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Labour shows us the money

Written By: - Date published: 12:06 pm, November 4th, 2011 - 155 comments
Categories: economy, labour - Tags:

Labour has shown us the money. Here’s Vernon Small’s summary:

Labour releases spending plans

Labour would return to surplus by 2014-15 and clear debt in 10 years Labour leader Phil Goff says. “I am not Jerry McGuire but I am here to show you the money.”

He said Labour would pay off net debt faster than National without selling assets. Labour would borrow a little more short term but the revenue from dividends on the assets and from capital gains longer term would lower debt faster.

Extra borrowing would be $2.6b in the first three years and peak at $4b but fall from 2017-18 and Labour would reach net zero debt before National would.

Early reaction from the Herald is here. We’ll probably have more to say (like everyone else!) when we’ve had a look.

155 comments on “Labour shows us the money”

  1. Anyonewhobelievesapoliticianwhentheysaytheyarehonestisafool 1

    Where can one access the “spreadsheet”. It’s not on any news sites or labour.org.nz – at least as far as I can see.

  2. Just to set the context it was always intended to present this information today for two reasons:
    1.  It allowed the PREFU data to be integrated into the analysis.  The party was insisting that the analysis be coherent and based on the latest data.
    2.  Because it refers to indivisual policy packages it was important that all of these policy announcements had been made beforehand.
    There was a structured timeline of announcements.  I agree with aerobubble’s comment in open mike that Key cynically used this to try and create the impression that Labour had not done its costing.
    Let this election campaign be about what parties actually will do, not about one party telling lies about the other party.

    • thejackal 3.1

      “I want it now… now now now,” screamed the right wing.

      • Rob 3.1.1

        Do you not think the people who live in this country and are voting in this election deserve to see the detail on how prospective Governments are planning to to deliver their election promises.  Is that such a difficult thing to ask for Jackal.  Do you not think that at this 11th hour before an election that any propsective Government would not have this detail already compiled and fully understood at least at the Leadership level. 

        So yeah I suppose we are screaming “we want it now”, because we do want to take it seriuosly and we do want to be able evaluate whether it makes sense.

        • Ari

          They certainly do have a right to see those costings, but I think waiting for the figures to actually base the costings off the most current data was a fair call, especially seeing we’ve still got three weeks before the election.

        • Uturn

          The people of this country will never read the costings.

          They take their lives too seriously. They realise it isn’t about nice tidy numbers in nice straight columns handed to them by nice tidy accountants.

          They’ve seen Labour in action before and things weren’t so bad. It’s not like Labour are a pop-up party.

          They’ve lived under National too, and somehow, no matter whether it was described as a Brighter Future or a Decent Society, and despite the abundance of figures, things got worse.

        • lprent

          PREFU was released when? A week ago?

          Perhaps you should be asking for that to be released earlier? I direct you to certain Bill English who has had it for months.

        • Draco T Bastard

          Do you not think that at this 11th hour before an election that any propsective Government would not have this detail already compiled and fully understood at least at the Leadership level.

          Nope because the government goes to a great deal of effort to ensure that the necessary detail to do such costings are secret. This should, of course, be illegal but no government has yet changed the laws so that the people can see WTF is happening in their country whenever they happen to look.

  3. tsmithfield 4

    I repeat my posts here I made on the previous thread because its a more relevant thread:

    I can see quite a bit of bullshit in there already without having to look too far.

    For instance, the projected income for reducing tax avoidance. Firstly, the government has already grabbed the low-hanging fruit in this respect. Secondly, new rules create new loopholes, so I very much doubt there will be much to gain in this respect. It looks to me that the projected numbers in this respect are magical ones rather than based on any fact.

    Also, Labour obviously is relying on the economy to grow while at the same time taking money out of the economy for compulsory kiwisaver etc. Thus I don’t think they can depend on the growth projections.

    Also, ring-fencing losses on property might gain some extra tax revenue. But it will also affect property values, thus driving down income from the CGT!!!

    Not very bright from Labour.

    Hell, if I can see this sort of stuff at a few minutes glance, National is going to have real fun with it.

    • One Anonymous Bloke 4.1

      You’re missing one vital aspect: National has to sound credible, whereas you feel no such obligation.

      • tsmithfield 4.1.1

        Also, projecting income from borrowing to save in the current world markets is very, very, optimistic.

        Also, projecting for dividends for assets not sold is just plain dishonest. The income is there already. So it can’t be counted as extra income.

        • mickysavage

          Ummm I have to pull you up on that one.  The sale proceeds for the shares are not in the books but what is put back is the income that would otherwise be lost. 

          The tax avoidance issue is very easy.  National has run staff numbers down.  If you bolster up staff numbers in avoidance then a very good return is possible. 

          • tsmithfield

            “Ummm I have to pull you up on that one. The sale proceeds for the shares are not in the books but what is put back is the income that would otherwise be lost.”

            OK. I’ll accept that. I see they have unbooked the asset sales in the document so that is probably fair enough.

            “The tax avoidance issue is very easy. National has run staff numbers down. If you bolster up staff numbers in avoidance then a very good return is possible.”

            This is magical thinking though. Of course, increasing staff numbers costs more. So the extra revenue from the tax cuts would need to exceed the cost of capturing it. I really think this is based on very shaky, even non-existent assumptions.

            • felix

              We could probably do away with IRD altogether then. Sure, we’d lose a bit to tax avoiders but just think of the wage bill savings!

              Hey I like this “magical thinking” of yours tsmithfield. Except it’s not really magical and it’s not really thinking either.

              • Rob

                Wow, someone better give Unite Union a heads up, things could get tough for them under Labour’s super charged IRD collections team.

                • felix

                  I’m not Labour or Unite, dickhead. Address your dribble elsewhere.

                  • Rob

                    ^^ dickhead eh Felix……nice

                    • Colonial Viper

                      Maybe you’d prefer ‘shit for brains’, shit for brains? Because its the big banks and corporates which are going to suffer under increased IRD vigilance…which must be why they’re the ones giving National $100K donations.

                      They probably consider it an investment with excellent tax returns.

