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The new economy: tax & redistribution

Written By: - Date published: 11:13 am, December 7th, 2010 - 135 comments
Categories: benefits, Economy, equality, tax - Tags: , ,

The other week we talked about what a new economic order should look like, following the neoliberal experiment’s resoundingly failure. Sustainability and fairness need to be at the heart of the system. Government acts on the economy through law, taxation and income redistribution, and as market player. Let’s start with tax and redistribution. My concept is basically a suped-up version of Gareth Morgan’s Big Kahuna with the explicit goal of eliminating poverty.

The Government takes in about $60 billion in tax a year. Over $20 billion of that (around about as much as is collected through personal income tax) goes out as transfer payments – ie. superannuation, working age benefits, housing allowance, Working for Families. Another billion or so is spent on allowances and loans for students’ living costs.

So, all this money (about 10% of GDP) is being pooled by the government and then redistributed to those in need. That’s really important work that forms the basic income for about a million New Zealanders (540,000 pensioners, 350,000 beneficiaries, plus students) and reduces or eliminates the tax bill for hundreds of thousands of working families.

But its a very complicated system of separate benefits. Some people who need help fall through the cracks and get nothing, some who don’t need help get it. And the very high abatement rates on benefits and, to a lesser extent, Working for Families can make working not worthwhile. For every dollar over $80 a week you earn while on the dole, you lose at least 80.5 cents – not exactly an encouragement to find part-time work. And we have poverty while a few live with massive wealth (the wealthiest 10% have more net wealth than everyone else put together and the bottom 50% have no net wealth).

A better system would begin with a guaranteed minimum income. If every taxpayer received a tax credit of $250 a week, that would form a minimum income of $13,000 post-tax a year for everyone. That’s at or above the level of most benefits and more than most families’ Working for Families – and not far from the post-tax individual poverty line ($15,000 – most adults with incomes below $2,000 will be living with others on higher incomes, so would avoid poverty).

Of course, that’s big bikkies. 13,000 times 3.1 million taxpayers is $40 billion.

About half of that is going to be paid for by more or less eliminating the benefit/super/WfF/student assistance system which isn’t needed any longer, apart from topping up some special cases.

For the remaining $20 billion, some could be raised by making the income tax system more progressive, say starting at 10% and rising to 50% by $100,000. 50% isn’t a crazy top tax rate – its typical of many other developed countries and we got along just fine with much higher. The net tax bill for people with incomes under $100,000 would be lower than it is now even if the income tax on their earnings was higher because they’ve got the minimum income, and you could tweek the rates and thresholds to whatever point you like.

After the last Budget, Tracy Watkins gushed that people earning over $50,000 now pay less tax here than in Aussie. Wouldn’t it be better to say that people earning less than $50,000 pay less tax and we don’t allow anyone to live in poverty?

Now, the idea is this is all fiscally neutral, so here’s still a bit of a hole in the revenue to make up. Of the $40 billion cost of the guaranteed income, about $20 billion has been saved by replacing benefits and another $2 billion, say, could be raised in income tax while still leaving most people with a lower tax bill.

Currently, polluters get 50% of their carbon credits free, paid for by us. You could save another $1 billion this year (and $110 billion by 2050) by removing the government subsidy for climate polluters, and help the environment at the same time.

If you stop locking up everyone, wasting money on white elephant motorways, and buying military crap that we don’t actually use then another billion is freed up.

The rest of the gap would be filled by a comprehensive capital tax like Gareth Morgan suggested in his ‘Big Kahuna’ idea (this is a tax on owning capital, not on capital gains) or a land tax on the Georgist model (the philosophy of the Georgist model is that an owner of land is depriving everyone else of the ability to use it, so they owe a rent to the rest of society). It would take only a 1% capital tax to fill the gap or about a 2% land tax.

Yeah, that’s going to be a lot for people with large capital or land assets. For example, say you’re a ex-currency trader with $10 million worth of property in New Zealand, you might be looking at a $200,000 per annum bill (you would be allowed to defer taxes, with interest).

But that’s the point. The greatest inequality in this country is not inequality of income but inequality of wealth. 50% of us have no net wealth between us, while 10% have more net wealth than everyone else combined. An inevitable result of a capital tax would be a redistribution of that capital.

It’s an ambitious scheme that would as good as eliminate poverty and correct some of the unfair distribution of wealth in this country. From that, huge social benefits would flow. And it’s not complicated from an operational stand-point. The guaranteed minimum income would be like a universal version of WfF. The systems for capital taxation are already established with the rating system and tax on shares.

This could all be done. We could rid ourselves of poverty, a complicated benefit system, and the gross inequality of wealth. Does anyone have the courage to do it?

135 comments on “The new economy: tax & redistribution ”

  1. Bored 1

    Nice analysis, but one big hole (not mentioned really, I expect you will come to that next)…..where does the income come from? As in how do we keep the tax revenues high when we go into a major recession and the costs blow out? As in what businesses which are struggling to keep their head above water will have any profit for tax?

