National thinks tax cut good, reduction in Government charges bad

Written By: - Date published: 8:13 am, May 19th, 2023 - 77 comments
Categories: budget 2023, grant robertson, health, labour, national, nicola willis, Parliament, Politics, same old national - Tags:

National’s phrasing around tax cuts always sends me spare.

For instance working for families, which was essentially a significant tax cut to poor and middle class families so that in net terms they paid a lot less money to the Government has been described variously as wasteful spending or in an example of peak stupid rhetoric as communism by stealth by former National Party Prime Minister John Key.

National clearly believes that the amount of money paid by citizens to the Government should be reduced.  But it appears that their biggest gripe is that the money was taken in the first place, and the fact that it may then be redistributed to ordinary people according to need is irrelevant.

Their response to the latest budget highlights this weird take they have on funding issues.

As part of budget 2023 Grant Robertson announced the ending of the $5 prescription for medicines.

In his budget speech he said this:

For some Kiwis, prescription costs are a barrier to receiving the healthcare they need, and lead to trade-offs with the purchase of other necessities. We know that in the 2021-22 financial year, 135,000 people did not collect their prescription because of the cost.

I am pleased to say that from 1 July this year we are removing the $5 prescription co-payment for all New Zealanders. This will reduce inequality in our health system and lead to better health outcomes for everyone.

The policy has compelling reasons.  Too many people miss getting prescriptions because of the cost and this results in far more expensive hospital treatment when a set of pills could avoid this need.

This article from Radio New Zealand highlights the problem.

New Zealand-based study published in January found “prescription copayments are likely to increase overall healthcare costs”, with the small fee discouraging people from collecting their medicines, and ending up needing hospital care as a result. The authors “strongly recommend that the $5 prescription co-payments be removed for those with high health needs and low incomes, or be scrapped entirely”.

“[Some people] go without their medicines, and as a result their health problems get worse, so they need hospital care. This is bad for them, their whānau, and the health system,” research lead Pauline Norris said.

Prescription charges have some history.  The first Labour Government introduced free prescription charges, the fourth Labour Government and Roger Douglas reintroduced them.  National in 1992 increased them to $20 per unit.  The fifth Labour Government under Helen Clark decreased them to $3 per unit, and National under John Key increased them to $5.

More recently the advent of loss leading prescription free Australian owned Pharmaceutical chains has placed local pharmacies under significant strain.  As well as improving health care this policy avoids the unhealthy dumbing down of the pharmacy sector.

As well as being very popular the policy is the right thing to do.

So what is National going to do?

How about promise to wind the policy back if elected.  From Thomas Manch at Stuff:

The National Party says it will repeal the Labour’s removal of a $5 charge on medicine prescriptions if elected.

The scrapping of the $5 cost of prescriptions was one of the major spending initiatives in the Government’s 2023 Budget, published on Thursday, expected to cost $706m for the coming four years.

But it is among the plans most opposed by the Opposition.

National Party finance spokesperson Nicola Willis told Stuff National would return the $5 charge to prescriptions if elected, as it was a “nice to have should not be the priority”.

“I’ve got a lot of sympathy for the fact there are lower-income people for whom I don’t want prescriptions to be a barrier. Well, actually, there are already targetted ways of ensuring they don’t face prescription fees,” she said.

“And you have the Chemist Warehouse offering all prescriptions for free. So, in effect, the Government ends up subsidising that and also subsidising a lot of higher-income people who are perfectly happy to pay that charge.”

What I struggle to understand is how National can oppose the state not collecting money from individuals and letting them keep their hard earned cash.  And the policy is targeted to those in need.  The more unhealthy you are the more you will benefit.

So why is a tax cut good but a reduction in Government charges bad?  Both will result in the individual paying the Government less money and I thought they would be pleased about this.

Besides National’s opposition is strategically a very silly move.  For the rest of the election campaign I can guarantee that the fact National will increase prescription charges if elected to Government will be stated many, many, many times.

