Marama Trust with a grant of $1.8 million to set up a school, given it leased a premises that the accounts show is costing it only $68,000 a year?

Hon HEKIA PARATA : I am very happy to answer that question, because the member has failed to grasp, for some considerable amount of time, that partnership schools are set up on a different funding basis. It is cashed up, based on the inputs—[Interruption] Good, are we all following along here? Yes. So it is based on the inputs that we fund—schools—and is benchmarked against decile 3. But I can see that the Opposition actually does not want the intrusion of facts on its shouting. That is what happens with partnership schools. We take the formula provided for mainstream schools. We benchmark against decile 3. We cash it up. We provide it with a contract. That contract is specific and public, and then we report the outcomes, and perhaps the Opposition would like to shout with glee for the number of kids who have gotten great educational qualifications that otherwise they might not have gotten.

Chris Hipkins : If the partnership schools are indeed “cashed up”, as the Minister explains, where has the extra $2.5 million that He Puna Marama Trust was given to run a partnership school gone?

Hon HEKIA PARATA : A number of the partnership schools have been leasing properties while they prepare to build. That is the case in the particular school whose accounts the member is selectively quoting.

Chris Hipkins : How is it fair that charter schools are being allowed to make multimillion-dollar surpluses, or have multimillion-dollar amounts unaccounted for, while just down the road students and teachers are having to put up with classrooms that are increasingly covered in black mould, and other schools throughout New Zealand where parents are being asked to subsidise their kids’ education that the law says is supposed to be free?

Hon HEKIA PARATA : It is quite inaccurate for the member to suggest that there are funds that are unaccounted for. They are accounted for, but the member just does not like the way they are using their funds. They have a long-term contract. They have cashed up inputs based on the same benchmarking. They have all made different choices that this House has heard about before. Vanguard, for instance, has put over 50 percent of its funding into the employment of staff. Other schools have made choices about lease versus purchase properties. In the end, our interest is to ensure the well-being of the students and the education quality the schools are delivering. That is what the annual reporting represents.

Chris Hipkins : How many months has it been since she gave the Whangaruru charter school 1 month’s notice, and given the Prime Minister’s statement that if charter schools failed, the Government would be quick to close them down, why is that school still operating?

Hon HEKIA PARATA : Because of both the operation of natural justice and its contract. I gave it a month’s notice, during which time I commissioned a review by Deloitte and the Education Review Office—

Chris Hipkins : In January.

Hon HEKIA PARATA : No, I gave them that in March.

Grant Robertson : More than a month ago.

Hon HEKIA PARATA : Yes, if you will just follow along with me, I will explain the process. So then I commissioned a report by Deloitte and by the Education Review Office, which I have received. Now I am in a process with that school, working through it.

And here is the PPTA press release:

Massive surplus for cash cow charter

1 July 2015

A Whangarei charter school has banked an operating surplus of more than $2.4million, thanks to funding well above the amount regular schools receive.

Audited financial accounts released to the charities commission show the He Puna Marama trust, which opened a charter school last year received $3,897,323 in government funding to the end of 2014.

Just $1,464,093 of this has been spent on setting up and running the school, which last year was funded for 50 students and six teachers.

PPTA president Angela Roberts was disturbed to see such a surplus when there didn’t seem to be a spare penny to spend on other schools in the area as their buildings rotted around them.

“It must be wearying for the rest of the Whangarei community to see all this surplus when other local schools are falling down,” she said.

While the trust was given $1.8 million as an establishment payment towards the end of 2013 to begin operations, only $123,000 of this was spent. In 2014 the trust received $2 million for property, staffing and operations, and just $1,355,782 was spent.

The salaries for six teaching staff came to $622,740, contributing to a drain of teachers from surrounding schools.

“I am aware state schools are losing valuable staff – they can’t possibly compete with that type of money,” Roberts said.

This is the same charter school that came under fire earlier this year for the purchase of a $100,000 waka. At the time the school leadership hit back at critics saying that other schools simply ‘need better accountants’ if they cannot afford to buy such things.

The audited annual accounts of He Puna Marama are available from the Charities Commission register

There does seem to be some similarities.

Of course Labour and the PPTA can share information and campaigns as much as they like, but it does give an indication why Parata, National and ACT have difficulty dealing with the PPTA on things like Partnership/Charter Schools.