  2. Lanthanide 2

    “The greatest inequality in this country is not inequality of income but inequality of wealth. 50% of us have no net wealth between us, while 10% have more net wealth than everyone else combined. An inevitable result of a capital tax would be a redistribution of that capital.”

    So you’re redistributing the capital, using a market system, yes? Effectively this means you’ve just knocked a huge amount of value off those assets, because now you have to pay tax on them. So if someone were to buy the asset, they’d want a lower up-front price. So now that you’ve devalued all the assets, by lets say 30-40%, where are the tax revenues going to come from?

    Furthermore, what are you going to tell to the pensioner that owns their house as their only savings and was going to sell that and move into a rest home? Now their house is worth much less than it used to be.

    Why would wealthy people choose to remain in NZ, when they can sell up and move to Australia?

    Your ideas do sound nice, and workable at face value. But I think the consequences of actually implementing such a system, rapidly anyway, would result in the whole thing falling apart.

    • Blighty 2.1

      we already pay a capital tax on land and housing. The world hasn’t ended.

      “Why would wealthy people choose to remain in NZ, when they can sell up and move to Australia?”

      They may well leave but the capital doesn’t, does it?

      • jbanks 2.1.1

        “They may well leave but the capital doesn’t, does it?”

        You’re right. We don’t need private and/or foreign capital in New Zealand.

        The Govt. can bankroll the private sector and all those selfish people who want to risk setting up a business or company can just leave.

        • KJT

          You cannot get capital beyound your house or farm equity for a business at present because all the finance people want to invest in speculation on non earning assets.
          That along with the RBA is why I am not continuing with my business.

          CGT will make it easier to start a business. Not harder!

          • Colonial Viper

            Yeah but was the OP talking about a capital GAINS tax or a capital tax? Quite different.

            • KJT

              Yes, but similar in effect in that they tax monetary and speculative capital which is not taxed now. Whether CGT or CT is better to get the desired results in the tax take could do with further discussion.

              There are arguments either way.

              You could say CT taxes unrealised income, but it also pushes people towards using assets to earn income. It is harder to dodge than CGT. Hard to hide assets. Those with large non earning assets will be disadvantaged, but if it is accompanied by a corresponding decrease in income taxes, income earners will gain.

              CGT has the advantage of only having to pay when you realise the income, but it is easier to fiddle and would be more complex.

              Read either CT or CGT when i have mentioned CGT elsewhere here.

              I think whatever the type used it should be universal. I hate paying tax accountants just because tax laws are too complex.

      • Lanthanide 2.1.2

        Yeah, the capital stays, and devalues even further, because the whole economy has collapsed and no one can actually afford to buy it any more. Massive deflation.

        • Colonial Viper

          Geeez relax Lanth.

          Councils have put rates up massively over a period of 3-4 years – an effective tax on property which you cannot avoid – and you haven’t seen your fear mongering scenario of massive property deflation come to pass because of it.

          As for people not being able to purchase property any more – dude that is RIGHT NOW, given the last several years of property bubble inflation.

          • Lanthanide

            Sure, rates might’ve gone up, but I don’t think they would’ve gone up so much that someone who owned $10m worth of property got hit with a rates bill that was $200k higher. Also, this new tax would be on top of any existing rates bill.

            • Colonial Viper

              My point was this: there is already a tax on property. Its called rates. Its been around forever. It hasn’t destroyed the property market.

              • Lanthanide

                And my point is that this is the introduction of a new, much bigger tax than the existing rates. Unless you phase it in over time, it will have a big impact on the market.

                captcha: surprise

        • KJT

          It is beneficial for non earning capital to be discouraged. It pushes investors towards productive income earning use of capital.

          There would have to be exemptions for non-earning capital such as land in QE2 covenants or reserves, but that could be beneficial in encouraging more conservation and public reserve land.

    • KJT 2.2

      Knocking a huge amount of monetary value off say, land means that farmers can afford to farm for income instead of capital gains. Share milkers can buy the farms they work on. A business can afford to buy or lease land closer to markets. A young couple can afford to have a house and children at the same time. Banks will have to lend to new business because there are not enough earnings from the ponzi schemes. We need to discourage people from using non earning assets (Including money) for speculation ..

      The wealthy always say they are going to take the ball away if you make noises about them paying their share, but they also tend to stay in more socially cohesive countries because they are more pleasant to live in.

      The tax revenues will not go away as you cannot hide land or transfers of speculative capital.

      In Adam Smiths day they advocated taxing capital, not labour, to encourage desirable investment and discourage speculators.

      The pensioner’s house price will drop anyway due to supply and demand when the boomers retire. Really what retiring people, especially farmers, are hoping for is that they can rip off the next generation with a large untaxed capital gain.
      The retired are the richest part of the population due to 40 years of capital redistribution from working people to those who already have money.

      It is the next generation of children we should be giving a good start in life.
      Universal super has worked so well in removing elderly poverty we should extend it to children.

      A guaranteed minimum income for everyone, in the same model, including children, through IRD wound get rid of the hodgepodge of benefits. It would have to be set at a realistic living level, unlike ACT’s proposal.

      Productive individuals are leaving for Australia in droves. Fair wages, not less taxes are the reason they leave.