But what do I know.  I am just a soft hearted woke lefty.  Although it seems that commentators from the opposite part of the political spectrum think the same.

77 comments on “National thinks tax cut good, reduction in Government charges bad ”

  1. tsmithfield 1

    I think the removal of perscription charges is debatable.

    Firstly, it is a blunt instrument, in that a lot of people who can afford the charges will get the benefit. So, it can be argued that a lot of that money is going to people who are not in need. Thus, it is not very effective targeting.

    The second point is that the money could have arguably been used more effectively for health. For instance, by increasing the Pharmac budget so they could bring in some more effective drugs for people who really need them.

    • Jack 1.1

      I think that is the key point … for a health system in dire crisis, there are much more pressing priorities. The $650,000,000 now taken out of the system could go such a long way to for example, as you suggest, properly funding Pharmac

      • Louis 1.1.1

        Pharmac is being properly funded under Labour.

        • tsmithfield 1.1.1.1

          Define "properly funded".

          From what I have seen, there is no shortage of people wanting this or that drug funded. The fact is, that if Pharmac had more money, they could fund more of those drugs.

        • higherstandard 1.1.1.2

          PHARMAC is not and has never been adequately funded in NZ.

          Our access to modern and even post patent pharmaceuticals is very poor in comparison to similar countries.

          • tsmithfield 1.1.1.2.1

            Yeah. My son has Crohn's and up until recently, the medicine available was over 10 years out of date here in NZ. That has changed slightly, but only a very small percentage are going to get the good stuff atm.

        • gsays 1.1.1.3

          "Pharmac is being properly funded under Labour."

          Talk like that makes me think it's the red pom-poms that are fully funded.

      • Muttonbird 1.1.2

        Nothing has been taken out of the system, you just pay via income tax rather than at the counter.

    • Louis 1.2

      The Labour govt are doing that.

      "we have increased funding to Pharmac by 51 percent since 2017"

      03.30

      https://ondemand.parliament.nz/parliament-tv-on-demand/?itemId=232984

      • tsmithfield 1.2.1

        But, there is still more that could be funded, regardless of how much funding has been increased. And, given inflation over recent times, the effective percentage increase would be a lot less than 51%.

        • Louis 1.2.1.1

          Regardless of your spin, Pharmac is now able to fund a lot more drugs under Labour than what they could prior.

          • Liberty Belle 1.2.1.1.1

            It's amazing what you can do when you're prepared to run $7bn budget deficits and continue to blow your own capital and operating forecasts. Mind you, the gamers will be happy.

    • Muttonbird 1.3

      Again with the regressive tax which seems to be very popular with the right.

      This charge, part charge in fact, is no longer flat (regressive), but now brought within the tax system (progressive). So it is now targeted because people on higher incomes pay more of it.

    • Phillip ure 1.4

      I can see the logic in this policy crumb being more targeted…but this one is all about the optics..

      And the optics for national are bad ..

      Not only will they gleefully fuck over the poor…(which we already knew..)

      They have now revealed they will do the same to the sickest/suffering…

      National have confirmed (for most) that they have no heart…

      Hard for them to pretend to care..after this one..

      • gsays 1.4.1

        I agree.

        Just imagie what Willis will come out with when she finds out sbout the Tooth Fairy.

      • Stuart Munro 1.4.2

        It's effect on the elderly should have given National pause – fixed incomes, and often on multiple medications, mean they will be paying attention to this. And National is consistently more popular among older than younger voters.

        So, to answer Whaleoil's question, "Yes, yes they are".

    • newsense 1.5

      Mr Smith Field.

      Didn’t read, refuses to read or can’t read?

      Must be a special advisor to Nicola Willis.

  2. Mike the Lefty 2

    Although $706 million is a big sum for you or me, as a budget item it is not massive compared to some other big ticket items.