                    • Rob

                      “Shit for brains” pfffft

                    • queenstfarmer

                      its the big banks and corporates which are going to suffer under increased IRD vigilance

                      Actually that’s unlikely CV. The big banks & corporates occasionally have big legal stoushes over interpretations and the like, but it’s all very transparent. In fact they usually tell the IRD what they are doing in advance. They are required to disclose a lot more information to the IRD, and if they lose a test case they pay it back. There is very little, if anything, that the IRD is “leaving on the table” with the big banks & corporates.

                      It’s the smaller business-people/property developers/wealthy individuals (aka rich pricks) who tend more often to try to sneak things under the radar, usually encouraged by a over-zealous accountant. The statistics show it is a minority, but it does happen.

                      However any suggestion that there are hundreds of millions left uncollected from this “revenue source”, and if the IRD puts a few more feet under desks they will collect it, is pure fantasy.

                    • felix

                      True, Rob. Puddingfarts for brains more like.

                    • Draco T Bastard

                      The statistics show it is a minority, but it does happen.

                      Got link to these statistics?

                      However any suggestion that there are hundreds of millions left uncollected from this “revenue source”, and if the IRD puts a few more feet under desks they will collect it, is pure fantasy.

                      You’re right that it’s usually not the big businesses that usually do these things…

                      oh, wait…

                      All businesses, because of their psychopathic mentality, will try to avoid taxes. Some will get caught, most won’t because the IRD is understaffed and overworked. NAct just cut IRD staffing levels while also massive tax breaks and changing other rules – wonder why.

                      The small businesses that avoid paying taxes are small but there’s lots of them. So, each only avoids a small amount (a few thousand each) but the accumulated total could easily be into the tens or hundreds of millions.

                    • queenstfarmer

                      I’m afraid you’re in the realms of fantasy again, DTB.

                      Got link to these statistics?

                      Of course. See here for example (Aus). NZ doesn’t compile stats, but you just need to take a look here to see the typical profile.

                      NAct just cut IRD staffing levels while also massive tax breaks and changing other rules – wonder why.

                      The current Govt has actually made a major crackdown resulting in far more prosecutions for tax avoidance than Labour did during 9 years in Govt – wonder why. Tax rorts were absolutely rife during Labour’s time in power. They basically created incentives for doing so by de-aligning the top tax rate and the trust rate.

                      oh, wait….

                      The Westpac case you link to is exactly the thing I was referring to when I said “…and if they lose a test case they pay it back”. There have always been, and will always be, test cases. It may be completely foreign to you but that is how the law works in every (democratic) country on earth. So, as the article says, in that particular instance they had already paid much of it under protest, and allocated for the rest in case they lost.

                      You clearly don’t have much knowledge of these matters you are commenting on.

                    • Draco T Bastard

                      $85m over 10 years to investigate tax fraud while cutting 156 people from IRD. Mixed signals anyone?

                      Oh, and changing the rules which will have another impact on IRD as it increases complexity.

                      BTW, those convictions may have been made last year but when were the investigations started? As I understand it, it can take years before an investigation will result in charges and be brought before the courts.

              • mik e

                A Greek tragedy ie thats the problem with Greece TSm they don’t have an IRD with clout they have corruption ie Brownlee in back pockets of big banks

                • The Baron

                  You need to learn what a full stop is and how to use it, Mike. I think your talking complete bollocks (Greece has more of a spending problem than a revenue gathering problem (though it has that too), and what has Brownlee got to do with the IRD when comb over is Revenue Minister?)…

                  … But it’s hard to tell due to your inability to use any punctuation. Someone needed a national standard a few years ago, methinks.

            • Galeandra

              ‘Of course, increasing staff numbers costs more…..’ well, at least double what they’d cost on the dole….without even considering the need for various top-ups etc. So if they’rejust half effective they’d still produce a gain.

            • mik e

              National would be in a huge hole if not for Kiwisaver the Cullen fund and $19 billion invested in acc
              Tsm tell me why are National borrowing to pay for Kiwisaver

        • One Anonymous Bloke

          So, since the dividends are part of the revenue stream they should be ignored and not included in the accounts then? You really are completely innumerate, aren’t you?

          • Draco T Bastard

            It’s tsmithfield – he’s just doing his bit to help National spin their lies.

        • mik e

          BS tsm the price the govt has signalled is a fire sale price depressed share markets tight finance as you have pointed out will lower the price.
          The 4 energy companies are making record profits and should be worth considerably more profit on the power companies is up 30%
          Ask John Key if he would sell his best performing stocks the answer would be no

  4. The Gormless Fool formerly known as Oleolebiscuitbarrell 5

    Labour has showed us the money.

    What is the past participle of “show”? Good demonstration of why we need National Standards.

  5. anne 6

    I for one am getting tired of the continual rubbishing of goff in all media sources,national hit men are swamping the media with attacks on goff,just like they did on winston peters last election,surely the media in nz should not be alining themselves to one particular party,national have committed crimes against nz’ers while in govt,but there is no mention of their track record
    anywhere,why not?

    • thejackal 6.1

      The mainstream media mainly being interested in giving Phil Goff shit and not wanting to hear any criticism of Brand Key is perhaps best highlighted in this Radio NZ interview with David Cunliffe. Unfortunately such nasty tactics work… anybody got a spare $43 million to bribe the MSM with?

      • One Anonymous Bloke 6.1.1

        I can’t recall the last time I listened to such a steaming pile of “fair and balanced” journalism. From what Cunliffe had to say, the interviewer should have known – and Brand Key must have known that the “bells and whistles” press conference had been called for Friday, and why, given the timing of the PREFU. What’s more grotesque, a government that thinks democracy is about point scoring, or a journalist who brings their own vaseline?

      • Ben 6.1.2

        I don’t suppose you happened to hear the interview with Cunliffe on Checkpoint this afternoon?

        Cunliffe was appalling. He wouldn’t “admit” that there was borrowing to fund the superannuation contributions, and it was really obvious that he was ducking the question. He should’ve just answered it “yes, and here’s why” rather than trying to avoid the question. He eventually “admitted” it, although had he been up front about it there would’ve been no “admission” and so it wouldn’t have been layered with negative connotations.