      We need to re-balance away from speculation as our main economic activity. It is a ponzi scheme for starters. and unsustainable long term.

      • Lanthanide 2.2.1

        I don’t disagree with you at all.

        I’m just pointing out, that if you roll this whole thing out all at once (which is what he seems to be suggesting), you’ll knock a huge amount off the capital value of current assets. Sure, *new* farmers and house buyers will benefit, but all of the existing farmers and householders will suffer dearly. No matter which way you slice it, in the end someone has to bear the loss for the capital value being slashed overnight, whether it be the banks, the property owners or the taxpayers.

        On the same token, although this might make long-term economic sense, it would ensure your government was a single term, or perhaps shorter if enough MPs rebelled against the government.

      • Blighty 2.2.2

        that’s right. part of the point of a capital tax is it would knock some of the inflated value of certain capital classes.

    • Bored 2.3

      Lan, inequality of wealth and inequality of income are decidedly linked, what we are talking about is retained surplus income aka capital.

      The common experience of western capitalist society is that wealth in the form of retained earnings (assets) does not get taxed, income does, hence the inequality of outcome. Assets are only worth as much as the buyer is prepared (or forced) to pay which may vary BUT they exist in a real sense apart from income into which they may be converted.

      There is a further advantage to assets, they tend to be able to generate passive income and are usually tax deductable /depreciation rated.

      Result, those who already have get much more. Sad really.

  3. Raymond A Francis 3

    Some good ideas here, I like the idea of the minimium wage being tax free
    But I would give your ideas more credence if you declared your annual income (and maybe its source) as I find a lot of these “new economy, tax and distribution” ideas are based on eny as much as anything

    • Draco T Bastard 3.1

      What’s his income got to do with the idea? And, no, it’s got nothing to do with envy but reality.

    • KJT 3.2

      Bullocks. I will raise you two Beemers and a yacht.

      A CGT would hit me personally rather hard, (I suspect the same with Gareth Morgan) but I have seen the effect of excessive inequality overseas. I do not want my kids to live in a dog eat dog society.

      • Bored 3.2.1

        CGT might hit hard, the problem for tax revenue raisers is that for the capital system to genrate income and wages to gather tax from it needs accumulated income to invest in production. Taxing capital harshy can depress the ability to tax wages and earnings. Catch 22. Stupid system really.

    • Colonial Viper 3.3

      Why is it always the righties who raising issues of envy? Frak, isn’t making the Joneses’ keep up with you part of the fun. The wealthy play the game of greed and envy all the time. The Joneses’ got a V6 Merc but you get the V8 model the week after = make the Joneses feel like losers, mission accomplished.

      • KJT 3.3.1

        I thought the bash a bennie lot were the envious ones. You know. “I worked hard for my money and I have to pay taxes so some solo mum can live it up on the DPB”.

        Doesn’t seem to occur to them that it could be them, given a bit of bad luck such as an illness, accident, marriage breakdown or business failure.

        • Vicky32

          I met a woman, years ago when I went on the DPB to escape an abusive husband.. this woman had been widowed or divorced 20 odd years before me, and was filled with anger that she had had to work and make her kids into latch-key kids, and even though she had had a house, something I would have loved, being in a refuge at the time, she envied me! (I think she was divorced.)

  4. And where have we heard about a Guaranteed Minimum (Family) Income before?

    I think this post is Unfinished Business…

    • burt 4.1

      And you might read about the tax free low income threshold in there as well.

    • Heh, as I was reading this excellent post I was wondering whether Marty would give a nod to poor old Rog but I guess that was too much to hope for 😀

      I’ve always felt it somewhat unfair to lambast Douglas for what he did do without taking into account that he wasn’t able to finish the job. Bit like interrupting your operation half way through then complaining that all the surgeon did was cut you open and took some bits out.

      Mind you, it’s as much Douglas’s fault as anybody else’s. Sure he wrote “Unfinished Business” but if I were him, every time the BRT or some right-leaning journo praised the bits I did get to do, I’d bellow that it was meant to balanced by reforms that would have actually benefited those on lower incomes, etc. But he’s hopeless as a salesman. Or indeed as a communicator in any sense.

      As it is, the common assumption is that everything Douglas wants to do would be warmly welcomed by the monied elites, when in fact as soon as he’d completed the demolition they wanted, they removed him before he got to the rebuilding phase.

      Agree with or oppose Douglas’s ideas, leaving them half finished was the worst possible outcome – except for the handful of people who derived a great deal of benefit from it all (and some of whose names you’ll find in the recesses of the Winebox).

      • Olwyn 4.2.1

        I guess the lesson is; if you are going to expound new ideas, you need to look beyond the ideas themselves and consider the sort of fan club they are likely to attract, and where that fan club is likely to run with them.

        • Rex Widerstrom

          Yep… exactly the problem NZF (or at least me and a lot of other people in it at the time) faced when it began talking about foreign investment and business migration.