    For National to go straight out and say they will reverse it they are either very brave or very stupid because it will be a recognisable and popular move that nearly everyone will benefit from at some time. A pledge to reverse it will give Labour plenty of ammunition for the election campaign.

    Incidentally, I remember picking up a prescription from a chemist in the early 1970s for my parents and I had to pay 10 cents!

    • tsmithfield 2.1

      For National to go straight out and say they will reverse it they are either very brave or very stupid

      It depends what they do instead. So, if they ensure that low income people can still get the rebate, and put the money saved into more drugs from Pharmac, then people might be more accepting of the change.

      • Louis 2.1.1

        But National are not saying what they would do instead, they are saying they it will repeal the Labour's removal of a $5 charge on medicine prescriptions if elected.

        “Dropping the $5 prescription charge:
        Many people seem confused about this.
        It’s aims to reduce hospitalisations and time staying there:
        Much better to ensure people don’t end up there unnecessarily. It also helps lighten the load on the hospitals”

        https://twitter.com/BioinfoTools/status/1659123960234246152

        • Mike the Lefty 2.1.1.1

          The National government of the 1990s.

          First thing you saw when you entered a public hospital – correction, they were known as Crown Health Enterprises (CHE's) – was a sign that read "Cashier".

          That's what you will get under ACT/National once more.

  3. Alan 3

    Have people not heard of the Chemist Warehouse????

    • tsmithfield 3.1

      We have several of those in Christchurch. But, the likely counter argument is that not all areas have the Chemist Warehouse, yet.

      • Muttonbird 3.1.1

        Also, for people who have mobility or transport challenges, it's not easy to get to a chemist warehouse even in cities which have them. It's another barrier for marginalised people.

        Pharmacies are convenient and usually situated close to GP clinics for that reason. Now people get the same service at the local pharmacy as they do at the chemist warehouse.

        Much more tidy and fair.

    • roy cartland 3.2

      Actually, no I haven't. What is it, what's so good about it?

    • Patricia Bremner 3.3

      Chemist Warehouse is an Australian business. We support our local Chemist, and purchase some items online from CW. It is important to support local where possible, and to keep employment and easy access.

    • Jilly Bee 3.4

      Jeepers Alan, do you want me to drive from Matamata to Hamilton or Tauranga every three months to get my regular meds, with the cost of petrol and parking charges thrown in for good measure. Last I heard, the Chemist Warehouse don't do online prescriptions and there would be a mailing charge to have them posted.

    • newsense 3.5

      National gummit policy -funded and by Aussie chains.
      Can’t wait to see them bring this compassion to Cyclone recovery and climate change!

  4. Tiger Mountain 4

    I have seen people in Far North Chemists pick which of multiple prescription items they will take. Sometimes I have offered to pay for them as politely as possible, as have others, while the Chemists look on opaquely.

    Strangely enough given Ms Willis’s statement that Natzos will reinstitute the $5 charge, ex Whangārei MP Dr Shane Reti used to make it a thing in the local community about his personally paying for people’s scripts too…

  5. Reality 5

    Nicola Willis' statement people can go to Chemist Warehouse is plain silly. Chemist Warehouse is not in all towns throughout New Zealand. A bit like saying go to the cheapest petrol station 40 kms away.

    • James Simpson 5.1

      It is online though

    • lprent 5.2

      “And you have the Chemist Warehouse offering all prescriptions for free. So, in effect, the Government ends up subsidising that and also subsidising a lot of higher-income people who are perfectly happy to pay that charge.”

      Nicola Willis' statement people can go to Chemist Warehouse is plain silly.

      My thought exactly.

      The thought of elitist idiot so divorced from reality that she clearly is incapable of looking at a website.

      https://www.chemistwarehouse.co.nz/aboutus/store-locator

      No store in Rotorua when my pensioner father lives. No store in Otaki, Invercargill, or just about anywhere where parts of my family live outside of Auckland and Christchurch.