        Quite apart from that, the treatment of Steven Joyce immediately afterwards blew my mind. Cunliffe had made a point about a $1b hole in National’s budget, and instead Suzie Fergusson concentrated on whether National would be borrowing to make contributions to the super fund *in five years’ time.*

        Hardly the most relevant discussion point with an election in three weeks.

        • mickysavage

          Hello Ben and hello Rob, two trolls, possibly plants.  Here is the Sesame Street version for you.

          1.  Labour will “borrow” to put funds into the Cullen Fund because it is very good at getting a return.
          2.  The “borrowing” does not affect debt because it is not consumed.  Cunliffe was talking about “debt” not “borrowing”. 
          3.  Please ignore everything else and explain to me this.  National in the budget booked the sale proceeds of the power company shares but did not take out of the accounts the income earned from the power company shares in the future.  How is this accurate, right or fair? 

          • fender

            I guess it means Key and his mates who buy these shares at an extremely low rate will feel so guilty they will simply donate the dividends back to the country….ok so I’ve had one too many bottles of tui….but with his record I’m sure we can Key to spin us a lie similar to this.

          • The Baron

            Lost $2.4 billion since May, Micky. Sorry, you lose. Oh no, actually we do. Borrowing to save is madness.

            • Colonial Viper

              Borrowing at very cheap rates to to make a higher return is economic good sense.

              HOWEVER there is extreme volatility in the financial markets right now.

              The Baron – forget about the short term timeframe “since May”. What has been the growth in the Cullen fund in the last 24 months.

    • gingercrush 6.2

      Are you blind, stupid or both?

      Has Eddie not been saying for the past five-six days how Labour has so much momentum but no you’ll continue to be blind as a bat and wah wah about how unfair the MSN are. Truly pathetic.

  6. Jenny 7

    When Goff was left floundering by Key, when Key made the challenge, “show us the money”. Phil could have quoted the world’s second richest man, Bill Gates this week, when Gates spoke at G20 Summit in Cannes.

    Bill Gates on, ‘Where the Money Is’

    • Jenny 7.1

      Bill Gates was asked to address the G20 nations to advise government’s around the world on how to raise funds to address the global financial crisis that would prevent government attacking the poorest through austerity measures.

      French President Nicolas Sarkozy asked him (Gates) to give G20 leaders recommendations on how to raise funds to meet the needs of the world’s poorest. Among Gates’ proposals: a small tax on trades of stocks, derivatives, and other financial instruments, also known as a financial transactions tax (FTT), Wall Street speculation tax, or the Robin Hood tax.</blockquote>

      You have to wonder why a tax so hated by the, Banksters, currency speculators and derivative traders the likes of John Key, is also hated by the Labour Party.

      • Ari 7.1.1

        Probably because it’s Mana policy, and they don’t really like anyone in Mana. 😛

        • Jenny

          Probably because it’s Mana policy, and they don’t really like anyone in Mana.


          Ari, I think your surmise that it is just a matter of Labour Party sectarianism is wrong.

          Could any political party possibly be that sectarian that they would oppose a policy that would benefit their core constituency just because some other party supports it?

          Ari I think your theory is just to implausible.

          Surely no serious political party could be that churlish and petty in the extreme.
          I could be wrong on this. But who knows?

          A cone of silence seems to have descended on Labour party supporters around this topic. So because they seem to have collectively chosen not to tell us their reasoning for opposing an FTT, guessing as to why, is all we can do. And your guess is as good as any.

  7. Chris 8

    From what I’ve read from numerous posters on this site National have not removed the dividends from the assets they are planning on selling from their budget anyway.

    So how is Labour getting into surplus faster based on dividends National has already included?

    • Rob 8.1

      Its a partial assett sale, so there is partial dividend returned to the Govt.  We just do not carry the full cost of the assett.

      • Draco T Bastard 8.1.1

        And yet National have left in the full dividends not the partial ones.

        • Ari

          You forgot that the privatisation fairies will come and double profits, thus returning the same dividends while also booking the one-time cashflow from the sale.

          Wasn’t there some talk of magical thinking somewhere around here earlier? lol.

          • mik e

            That has never happened whenever national and roger Douglas have sold assets
            Debt went up because Govt revenue went down look at stats NZ! lok at corresponding time of sale and indebtedness its quiet scary roger douglas said we had to sell assets to pay debt he trebled the debt after muldoon.

      • fmacskasy 8.1.2

        Rob – you’re condensing and simplifying a $7 billion (part) asset sale into a one-liner?!? And a one-liner that makes no particular sense at that.

    • Galeandra 8.2

      dividends National has already included

      Oh, so they get to sell assets AND keep the dividend stream. Tell me more, I like it.

      • Chris 8.2.1

        I’m not saying that is what will happen obviously it can’t. But posters on this site have been saying since the budget that National have left the dividends in there and accounted for the sale.

        So you’d have to say then that Labour are not actually receiving any more income than National are saying they will get (wrongly) in respect of the dividends. So how will that projected income help them out of surplus faster than National.

        • Puddleglum

          Hi Chris,

          If you have a look at the document and tables in the release you’ll see that they put in a corrected PREFU. That correction involves the removal of income streams from the sold assets. They then use that to calculate the point at which National and Labour will reach net zero debt (not budget surplus).

          From what I’ve read, they say they’ll be in surplus at the same point as National (2014/15) but at net zero debt sooner. That earlier date is not just from the income streams of retained assets but also from the superann fund, which they would resume payments into.

          But maybe I’ve got it all wrong … 

          • Chris

            Oh yep that makes sense.

            Does bring up one point I have been wondering about, how does payments into super being us out of net debt sooner? I assume it must because National doesn’t seem to be arguing it, but I can’t get my head around it,

            • Ari

              Because the super fund is already returning dividends at a rate that exceeds the amount of interest the government pays on borrowing.

              Labour aren’t actually gormless fools when it comes to finance, they realise that you don’t borrow to buy assets unless they return more than the interest rate.

            • Puddleglum

              how does payments into super being us out of net debt sooner?

              The argument is that the super fund is an asset and so payments into it don’t simply get counted as debt – NZ still has the money to call on, plus any return.
              If the ‘borrow to save’ criticism is made then the argument is that the investment return on the super fund has historically been consistently higher than the cost of borrowing, hence it still isn’t a drain on the books (the opposite, in fact).