          But does that mean good ideas that are likely to attract some unsavoury supporters shouldn’t be espoused? In any case, I doubt Garrett and McVicar and that cohort of Actoids could care less whether their hatred was wrapped in neoliberal, socialist or any other economic garb. Nor, I suspect, could many of those who’ve jumped on the bandwagon since it was the Association of Consumers and Taxpayers… they just see a vehicle for their own agendas.

          Again, much like NZF post-Laws. As I’ve rhetorically asked before, I wonder if this is the fate of all promising third parties? Ironically, the crap ones, like United Whatever-we-are-today seem to be far more stable, since no one with any ambition wants to join.

    • KJT 4.3

      No one is all bad. ??

  5. clandestino 5

    Mmmmm…..I can see the law of unintended consequences cast wide on this one….

  6. Draco T Bastard 6

    Well said and costed but I think that it should be a universal “guaranteed minimum income” rather than just to the “3.1m taxpayers” else we run the risk of leaving children in poverty. Yes, it would mean slightly higher taxes but I doubt if it would be so much higher as to be detrimental to the economy.

    Does anyone have the courage to do it?

    Apparently not although it really does need to be done especially getting rid of the tax loopholes that have high income people paying less tax, both in relative and absolute terms, than someone on less income. There is no excuse for maintaining poverty in a modern civilisation.

    • KJT 6.1

      Agree with you on both.
      Universal super has worked perfectly to reduce poverty to only 3% among the elderly. We should follow the proven formula for children.

      Just getting rid of the current tax dodges would probably be enough to pay for it.

      However increasing taxes on unproductive speculation and capital flows also has an economic benefit.

    • Lanthanide 6.2

      Paying money to children seems problematic to me. Maybe it all goes into savings accounts that they can’t touch or their parents until they reach a certain age. But either way there are problems:

      1. If you let them have the money, you’ll have 12 year olds running around spending cash on crap they don’t need. Seems like a good way to fuel delinquency and drug abuse, also.
      2. If you give it to the parents, you really do end up with breeding as an occupation.
      3. If you put it all into a savings account, you’ve probably just delayed #1, as when people get to 18 (or whatever) they’ve suddenly got heaps of money sitting in the bank that they can access: say hello to parties and debauchery.

      • KJT 6.2.1

        Breeding as an occupation happens now though it is not as common as many make out.

        The answer to that is to give teenagers better choices and a stake in society. Show they have a chance to earn decent money without turning to prostitution, crime or the DPB.

        Money should go to the parents to relieve child poverty. You do not take the pension of a 70 year old if he spends it on meths.
        There are other ways of dealing with dysfunctional parents (From CYF’s numbers 0.5 %. Even if you consider their numbers under reporting by 50% it is still only 1% of families that do not look after their kids. Some of those are the wealthy who send their kids to boarding school at 9 also. . Many more families would become more functional id they did not have to decide between taking their child to the Doctor or having breakfast.

        If you are worried about parties and debauchery have a look at the children of the rich in Dunedin, Whangamata and Ruapehu.

        • Colonial Viper

          The answer to that is to give teenagers better choices and a stake in society. Show they have a chance to earn decent money without turning to prostitution, crime or the DPB.


          Glad someone said it.

          Hmmmmm its not just teenagers who have to be given better choices re: opportunities to make a living, adults too.

          Where are all those $20-$25/hr jobs from NAT’s economic planning and closing the gaps with Oz strategy?

      • Draco T Bastard 6.2.2

        1. If you let them have the money, you’ll have 12 year olds running around spending cash on crap they don’t need.

        Give the kid pocket money from 5 and teach them budgeting. By the time that they reach the age that they get the whole lot, I’d suggest 16, they should have a grasp on the concept that costs need to be covered first.

        2. If you give it to the parents, you really do end up with breeding as an occupation.

        Last time I looked it cost ~$250k to raise a child up to the point that they left home/started working. If that point is 18 then the cost per year is close to $14k and Marty only suggests $13k as the income so, no, you won’t get people breeding as an occupation (unless they happen to be ignorant which can, and needs to be, addressed by schools and parents.

        And “no” to three. It’s there to cover their living costs as they grow not to be put aside as a nest egg.

        • Lanthanide

          Sure, if you’re going to start paying them $13k/year when they turn 16, then all 3 of the problems I identified go out the window. But if they are 16, then they are probably counted amongst those 3.1M taxpayers as they may have a job, and would certainly be paying GST, for example, and your whole point is that it shouldn’t be limited to just taxpayers.

          But if you’re going to start paying then $13k from the age of 5, or 0, then I really see ‘breeding for a business’ becoming much more of a reality.

          • Draco T Bastard

            Below the age of 16 the majority of the money would go to the parents but some would have to go to the as they got older so that they could be taught budgeting so that by the time they got to 16 and receiving the full amount they weren’t going out being stupid with it (which is what you get now for the majority of people).

            But if you’re going to start paying then $13k from the age of 5, or 0, then I really see ‘breeding for a business’ becoming much more of a reality.

            No it wouldn’t because it’s still less than what it costs to raise a child and the opportunity cost of not having additional income would hurt even more.

            • Lanthanide

              So because there is a $1k/year gap between the average cost to raise a child per year, and the $13k that the child would be bringing in, you can absolutely assure that there will be no “breeding for a business” whatsoever. Right.