      Does she think that prescription drugs can be sold online in NZ? Because they cannot and for good reason. The Medicines Act 1984 is pretty specific about the handling of any prescription medicines. Essentially prescriptions get filled out in store at Chemist Warehouse or Countdown or almost anywhere else that they are dispensed.

      Not to mention various international treaties that we are subject to.

      I guess that people living too far from a Chemist Warehouse just aren't real people according to National.

      Have to say that was a really stupid statement she made. Even for a conservative.

  6. Adrian 6

    This blurt of Willis’s appears to be evidence that they are worried about ACT eating into their base, ….or, as much as I hate to agree with Cam Slater.. she just might really be a bit thick.

    • Shanreagh 6.1

      Well to come out so quickly, and possibly without much thought perhaps she has muddled the 'up here for thinking and down here for dancing' parts of the human body….or is she starting an excrutiatingly boring argument about angels dancing on pinheads?

      While the inital reaction is to wonder if this might have been better targetted we then have to cost the processes to do this targetting. No child or adult in need should have their prescriptions left in a chemist's to be collected basket because of cost. That is not how they work.

  7. observer 7

    There's abundant data on prescription charges (and plenty of overseas evidence, we're not the only country that has pharmacies).

    It's not just about five bucks. It's about improving health outcomes and therefore saving taxpayers' money.

    No good argument against scrapping the charge, only blinkered rejection of evidence.

    https://www.stuff.co.nz/national/health/300801182/scrapping-5-prescription-fee-could-help-improve-kiwis-health-outcomes–study

  8. Shanreagh 8

    Well, whatever the impact of the lifting of the pharmacy charges National has bitten thus underlining the lasting impact of the tale that includes

    'come into my parlour said the spider to the fly……….'

    And having bitten will find it hard to untangle themselves.

  9. Reality 9

    Chemist Warehouses are not situated in every suburb even in those cities where they are. Whereas pharmacies are local and convenient, and avoid having to traipse across to the CW on the other side of town using petrol and taking up time. For a so-called intelligent woman, Nicola Willis is incredibly stupid.

  10. Adrian 10

    Going by the recent statement and others I've heard her pontificate on I rather think that she is exactly that, not very intelligent, hell, even Cam Slater agrees with me.

    • fender 10.1

      I'm only guessing here, but I think a few years ago Slater would have been in agreement with Willis.

      But now that he's in need of more medication his attitude has changed.

      It's how RWNJ's roll.

      • woodart 10.1.1

        ill health turns everybody socialist.

        • fender 10.1.1.1

          I have no idea and little interest in what the tone of Slaters activism is these days, but I'd be incredibly surprised if it could be described as socialist. Accusing him of that would be the worst insult imaginable to him I'd have thought.

  11. Stephen D 11

    We're with you Patricia. We use CW for vitamins and the occasional specialist product. Our local Unichem for everything else.

    What I don't want to see is what happened to small towns when The Warehouse opened up. Lots of small mum and dad shops going bust.

    • Shanreagh 11.1

      I use local chemist (unbranded) and for vitamins etc use Health Post which is a NZ company based in Golden Bay and which has an active revegetation programme that they subscribe to. This combo suits me on many levels even to the ability to recycle their sustainable packaging to send my TM sales out in.

      Most of the time you can get a special that oiffers free postage

      https://www.healthpost.co.nz/

    • Patricia Bremner 11.2

      Yes Stephen, we moan about the groceries, so we need to support our local Chemists. Our son had a Chemist friend. It was a very competitive field. He now does relief work in the Waikato, as there were too many chemists in Rotorua at that time. It is a demanding role, made more so with the arrival of covid.

  12. Descendant Of Smith 12

    Luxon's response is just as moronic.

    Asked about National's position, Luxon said the party didn't support the policy being universal – meaning it applies to everyone.