              Also, it’s an open question as to just what any borrowing is specifically for. National, for example, were borrowing far more than necessary on the argument that they were getting a good ‘price’ on the loan.

              Of course, they then claimed that NZ had to borrow $380m per week when, clearly, they knew that that simply wasn’t true (irrespective of the wisdom of the speculation on interest rates for government borrowing). 

            • mik e

              well you don’t have a very big head so don;t worry the super invests largely in NZ helping local business make more money creating taxable income and gst
              the company also pays dividends to the govt some in tax on the dividend . it reduces the amount the government has to find when the bulk of baby boomer’s start getting super 2020 allowing govt to pay down more debt when bay boomer’s start spending this money is spent long term thinking not short term thinking

      • Rob 8.2.2

        Well that is the unique feature of any 51% ownership.  I cannot see what is mysterious about that. 

        • Draco T Bastard

          “Shit for brains” is to complementary a description of you.

          Obviously, the government would only get to keep 51% of the dividends but this government have booked keeping all of them.

      • tang9 8.2.3

        Yes this is certainly a good one to sell the assets and the dividends will still be coming in hahahahaha

  8. phil 9

    Maybe a treasury type can confirm, but it seems Labour has ‘put back’ income that isnt going to be lost under national.

    Their forecast returns from SOE’s represent the sum of dividends and interest received from SOE’s (as set out in the PREFU see forecasts pp 100 ono). For example the FY2013 interest + dividend income from SOE’s is 1 billion, but govt revenue from dividend income alone is only 613 million. Is the extra 400 million from SOE’s therefore interest?

    Now I don’t know exactly where this interest stream comes from – I can only assume lending to SOE’s? However, Labour implies 47% of this amount will be lost under the nats plan. But only the dividend stream is lost when you sell a shareholding, this interest stream will remain. As such Labour has overstated (materially) the financial effect of selling assets I would think….?

    Happy to be corrected on the interest point though 🙂 (I’m not at all familiar with where those interest revenue figures come from in the PREFU)

    (NB the PREFU figures are on p90 ie note 2, and pp100 ono of the report, Labours are from p9 of their fiscal strategy document)

    • Ari 9.1

      It’s possible you’re right. Hopefully there’s someone else here who’s decent with accounts who’ll shed some light on whether that’s a mistake on their part or yours. 🙂

      • phil 9.1.1

        Going by the Herald/Treasuries comments reported today it looks like I wasn’t 100% correct, but definitely onto something 🙂

        I guess mistakes like this are going to be pretty likely – they would have put the stuff together in a rush.. Makes me a tiny bit suspicious of the rest of it though!  

        Interesting no one replied to my point. I would have expected some of the people commenting on this stuff to have enough financial knowledge to engage with it (given they all seem to be such experts lol). 

  9. Tom Gould 10

    Just tuned into Radio Dick Griffin and wouldn’t you know it, the lead item in the 2pm bulletin was an extensive string of tested lines from Key attacking every possible angle on the Labour numbers. Seems news has become so biased and corrupted over the last 3 years, that ‘dog bites man’ makes the front page, so long as the dog is Tory and the man is Labour.

    • infused 10.1

      It’s just that Goff is so useless he gets attacked. Have you forgotten the last 9 years when Labour was in power? National were attacked all the time.

      • The Voice of Reason 10.1.1

        Ha ha, didn’t realise we now had a Friday Funnies feature. National attacked all the time! Lord, how they must have suffered. Apart from the masters of the universe losing patience with Bill English in 2002, its been all one way traffic, particularly the vicious personal attacks on Helen Clark. And between 2006 and 2008, the MSM screeching was only lightened by subtle dog whistling from Crosby Textor. Democracy under Attack, anyone?
        Oooh, confused, you’re such a scallywag! And they say the satire boom is over; not with you around!

  10. muzza 11

    Your politicians do not work for you, why on earth else would they have judicial immunity, as one example and why would the public accept this to be written into law the way it is.

    NZ is broke and is going to become more so, and the IMF awaits, this is a certainty. So you idiotic party stooges who debate whether your red or blue meanies will save you are quite, well moronic really.

    Posts above debating if the sheet contains dividends from asset sales and the like. For gods sake wake up, and realize that you are debating who is acting the band members playing as SS Titanic NZ Plc sinks…

    You people can do better no, oh guess not!

  11. randal 12

    their is a difference between being attacked and being swamped ina pile of bullshit manufactured by the proprietor of the news outlet.
    radio New Zealand has become sloppy and toadying and they need to up their game.
    But anyway the people of New Zealand know that RNZ is in for a big shakeup after Labour win the election.
    Their standards have slipped into childish childish infantilism and pandering to children wanting to be adults.
    Its all style and nonsense instead of in depth treatment of anything.
    time for a change there.

  12. Jenny 13


    Labour needs to stop competing with the Nats. on who can borrow the most money, or where the austerity axe is eventually going to fall.

    It shows a complete lack of courage and imagination and leaves voters cold.

    Here in Papakura all I hear from people is “We are not going to vote for anyone.”

    • lprent 14.1

      They plan to borrow to save in the worst environment possible

      Bullshit – the worst possible environment would be when there are twice as many elderly drawing superannuation as there are now, and a lot fewer taxpayers. That is what National want to do.

      At least Labour is borrowing now to put it into building an asset that usually makes a return.

      National is borrowing heavily mainly to pay the wealthy a tax cut to do what? Induce negative growth appears to be the only result so far. Businesses aren’t being invested into. It makes no difference to employment and therefore the tax take. It just leaves and even bigger hole in the governments coffers that instead of filling up in preparation for a increasingly more elderly population, are flushing off to do sweet fuck all.

      If you’re going to make up a scenario, at least think it through the alternative first. Neither are ideal. But Labour’s makes much better sense than Nationals because they are spreading the load to pay for the forward obligations. Nationals is to piss it against a wall and hope. This should have been started 30 years ago.

      • Jenny 14.1.1

        Bullshit – the worst possible environment would be when there are twice as many elderly drawing superannuation as there are now, and a lot fewer taxpayers. That is what National want to do.