              • Draco T Bastard

                Yeah, ok, I think I’m just going to go with the idea that you’re a fuking idiot now. I did, after all, address that here.

                • Lanthanide

                  In the real world, education costs money. So you’ve increased the cost of this plan already. Also in the real world, education is not 100% foolproof.

                  People make lots of greedy, short-term decisions. They don’t really think about their long term future or what is best for the children. This is how we end up with families who are already on the dole/DPB with 5 children and end up getting pregnant and having more.

                  Finally, even if you somehow think this won’t be an issue, this is how the scheme would be portrayed by National and others who want to criticise it, whether it’s a valid criticism or not. So you better have a better response than “education” if you want to be persuasive.

                  • Colonial Viper

                    Education costs money?

                    Its an investment in the future of our society. Yes it costs $ now, but make sure it works right and pretty soon you get $$$ back.

                    As long as we stop exporting all our best grads to Australia because NZ businesses do not pay them enough.

                    BTW I do not think we’ll get away with giving minors thousands of dollars. That’s just not going to fly.

                    • Lanthanide

                      His solution for stopping breeding for a business was educating people to not do it. My point is that that costs money, which then increases the cost of this scheme above the present cost.

                      I agree with you in general, just in this specific case the education he was talking about was social education, not book-learnin’.

                      I think Draco is right though, to really combat the poverty cycle we need to focus on families with children. How to effectively do that, I don’t know.

                    • felix

                      I agree with you in general, just in this specific case the education he was talking about was social education, not book-learnin’.

                      So what? It’s the same scenario – $ invested now, $$$ returned/saved later.

      • felix 6.2.3

        1. If you let them have the money, you’ll have 12 year olds running around spending cash on crap they don’t need.

        Lanth, what do you think about 20 year olds “spending cash on crap they don’t need”?

        Or 30 year olds?

        Or 50 year olds?

        ‘cos I agree with you entirely that “spending cash on crap” that people don’t need is a problem, but let’s not pretend it’s more of a problem for 12 year olds than for anyone else.

        • Lanthanide

          Of course I agree, but you’re missing my point.

          If you give $13k a year to a 20 year old who has no other income, they’ll spend that on food, rent, electricity. Same as if you give it to a 30 year old, or a 50 year old.

          Give $13k a year to a 12 year old, who generally doesn’t have to pay for their own food, rent, or electricity, and what do you think they’ll do with the money?

          You’ll note I was comparing 3 options here: giving it directly to the child, giving it to the parents, or putting it into the bank. All 3 have problems.

          • Draco T Bastard

            And the best option – giving it to the parents, has almost no problems.

          • felix

            Why do I care what they do with the money?

            The pointless stupid ugly houses, unneeded urban 4wds, and massive tv sets that most adults are so fond of spending their money on piss me off too but I don’t get any say in that, do I?

            I don’t see anyone trying to restrict people from buying all that bullshit, do I?

            So why should I care if a few teenagers blow some cash on pointless, stupid, wasteful, useless, destructive, ego-boosting crap?

            I really don’t see the difference.

            • Lanthanide

              I think the point of the minimum income is to remove poverty. So having the money being wasted by teenagers on crap isn’t really helping remove poverty.

              My other point is to highlight how such a policy would be attacked by the opposition – giving money to kids for them to blow it, or to their parents to encourage breeding as a business.

              • felix

                It’s wealth redistribution.

                If you think you have a right to dictate what some can spend money on then why don’t you apply that to everyone else?

                Are people receiving WFF not allowed to make choices with their money in your world?

                How about people in lower tax brackets? That’s another form of wealth redistribution too – are they allowed to “waste” money?

                I think you either haven’t got your head around what a UI actually is, or you just hate teenagers.

                • Lanthanide

                  You don’t seem to get my point. If the goal is to reduce poverty, and that’s why you’re implementing this scheme, then don’t you think you should actually put some controls in place to make sure that actually happens? Otherwise all you’ve done is implement a big money-go-round that doesn’t actually achieve what you set out for it to achieve.

                  It’s like Whanau Ora – unless they put in some distinct goals, distinct controls and then distinctly measure the outcomes, why are we doing it?

                  • felix

                    I do get that – I’m saying why not apply that same rationale to the other examples of wealth redistribution I’ve mentioned?

                    If you’re comparing the proposal to the status quo (which is also a system of wealth redistribution), you can’t ignore that the very aspect of the proposal that you’re criticising (that people spend money on dumb things) is also present in the status quo.

          • Colonial Viper

            Children can save the money up, go to uni, get an education, then pool together with a few of their mates and start their own TradeMe or Rakon.

            Put another way, you encourage young people as they come through the ed system not to think like CONSUMERS but to think like COLLECTIVE ENTREPRENEURS and as CITIZENS, working together to improve their futures as a group.

            Ladies and gentlemen, we’ve cracked the problem of how to shift away from our western/US ‘Winner takes All’ model of capitalism into a collective one with communal participation. One where every single decile in NZ’s wealth ladder gets to participate. This is about giving young NZ’ers an ownership stake in society and in their own futures!!!