    "I don't think it makes a lot of sense that someone like me gets the benefit of that," he said.

    However, he said he did see the need for helping those who "most desperately need it".

    "I think targeting it to people with community services cards, for example, targeting to people with super gold cards would actually be the way in which we would go about doing that."

    For people who are "doing it really tough" or "low-income folk and elderly folk", Luxon said there is a "really good case for actually giving targeted support and certainly making free prescriptions available for them."

    He said: "I think if I can pay, I should pay".

    https://www.newshub.co.nz/home/politics/2023/05/budget-2023-christopher-luxon-clarifies-national-s-stance-on-5-prescription-fee.html

    His position on prescription charges is that they should be targeted to people who are struggling i.e. not himself

    His position on tax cuts is that the most well=off should benefit the most i.e. himself.

    I'm so in favour of universal assistance with the cost to the well-off being gained back through higher taxation rates.

    It is simpler, easier and cheaper to administer, you don't have to worry about moving the margins etc due to bracket creep and so on.

    It is in effect what we used to do with universal family benefit and what we do with NZS. On super and want to still work – you can do so but your total income will be progressively taxed.

    Tax cuts have just resulted in service reduction and user pays. If you are happy to pay for your prescription costs Mr Luxon then you should be happy to pay the extra tax to cover the cost. If you want less bureaucracy and fewer public servants then shove targeting out the window and support increased tax rates for those who may not need the assistance.

    Too many well off have benefit envy since we started getting rid of universal assistance for tax cuts. They have the cuts but then moan their heads off about the bludgers getting what everyone used to get. Up their tax and give it back to them.

    Universal family benefit
    Free medicine
    Tax rebates for non-working partners (would be interesting to see then how fewer people there would be on sole parent benefits)
    Free education

    The rich too can have it all. Targeting in a third world economy is just bull-shit.

    • woodart 12.1

      luxos line will come back to haunt him. "if I can pay,I should pay" what a campaign statement!!!

      • Descendant Of Smith 12.1.1

        Reminds me of Timothy Hutton in Turk 182.

        Who knew, Zimmerman knew"

        Has the same catchy tone.

  13. Daniel 13

    "So why is a tax cut good but a reduction in Government charges bad?"

    I'd be happy to answer your rhetorical question.

    Cause the people who can't afford $5 prescriptions don't deserve medication. Living in mouldy homes, not being able to afford healthy food, their genetics, and other poor lifestyle choices or their own making is what made them sick. We'd only be encouraging them.

    We're also meant to be moving towards a user-pays medical system. The market is the best judge at who needs treatment by limiting it to those capable of paying for it. You can't deny how much more efficient the American system is. That's what we need to be aiming for, we can't have Australia beat us to it.

  14. alwyn 14

    There is a very simple way to make every household better off.

    Leave the $5/item on prescriptions and retain the limit on the maximum that a household has to pay. Then raise the first tax threshold from $14,000 to $15,500. It is difficult to see how you could have a household where no-one at all was receiving an income of at least this amount. As long as there was one person in the household who was getting income of this amount you would have your tax reduced by $105/year which is more than any household has to pay for prescriptions.

    Anyone in a household that had more than one income earner in the over $14,000 bracket or where the household had less than 20 prescriptions/year would be even better off.

    How many households don't have anyone with an income of $14,500?

    • Descendant Of Smith 14.1

      That's still less simple than just removing the cost and assumes that people still won't choose food or rent before medicine and so the aims of ensuring people get their medicine still won't be achieved.

    • lprent 14.2

      Offhand…. I pay more than $105/year in prescriptions on my own. So you’re wanting a whole household to get all of their prescriptions for $105/year?

      Also you have to remember that that these all pay tax.

      Someone on unemployment benefit?
      Someone on superannuation?
      Someone on sickness benefit?

      Oh I see what you mean – these are non-people? /sneer

      But you’re making it a complicated system than what exists already. The pharmacies already put in a claim for prescriptions. This is exactly what they are doing now. The system exists. The accounting exists.