        Lynn, since the money changers flew the global economy into a wall, 2008 – 2009, governments around the world have been left with huge deficits. Which they are trying to bridge with austerity measures aimed at the most vulnerable, or massive borrowing which just postpones the evil day.

        Why is this causative factor not being addressed?

        In my opinion if Labour addressed this causative problem with an FTT, Labour would rivet the local and world media attention on them, inflame the National and ACT opposition, fire voters imaginations, electrify the campaign, and win this election – With the announcement of an FTT.

        Why won’t Labour supporters even discuss it?

        Bill Gates and countless others think it’s a good idea.

        Is this a taboo subject with Labour?

        If Labour party supporters like yourself oppose it so, why won’t you state your objections?

        • queenstfarmer

          Why won’t Labour supporters even discuss [an FT’T]?

          Because even those on the left of Labour realise (for now, it seems) that an FTT would be ineffectual at best, or very harmful at worst.

          • Ari

            BS. It’s been implemented overseas without adverse effect.

            • queenstfarmer

              BS back at ya. What first-world economies have an FTT? (an actual FTT, not just stamp duty on shares, etc)

              • mik e

                the EU is looking carefully at FTT to pay off debt that ponzi banks stole lost to a right winger

              • McFlock

                A wee bit of a selection bias, there (although I believe Belgium and Sweden have, or have experimented with, variations on the theme). Prior to now, developed economies have essentially been able to fund their governments from taxing their large middle-classes, whereas developing economies needed to think outside the tax box from the get-go.
                Your restriction to developed economies seems a bit artificial, anyway – the main thing an FTT needs is automated transaction processing which lowers the compliance costs to almost nil. Brazil’s experience seemed to be a good example of how to implement it cheaply but with blanket compliance.

                • queenstfarmer

                  Brazil’s experience seemed to be a good example of how to implement it cheaply but with blanket compliance

                  First of all, Brazil, tax and “blanket compliance” don’t seem to go together well: Tax evasion a way of life in Brazil

                  Second, as I think you note, Brazil tried an FTT and then scrapped it after only a few years. I don’t see why that should be held up as something NZ should aspire to.

                  • McFlock

                    1: It’s a developing economy. What did you expect? But if the money went through a bank, it was hit by the tax.

                    2: The Brazillians seemed to run it on a fixed term basis renewed every three years, so it was a bit of a political football. It seemed to work okay, though.

                  • Jenny

                    …..as I think you note, Brazil tried an FTT and then scrapped it after only a few years. I don’t see why that should be held up as something NZ should aspire to.


                    The fact that Brazil cancelled this tax only after a short period is not indication that it wasn’t doing what it was supposed to do.

                    You will have to do better than that Queenie.

                    Maybe it was being very effective in taxing the powerful financial elites in Brazil, so they exerted all the political and financial pressure available to them to get it repealed.

                    Witness the pressure that the financial elites in Europe were able to apply on the Greek “Socialist Government”. Through threats and pressure Euorope’s financial elites have achieved the forced the cancelation of the planned Greek referendum on their austerity program.

              • rosy

                I think it’s pretty clear many advocates for a FTT understand the implementation needs to be at least a regional, and possibly global one. Hence Bill Gates turning up at the G20, not on the White House doorstep.

                Using individual countries experiences it a bit of a red herring. A policy of supporting a FTT does not mean it would be implemented outside of regional/global agreements.

            • phil

              It was tried in Sweden in the early 90’s I believe, but failed to meet expectations – raised basically no revenue and just shifted transactions overseas. Later research tends to show that such taxes will invariably do this – raise little revenue, push transactions overseas and generally create distortions in the economy.

              Thus current proposals are really just political – playing on general anger towards the finance sector + ignorance of what such taxes do or dont do. In short FTT’s are great politics but poor policy. You are much much better off (in terms of raising revenue with minimal negative side effects) just bumping up taxes on income or capital a little.

              • queenstfarmer

                Exactly. The ignorance of many of the people promoting these thing is quite remarkable – they want to implement a tax that they have absolutely no idea about (not even the basics) but they think it’s good because some people give it names like “the Robin Hood tax”.

          • Jenny

            Queenie, maybe you would like explain your reasoning why you think an FTT “would be ineffectual at best, or very harmful at worst.”

            • queenstfarmer

              An FTT is widely considered to not be effective unless it is implemented globally (or at least among many countries). Virtually no countries currently have FTTs, and the tiny number who have tried them have generally scrapped them within a few years.

              So NZ racing out on its own to implement an FTT would not be good. If there was a broad plan to implement one, then maybe.

              And then there are questions about what it is supposed to do. Some people think (or hope) that it will rake in huge amounts of tax. Others say it won’t. I’ll leave you wade through the massive economic dissertaions on that one for now 🙂

              • Colonial Viper


                a local FTT will reduce the proportion of the economy associated with financial speculation.

          • Colonial Viper


            FTT of 0.05% on all NZ currency transactions would be one of the best things which could happen for our exporters.

            And its way way less than the banks charge us for currency transactions.

        • lprent

          I’m not the Labour party obviously. But there are have been some obvious problems with a FTT.

          I looked at this nearly 30 years ago. In those days the main issue was that the costs of collection were effectively higher than the revenue. It was pointless to put in because it simply acted like grit in economic systems. Other transactional taxes like stamp duty eventually got removed for the same reason. This isn’t a real issue anymore because better computers and network eliminate the problem.

          However they introduce the issue that causes the current problem with having a FTT. It also makes it really easy to do transactions outside of the jurisdictional region that has a FTT. To put a FTT in a developed economy where we have (for good reason) dropped almost every barrier to the flow of investment means that those transactions will simply get done elsewhere.

          A FTT would either have to be really small – in which case the cost of collection starts kicking in again or you have to lock your country away from the rest of the financial world (bad idea and you don’t have to look back too far in NZ to find out why) or you have to install it internationally.

          If NZ put one in unilaterally with our current system, then only people who would pay it would be those who were too poor to avoid paying it. If we locked the country away behind a exchange wall, then people like myself would simply leave because it just raised the cost of doing business here far too high (it was why I nearly left in 1984).