            Frak you guys are good. LAB are you listening. OMG I just wet my pants.

            • Lanthanide

              Or, if the money had been forcefully saved in everyone’s bank accounts (rather than giving them, or their parents, the money) then when everyone turns 18 they’d have $234,000 in the bank sitting, waiting to be spent.

              Good luck trying to buy a house with that though – you’ll push house prices up through inflation – more money chasing the same amount of housing stock.

              The other problem with forcing children to save is that it’s effectively a dead-weight loss to the economy. You’ve taken $13k in taxes and put it away in a hole where it won’t come out of for 18 years.

              Note: I realise you’re not suggesting enforced savings, but I’m just bringing this up as being another wrinkle with the idea that the kids can all save their money.

  7. I think the idea’s good. Did you also allow for the large extra income if you increase the tax system’s proportionality so that someone over the (say) $80 000 mark doesn’t have a net benefit from the Guaranteed Minimum Income?
    I.e. if I earn $80 000 I get an extra 10k a year in GMI also have to pay an extra 10k in taxes.
    It would save a lot, simplify the system and increase proportionality.
    I’m not sure about the capital tax – if a capital gains tax doesn’t apply to someone, i.e. they’re not making money from their capital, why tax them?

    • Blighty 7.1

      “I’m not sure about the capital tax – if a capital gains tax doesn’t apply to someone, i.e. they’re not making money from their capital, why tax them?”

      my thought would be that a capital tax is going to be an incentive to allocate capital better – to things that generate the most wealth. ie. you’re not going to have people throwing all our capital into housing and farm speculation but into things that actually produce wealth, otherwise they won’t have the income to pay the tax.

      The amount of tax due is going to rise with any capital gains.

      Here’s Morgan on the effects of a capital tax:

      Impact on Capital Returns, Pricing
      One of the trends under our selective tax on capital income has been the emergence of some asset classes that furnish very low cash income or earnings yield, instead providing investors with the bulk of their return through “permanent” capital value increments. Such a distortion makes it very difficult for investors to accurately allocate funds across asset classes because of the “noise” from “permanent” capital gains on some asset classes. An efficient allocation of capital across asset classes is unlikely – so income and employment generation are unlikely to be maximised. Farm enterprises would be a case in point. The CCT would remove the distortion that has led to pricing of tax-favoured assets as there would no longer be the incentive to arbitrage the capital/income boundary and in consequence drive the price of some assets to a level unrelated to their income return.

      Family Homes & Chattels
      As with GST there is no case to provide exemptions to the CCT if boundary problems are to be avoided. However if the world of realpolitik so dictates, then my suggestion on the grounds of both efficiency and being equitable would be that the exemption on the family home must be limited to the value of the average New Zealand home rather than the more populist notion that the family home should be exempt, regardless of its value. To exempt the family home irrespective of value would lead to ‘mansion tax shelters’. With respect to chattels, again it is simplest to include everything but government may decide to publish a list of consumable personal assets that can be ignored in the case of personal tax payers. Personally I’d like my six motorcycles to be exempt.


    • KJT 7.2

      $80 000 is not a high income even for NZ. That is only $10 000 over the median family income. With WFF abatement the difference in take home income between $50k and $80k is not that great’
      I would suggest higher rates kick in over $150k. To avoid discouraging useful people training like Doctors, School heads, SME owners , tradesmen, etc who mostly tend to be in the 45k to 120k band. CGT and consumption taxes could mean a large overall reduction in income taxes anyway.

      Like Gareth I think CGT should apply universally. (Except for home built wooden sailing boats :-). )
      Guaranteed minimum income levels and low interest loans for first home buyers could compensate for the effect on lower income home buyers.

      • Blighty 7.2.1

        you’re comparing the individual income to the family income.

        IRD says less than 7% of people have incomes over $80K. While over half of kiwis have an income less than a third of that (ie under $26,000). That sounds like a high income by definition to me

        • KJT

          And your using benefits as well. Which actually shows how miserly benefits have become.

          Not to mention the small gap in take home pay between 45k and 75k due to abatement rates from WFF.

        • Colonial Viper

          Ummmm I think this is the wrong road to go down. The people sitting just on the top decile of income in this country earn ~$67K p.a. You might consider that relatively rich (income wise, not wealth wise) because they sit above everyone else, but $67K p.a. is actually a pathetic level of income. 🙁

          OK before anyone objects, this actually shows how even more horrendous and pitifully off everyone in the lower deciles are. You enter the 9th decile at around $55K p.a. Well for a single person that is a comfortable income, but not a lot more than that. You’ll be able to eventually after many years save up for a house in AKL but then you will be pinching pennies to keep up with the mortgage. Yeah and good luck if you suddenly have a child or two on the way.

          Overall I think that fundamental change in our economy is needed, this tax/living wage type restructuring could be an important part of it, but by gods we need to raise the income levels of the bottom 6-7 deciles of our communities drastically, and even the top couple of deciles need to rise a tad. The top 0.25% can stay frozen as is, they do quite OK 😀

          We are so frakin lowly paid in this country it is a shame. 🙁

          And consider people have used higher and higher levels of debt to pretend that they are earning the income they feel like they deserve to spend.