      Are you really interested in inventing extra work because it makes some idiot politician look less like and idiot? Or is this just being punitive and making more work for everyone so everything gets less efficient.

      Mind you that is the classic trade mark of Act and National – inefficient solutions because they make better slogans for the mindless fools who vote for them,

      • alwyn 14.2.1

        "I pay more than $105/year in prescriptions on my own"

        Perhaps I can suggest a way to save you a little money then. I am assuming that they are medicines funded by Pharmac? If they aren't this will not apply but neither will the proposed "free" prescriptions. Read this link. The most important bit is this but that that the 20 is prescriptions for all the people in the family..

        "If you’ve paid for 20 prescriptions in a year (from 1 February), you won’t have to pay the $5 charge for any new prescriptions until 1 February the next year."

        https://www.govt.nz/browse/health/gps-and-prescriptions/prescription-subsidy-scheme/

        If these people pay tax, and get more than $15,500/year thay will under my scheme pay less tax. Don't you want people on benefits to pay less tax? Are they "non-people" and do you really sneer at them?

        "in inventing extra work"? Well no. There is nothing new to do. They do it all already.

    • Patricia Bremner 14.3

      Alwyn last visit to the Dr. was $19 x2 plus $40 x2 for our scripts. $118 with the community services card.

      We get four lots of meds a year. granted after 20 items it becomes free. The point being, you have to pick up and pay to reach that 20 items. Some couldn't afford that.

      • alwyn 14.3.1

        "Some couldn't afford that".

        I quite agree it is expensive for any medical care. The reason I nominated the tax rate change was purely to provide a means where the $5 charge for the first 20 prescriptions would be covered by the tax cut. At the moment the first $14,000 is taxed at 10.5% and from $14,000 to $48,000 at 17.5 %.

        This on your first $15,500 on my scheme you would pay $1,627.50 whereas you now pay $1,732.5. This is where the $105 comes from which exceeds the $100 you have to pay now. Technically the cut in the tax rate would cover the levy and one should be very slightly better off.

        I hope Lprent reads this. It seems to me that if he really is paying more than $100 for his prescriptions he should be complaining to his Pharmacist. They should have told him about it.

        If he is getting drugs that Pharmac doesn't fully subsidise of course all bets are off. However the new scheme isn't going to help him anyway as it won't cover any but the basic items.

        • Patricia Bremner 14.3.1.1

          Read Act's Policy Alwyn. They want 17.5 % tax on the lowest level.

          • alwyn 14.3.1.1.1

            Perhaps you should read a little further they apparently also say that there would be a rebate at low incomes.

            "In order to ensure that every earner would receive a tax cut, ACT would also create a new Low and Middle Income Tax Offset (LMITO), starting in fiscal year 2022/23. This tax offset would be worth $800 per annum for all earners earning between $12,000 and $48,000.".

            At a glance that would appear to balance out the extension of the 17.5% at the bottom.

            I am talking about the difference between National and Labour of course. I really don't think that the income tax policies of ACT, or TPM for that matter are going to take effect in 2024

  15. Jeff Busbridge 15

    So National are opposed to removing the $5 charge because the rich can afford it yet the rich need a far greater tax cut? They really have made a meal out of this bless them.

  16. Reality 16

    Bizarre – Luxon wants to pay for his prescriptions, but wants an $18,000 a year tax cut!

  17. tsmithfield 17

    A question I have about the prescription charges is, should the government be subsidising big business? Because, presumably, the Chemist Warehouse and Countdown, that were doing prescriptions for free will now have the government pick up the tab for them.

    • Belladonna 17.1

      I suspect that both were using it as a publicity 'loss leader' – getting people to source prescriptions there in the hope that they'd then buy other stuff.

      I'm sure that both are sufficiently well-resourced to come up with another marketing gimmick.

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