          I think that there should be a FTT. But it has to be one done across economies. And there has to be an agreement to embargo and starve cheater nations – including all current tax havens.

          • muzza

            The most obvious problem of course being that the banking cartel who control all the players and in fact the game too, will never allow it to happen!

            The EU looking at one – Yes that’s right, it’s getting looked at…..that is all it’s getting!

            • mik e

              MUZZLE The right wing are researching it Merkal Sarkossy and Berlssconi
              You might be saved though the right look like they are going to lose their elections right across the board. so you might not have to worry .But Merkal and Sarkossy say it would be a good way to get the money back from the banks they bailed out.
              It would be unavoidable if it was put on foreign currency transactions as well but at a lower rate to help pay our $40 billion election bribe debt.

          • Draco T Bastard

            To put a FTT in a developed economy where we have (for good reason) dropped almost every barrier to the flow of investment means that those transactions will simply get done elsewhere.

            Actually, there’s a way to stop that. Make it so that every NZ$ is an encrypted code that automatically reports transactions and transfers the FTT amount to IRD no matter where in the world it is. The only way that banks and financial institutions could deal in NZ$ would be if the code could run on their systems and they ain’t going to avoid opportunities to make a profit. Any tampering to the code would void the NZ$ that it represents.

            Difficult, yes but not impossible IMO.

            • lprent

              Every company I had worked in over the last 10 years has offshore bank accounts for different currencies that they get paid in. Mostly these are used against the exchange movements – you hold until Fontera or the government or the current international scare is done. Those things are so big that itis often cheaper to borrow than repatriate.

              Several have been able to move development between countries.

              It is a connected world…. Finance acts exactly like the net does, it bypasses barriers…

          • Jenny

            Thanks Lynn for expounding your reservations on the Robin Hood Tax.

            ….This isn’t a real issue anymore because better computers and network eliminate the problem.
            However they (computers?) introduce the issue that causes the current problem with having a FTT. It also makes it really easy to do transactions outside of the jurisdictional region that has a FTT. To put a FTT in a developed economy where we have (for good reason) dropped almost every barrier to the flow of investment means that those transactions will simply get done elsewhere.

            I am glad to see that you think “that there should be a FTT”. But your pre-condition that, “it has to be done across economies”, is obviously for you, the killer for this idea.

            This is also the main objection most frequently raised by critics of this tax.

            However this objection to this tax is a long way from Queenie’s claim that an FTT would be harmful at it’s worst.

            As you are probably aware Lynn, this issue is up for consideration in the E.U.

            After hard lobbying by self interested financiers of the British Tory government. David Cameron leader of the British Conservative Party also used this excuse. Cameron said that his government would support the Robin Hood Tax if it was introduced globally. (an impossible pre-condition)

            Obviously someone needs to be first.

            Though a global FTT would be the ultimate goal, someone has to take the lead. (In human affairs that is the way change happens.)

            However, apart from that – Bill Gates for one, disagrees that global agreement needs to be a pre-condition for implementing this tax.

            According to an advance copy of Gates’s report;

            “FTTs already exist in many countries, where they generate significant revenue, so they are clearly technically feasible. According to the IMF, 15 G20 countries have some form of securities transaction tax. In the seven countries where the IMF estimates revenue, these taxes raise an estimated $15 billion per year.”

            Further in his report Bill Gates concludes;

            ….(European) aid budgets would be boosted by $9bn even were the FTT limited to the larger European economies, such as Germany and France, which back the idea.

            Gates concern is that British Conservative government acting at the behest of the international Banksters would veto an attempt by the European commission to implement an FTT in Europe.
            Even the British Treasury has advised the Torys against vetoing the other EU countries introducing an FTT if they wanted to.

            To recap, most of the opposition comes from conservative politicians and powerful political lobby groups acting on behalf of the financiers, who in turn are motivated purely out of self interest.

            The main opposition argument that it would need to implemented globally from the start is a fallacy.

            A number of other commenters here have pointed out that most of the lesser and more specious objections to this tax can also be overcome…..

            I would like to add, All that is missing is the political will to make this work.

      • tsmithfield 14.1.2

        Iprent, the point is that they are committing all NZers to this borrowing in an environment where another major crash could happen any time within the next few years. If it was their own money, that would be their risk. But its not. It is committing all NZers to fixed liabilities that still must be repaid if something goes wrong.

        And it is quite dishonest not to show the borrowing on their books. Sure, there is an asset on the other side of the equation. However, if you had a house with a mortgage, would the fact that the value of the house exceeded the value of the mortgage annul your obligation to the bank?

        • Ari

          That analogy is rather flawed, as you’re not counting dividends in it.

          A better one would be owning a rental property that’s returning more than you’re paying on the mortgage. Assuming you don’t intend to keep the property forever, (we don’t in this case, it’s there to fund retirements and will eventually be cashed out) it’s perfectly honest to book in the sale value against your mortgage liability, as long as you hedge the figure in case of market downturns. The point is you take on the risk in order to get the returns from the rental and actually, you know, get to spend the money you cash out at some point.

          If John Key wants to criticise borrowing for a good investment to pay for super, he better stop committing to paying out super first- oh wait, he can’t, he’d have to resign. It’s incredibly hypocritical of Key to maintain it can be paid for, and then criticise his opposition for actually trying to pay for it.

        • mik e

          The rights spin pretend the economy is like a household budget
          Its a totally different Dinamic
          Changing NZERS savings habits is more important
          this invested money returns dividends which are taxed
          The Australian govt Super scheme is saving the tax payer billions with the tax on dividends and all the other benefits that acrue
          NZ will be left behind again and Jinxed Key will never catch Aussies growth without a super scheme!

        • Puddleglum

          they are committing all NZers to this borrowing in an environment where another major crash could happen any time within the next few years.

          I might be mistaken tsmithfield, but weren’t you one of the commenters applauding National for its financial nouse in borrowing now more than was needed in order to ‘front load’ the borrowing while interest rates were good for borrowing? Yet now you seem to think that that approach is a very dangerous and ill thought through approach.

    • Ari 14.2

      Actually they plan to return money into the economy by shifting tax burden away from the lower tax brackets and produce and into the CGT and upper tax brackets. If you’re going to talk about growth, at least talk about its real drivers, which is the confidence of working class households, not of millionaires.