          Now it gets interesting:

          Where does the capital come from which provide that debt? ANS: From wealthy capital holders, foreign and domestic. 👿

          So the cycle goes like this: capitalists get wealthy by paying workers less and suppressing wages, they build up massive amounts of capital by doing this, then give that capital back to workers in the form of interest bearing loans, in order to take even more money off workers!!!

          Damn clever. 👿

          • KJT

            Yes it does show how miserly wages and benefits have got in NZ while a few Rich waits have run away with the money.

            In my day job alone, which used to be a very highly skilled high paid job, the pay is 40% less adjusted against the CPI since 1982.
            When you consider that necessities have increased a lot more than the CPI it should not be a surprise that most of the skilled have left.

            It is not tax rates that have done it though. 45% in Australia. It is the low wage high priced economy.
            The finance sector have pinched an ever increasing amount of wealth while contributing nothing

            Time we had Democratic control of the money supply, removed that dead weight on the rest of us and directed money capital towards a sustainable future.

            • Colonial Viper

              Time we had Democratic control of the money supply, removed that dead weight on the rest of us and directed money capital towards a sustainable future.


              No more interest bearing debt based bank cash please; instead a sovereign issued debt free, interest free dollar available to all to enable the smooth transactions of markets and commerce.

          • Olwyn

            It seems that assets, such as houses, are priced on an international scale of “worth,” while earnings in general (and that includes earnings from small business) are generated on a local scale of “affordability.” Which suggests that Marty’s scheme would need to be locked in in terms of proportionality rather than number, if the GMI is not to rapidly devolve to barely covering the cost of a pie and a six pack. One of the world’s great mysteries is how people living under conditions such as ours are able to generate and support so much advertising!

            • Colonial Viper

              It seems that assets, such as houses, are priced on an international scale of “worth,”

              I don’t think this is necessarily true, it seems more related to the availability of easy credit (e.g. no questions asked 5% deposit mortgages, however much you would like) which is in turn driven by the availability of hot liquid capital inflows.

              Not much to do with any intrinsic ‘worth’, or ‘value’ of the house at all.

              • Olwyn

                I said what I did because the putative worth is surely set at a price where the bank will not lose out if there is a default on the mortgage. Hence they envisage enough buyers who will be willing and able to pay that price. The possibility of selling internationally is probably one driver among many, another being a housing supply that does not meet the level of demand, owners of existent properties stocking up on “renters,” as well as the lending habits of banks, but prices are certainly not pegged in a realistic relation to NZ earnings, which was the point I was trying to make.

                • Lanthanide

                  “I said what I did because the putative worth is surely set at a price where the bank will not lose out if there is a default on the mortgage.”

                  Have you gotten a mortgage before? The bank doesn’t even look at the house. They probably looked at some paperwork, but that in no way makes up for actually eyeballing the house and seeing that you’ve massively overpaying for a small little shack or something completely decrepit and covered in graffiti. Obviously the bank is relying on the fact that if you want to buy a house at that price, it must be ‘worth’ that price (to you). But that doesn’t guarantee it’ll be worth that much to anyone else.

                • Colonial Viper

                  I said what I did because the putative worth is surely set at a price where the bank will not lose out if there is a default on the mortgage.

                  This is what used to happen, years ago, when banking was an old fashioned community minded venture.

                  Firstly, banks can give you the money for a mortgage without having to have that money on hand i.e. they create ‘bank cash’ out of thin air. (They do this by simply electronically crediting your bank account, an account which they control). So from the outset, they can’t lose.

                  Second, banks make a lot of money through loans. In fact the different banks compete with each another to see how much debt they can push on to the public. Even if a bank loses $100K on a house after they mortgagee sale it, they will make it back within hours on other mortages. (i.e. they price the occasional loss into the mortgage interest rate so that they can shrug a single defaulter off no probs)

                  Thirdly banks acted together to fill the market up with cheap easy to get mortgages thereby fuelling a massive asset bubble. If they leant you $500K with zero deposit on a house they would not worry because they knew that they were fuelling a bubble which meant that the house would be worth $600K in one years time. Worst come to the worst you would be forced to sell and the bank would still be ahead (unless the bubble burst…)

                  Fourthly (and mostly overseas) the banks created the mortgage securitisation market. The banks basically sold their risky mortgages off at a profit to investors who were tricked into thinking that they were AAA rated income earning debt. So the banks started issuing tonnes of mortgages not caring if they went to people who could ever pay it off because they knew that they would sell those mortgages off and someone else would wear the risk.

  8. TightyRighty 8

    only the left can come up with such idiocy. a minimum income (state benefit) followed up with a massively regressive taxation system? punishing those who create the jobs to reward those who erase the jobs? you’ve gone off the deep end. I hope no one saves you

    • KJT 8.1

      Create the jobs. You mean the people who took our wealth and ran with it to gamble on US derivatives and who will soon want more to bail them out. Or the ones who asset stripped enterprises into the ground, burgled the sharemarket in the 80’s and played with our currency. How many jobs did they create?