      Your comments about borrowing to save indicate you don’t really understand investment. Borrowing to invest in something that returns more than the interest rate even during bad financial times is a no-brainer, much like paying debt off is good fiscal strategy when you have a surplus and you have a reasonably high interest rate.

      Borrowing is only bad when you’re borrowing to spend on things that don’t have a good rate of return- like tax cuts for the rich.

      • tsmithfield 14.2.1

        And, like most lefties, you don’t grasp the concept of risk and return. If there is the opportunity for a greater return in the financial markets, it is because there is a greater risk there. If that was not the case, then lenders would go straight to the markets themselves rather than lending to relatively secure sovereigns such as NZ.

        Given that volatility is currently between 30 and 40%, it is a very dangerous time to be in the world markets, and may well be for quite awhile yet. At the moment, Labour’s plan is akin to borrowing money to go to the casino.

        If you want to borrow money on your own behalf for this sort of lunacy, then go ahead. But don’t make the rest of NZ liable.

        • Ari

          I do grasp the concept, I’d just rather if we’re going to pay for NZ Super, we risk bloody investing to get the money to do it first, rather than funding it directly from debt. Seeing there doesn’t yet seem to be a choice where we at least don’t pay super to people who don’t need it, (Labour’s policy is essentially only means-testing the first two years) I’d prefer we at least bloody well TRY to fund the monstrosity now, while the people who could conceivably benefit from it are actually still paying into the system.

          What we have is essentially a sunk cost, (because neither of the bigger parties is brave enough to commit to cutting it in a way that doesn’t hurt those who genuinely need it) and you’re telling me we shouldn’t invest to pay said sunk cost, because there’s a probability we might lose some of the investment. I’d rather bear the risk now and try to pre-fund it than bear the crushing economic consequences later of the incredible amount of borrowing (or simply letting seniors live in poverty by cutting the program to the bone) that would result.

        • Colonial Viper

          Righties understand risk/return:

          As per the righty maxim “Privatise profits for the 1%, socialise losses on to the 99%”.

    • mik e 14.3

      TSM From 2000 till 2008 savings didn’t slow the economy the money is reinvested in the productive sector allowing businesses to expand

    • Puddleglum 14.4

      “They plan to borrow to save in the worst environment possible for this type of stupidity and still expect to generate income from it.”

      Well, according to Brent Edwards on National Radio (Checkpoint), professional investment advisors are saying this is the best time to invest. It’s at about 7min 30secs into this audio here

      The whole analysis in the audio is worth listening too. Edwards also makes the point that Key’s defence of his GST ‘mispeak’ is “cute”, since the so-called tax switch, if you think about it, was basically an attempt to cut top taxes, which required GST to rise in order “to balance the books”. Key was trying to say that the original interview question was about raising GST “to balance the books”, hence he wasn’t raising GST for that purpose in the context of the ‘tax switch’ – but, of course, that’s exactly what he was doing.

    • KJT 14.5

      Same with National.

      Predicting growth when they are going to suck the spending out of the economy by attacking wages, benefits and sacking state service providers to employ offshore contractors.

      Their predictions are a lot more dodgy than Labour’s even.

      Nationals tax deficit is going to require billions a year in borrowing, forever.

      Borrowing for election bribes, not stimulus, or assets. At least Muldoon bought us some assets.

      Key is not concerned because they will have finished there current raid on NZ and they will be off to burgle somewhere else, as we attempt to build NZ again.

      We are not going to export our way out of debt. Every country thinks they are going to do that. The only winners will be the ones who are big enough to dictate terms.

      Our currency should be dropping to correlate with our terms of trade, but it is artificially held up by the RBA and speculation.

      Not to mention more than 16 billion a year and rising lost due to the first ACT and Ruth’s governments criminal actions..

      “Accountants know the cost of everything and the value of nothing.” Key is an accountant.

  13. Adrian 16

    The Marlborough Express has run a poll this week on the candidates. It didn’t go to plan with Liz Collyns ( Lab) trouncing Mr Invisible Colin King (the incumbent Nat, you won’t have heard of him). It was big on the website etc, the results are hidden in a tiny little corner of the paper, no headline or leader. I bet if it was the Nats in front it would have been front page. Arseholes!

  14. anne 17

    Here is the rub,key and national minders knew that the costings were not ready for labour,not for a couple of days because they needed to be signed off,so as key always has notes to work off was directed to attack that,key’s minders knew that goff could not answer that in the ch ch debate and knew that would make him look incapable,the same way national minders played disgraceful games against winston peters in the run up to the last election,national have no credibility and certainly not on running the economy,3 downgrades are not ch ch earthquake faults
    they are an inept,incapable,treating tax payers money as their own,the media needs to take a long
    hard look into the national party’s handling of the economy,there are many instances of lies,corruption,manipulation,time to pull the shuters up on national’s key and english.

    • Colonial Viper 17.1

      Goff is going to have to be ready for more unreasonable attacks and demands from Key.

      A “Labour’s policies are fully costed and paid for. And sorry John, Labour doesn’t do policy releases for your convenience”.

      Moving to “John, you’re wasting time because you have nothing to say. Labour’s policies are fully costed and paid for. And for the umpteenth time, Labour doesn’t do policy releases for your convenience.”

      Moving to “John, your Government are the experts at putting NZ in hock without a plan. No wonder you’re so interested in debt. By the way John, do any of your former investment banking colleagues make a profit from the NZ debt that you have sold them?”

      • ianmac 17.1.1

        Key’s Response to the release is to ridicule and denigrate but not debate its so-called deficiencies. Wonder why journalists just accept that? After all it was Key who called “show the money.” If he just uses weasel words he might dent his credibility. A $17 billion hole? Really John?

        • Carol

          And yet, wasn’t Key the one who, a few months back, was accusing Labour of negative campaigning and politics, and who said he focused on the positive.

  15. Policy Parrot 18

    “Phil Goff promises Labour will clear debt in 10 years, but John Key says he’s “a monkey’s uncle” if the figures are right.”

    Monkey – meet uncle.

  16. ianmac 19

    At Pundit Rob Salmond has carried out an examination of the Labour money pointing out that just as Mr Goff’s credibility is at stake, so is Mr Key’s given that he has said that the “hole” is $17b, $15b, $14b or maybe something else. Rob like others here point out the sometimes billions of errors that National has made. Even TS Smithfield would be impressed.


    • Aye Key said $10b today.  Three days four figures, and the MSM lapps it up and do not ask the hard question, how much is it Mr Key and how do you reach this figure?

    • McFlock 20.1

      Please god yes – let him claim to be one of the people who gambled the planet into a depression!

      • Uturn 20.1.1

        I’ve just heard him imply that everyone in Greece is a loser. They are the source of their own misfortune he says, and they deserve a plan similar to Labour’s. So now Key is so smart he can fix NZ’s and Greece’s problems. And if not, I imagine he’ll cut connections with both of them. Nice bloke, that Key.

    • mik e 20.2

      selling and buying currency not investing .He worked for Merrill Lynch the ponzi scheming toxic derivatives Bank.monKey [here no evil etc] claims he new nothing about toxic derivatives but US Senate investigation shows that the currency trading arm was fully participant in the toxic schemes and monKey was in charge of currency trading so he is lying again.

    • Puddleglum 20.3

      I won’t repeat myself, but here’s an interesting response to your imagination – and not from Goff.

      • mickysavage 20.3.1

        Yep and it is by far the best time to start buying back New Zealand shares.

        It is weird, I bet that Key privately id going to town with his investments locally and overseas but when it comes to the Government there is this idea that no way should the state be allowed to do the same. 

        • Colonial Viper

          Well they don’t want the Government to invest in NZ because that would introduce a powerful competitor into the market, bidding against their own private attempts to acquire for themselves NZ assets at super cheap prices!!!

    • mik e 20.4

      Cgt is on more than just properety and the property market is in recovery mode

    • mik e 20.5

      At least with govt ownership the money save taxpayer when it goes to private investors that money will go and never be seen in our economy even borrowing bills said that overseas owned companies profit is causing a blow out ion our balance of payments

  17. tc 21

    And hasn’t that worked out so well for the world.

  18. tsmithfield 22

    And now this from Joyce. 🙂 🙂 🙂

  19. freelunch 23

    Aside from all the bru ha ha regarding asset sales vs. Nz Super, tax cuts etc… three things stand out in Labour’s package:

    1) They are intending to control core expenditure in health, education, justice etc… as tightly as National

    2) They will have no additional funding to spend in Budgets 13 and 14 (aside from the tightly constrained “maintenance” funding for health etc…)

    3) They have left themselves very exposed if revenue rising initiatives are less than expectations or borrowing rates increase sharply (to fund NZ Super etc…)

    It’s a very tight package in which the biggest new “expense” are tax cuts. I wouldn’t be borrowing money to bet against post election cancellation of tax cuts or NZ Super contributions.

    Interesting times.

  20. marsman 24

    Goff should ask Key ” When are you going to stop lying to the people of NZ John”.

  21. Herodotus 25

    I have just been made one of the privileged, receiving an email from Jamie Lee Ross (MP)- so now the entire $5-$7b funds that are to be recieved from asset sales “All of that money will be set aside in the Future Investment Fund and will be used to invest more in public assets and new infrastructure” So the money is not to reduce the deficit from currently proposed spending. Was that not the reason for the sales- to mitigate and reduce the deficit.
    JLR also comments “.. be paid for without putting an extra burden on taxpayers by borrowing from offshore” Does no one in National understand that there is a consequence to dividends. Unless Nat has a master stroke – issue shares that are not eligible for dividends

    • mik e 25.1

      While the assets are still owned by the Govt they are returning in excess of 20% profit Keys plan will see us taxpayers loose those dividends what interest rate will this fund return bugger all is my bet

    • Anne 25.2

      So he remembered to insert his name at the insert name here bit Herodotus. 🙂

  22. Herodotus 26

    The ROA or dividends that Power generators paid out is abit overstated as both Labour and National have used the power coys to extract Special Dividends to help in pay for promises, Nat just did such an exercise to rape $521m by selling a generation plant from one coy to the other then making the vendor pay the proceeds out in a dividend and the purchasor to increase debt !!!
    Or the $800m that Labour gouged out of the system, and then blindly close theirs eyes when non tradable inflation is so high, it is high because both Lab and Nat have instructed as much profit out of these coys as possable, then comment that they have a desire to help people of NZ to a better life.

  23. Roflcopter 27

    I thought Labour was making the big decisions?

    If they’re gonna borrow $6b and pay for it with the net gains in a better fund management system, why not borrow $50b… $100b… a trillion?

    • mik e 27.1

      Roflopheadof Why not just $40billion to $60 billion like national have done

    • fmacskasy 27.2

      Roflcopter… Ok, I’ve put the link elsewhere, but if the Blog mods are ok with it, I’ll re-post it here for you: http://fmacskasy.wordpress.com/2011/11/03/labour-the-economic-record-2000-2008/

      Check out the data. It shows very clearly, from data collected from various sources, just who the fiscally responsible Party is.

      It shows which party-in-government has the best indicators, as judged by reputable left-wing organisations such as the IMF, World Bank, Statistics NZ, the Reserve Bank of NZ, etc.

      In which case, your statement – “if they’re gonna borrow $6b and pay for it with the net gains in a better fund management system, why not borrow $50b… $100b… a trillion?” – is revealed as the absurdity that it is.

      Let us know what you find from that link?

    • lprent 28.1

      You mean the cockup in the numbers by the current treasury incumbents? And you…

      Well what is the PREFU for? Evidentially you don’t know. Perhaps you should’ve found out before making a dick of yourself. Of course reading the article woukd have helped.

      Labour is as reliant on the numbers provided by treasury as the government are. In this case it looks like the numbers are inadequetely noted. Perhaps it is time to replace the people at treasury? They seem to have been cocking up with monotonous regularity for decades.

  24. tsmithfield 29

    Its all very well to blame Treasury. However, Labour should have given the figures the sniff test. If the results seemed just too good for the state owned enterprises National is proposing to part sell, then they should have asked more questions. Just blindly applying figures without giving some thought to them is not acceptable.

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