      The ones who we were told if we allowed them a bigger share they would re-invest it in jobs. Worked so well re-investment in productive business dropped to a third. private investment in R and D disappeared.

      We will be rewarding those who do the jobs instead of those who take the money and run.

      Allowing finance for small business and farming efficiently instead of for driving prices into the stratosphere.

      • TightyRighty 8.1.1

        “We will be rewarding those who do the jobs instead of those who take the money and run.”

        A nation of drudges, with no incentive to take risk, make profit and get ahead. What a sparkling vision you all share

        • KJT

          Prefer your vision do you? Ireland, USA, UK, Greece.

        • Colonial Viper

          Incentive to take risk LMAO

          Tighty, haven’t you noticed that the only people being exposed to billions of dollars of risk are ordinary working people? This happened when private debts got turned into public debts by absolutely massive bank bailouts.

          While the big deal makers walked away with huge profits when times were good, then huge bail outs when times were bad. What the frak.

          • TightyRighty

            I didn’t want the private risk publicised. Socialist heroes like Gordon Brown, Michael Cullen and others pushed for it from government, and the weak wankers on the financial high streets clamoured for it. The pain would have been harder, but the lesson would have been learnt if the banking system had not been bailed out. winners, based on sound capital adequacy ratios, would have emerged. For too long we have heard the cry of the ordinary working people who get screwed. it’s those same people who greedily accepted larger than normal interest rates from dodgy finance companies or faux-ponzi schemes, and then cried about it when they got what they deserved for not practising due diligence or common sense. if it’s good for the finance company operators, it’s good for the depositors. let em all burn equally. Governments have exposed the working man with no deposits to risk, so blame them CV. numpty.

            I do prefer the irish vision actually. there problems arise not from having a competitive low tax, entrepreneur friendly position on the edge of a large market, but from being part of a currency system that made no recognition of regional imbalances in trade or prosperity. The irish problem is now that they are damned if they do and damned if they don’t. I’d be fucked off if I had a bailout imposed on me to save the same currency unit that fucked me in the first place. we have an opportunity to be a low tax, entreprenuer friendly environment on the edge of the largest emerging markets in the world right now, without the encumberance of being shackeled to a currency that is out of our control. but marty g et al just want to encourage bludging, keep up the good work guys. we can couch potatoe our way to victory. And when we get to fat? Wii’s with Sports Resort for all.

            you can keep the UK and greek models. Outmoded socialist systems with to many beneficiaries in the last two to ever recover properly. The USA will be saved by it’s people, who thank god are optimistic and forward looking. and the majority of them get ahead without the government.

            • Bored

              TR, as a hard line lefty I heartily agree with you about “For too long we have heard the cry of the ordinary working people who get screwed. it’s those same people who greedily accepted larger than normal interest rates from dodgy finance companies or faux-ponzi schemes, and then cried about it when they got what they deserved for not practising due diligence or common sense. if it’s good for the finance company operators, it’s good for the depositors. let em all burn equally” Let the buyer beware….we might disagree on the point of what is allowable, but hell, I hate bailing out the greedy, the venal and the stupid me too’s.

              What really pisses me off about debating who gets what (via redistribution) is the number of free meal grabbers….the monopolists, oligarchs, bankers, those with inheritted capital, landlords / rentiers who add nothing and take everything risk free, corporate managers demanding excessive packages, lazy workers, people who expect the world to pay them for their lack of input to society. What happened to “a fair days pay for a fair days work”, and a little “there but for the grace of god go I inclusion and welfare”?.

              • TightyRighty

                How about no redistribution? how about using tax dollars to only provide the framework for a stronger economy, roads, rail, internets, education? how about only having social welfare as a safety net, as opposed to a career option? how about no middle class welfare, so then there can be less middle class tax? how about keeping more of what you earn, so that bored doesn’t agonise over how what is taken is to be distributed?

                • Bored

                  TR I wont agonise over how and what is taken: personally I think that we could pretty much keep the tax system afloat with no redistribution if we nationalised all infrastructure and finance and charged the true cost of use to all users….no tax breaks for anything, no distortions. And anything that becomes a monopoly or oligarchy will have outlived its usefulness in a market sense, socialise it as it happens, garner the profit for the society as opposed to taxing them.

            • Draco T Bastard

              Socialist heroes like Gordon Brown, Michael Cullen and others pushed for it from government, and the weak wankers on the financial high streets clamoured for it.

              I didn’t want it either and both Brown and Cullen were protecting the bankers and not society. It was a stupid, very right-thing to do – protecting the rich because they “create” jobs. Society would have been far better off if they had all been allowed to lose as the risk they took demanded.

              The Irish problem is complex but the real issue is that they didn’t build up from having low taxes but because they had massive subsidies from the EU. If Ireland had been left solely there’s no indication anywhere in history that they would have had that sort of growth. Being part of the EU now is royally screwing them.

              They shouldn’t have bailed out the banks, after doing that they should have defaulted on all debt and dropped the €. The EU bailout is making them even worse off.

              Outmoded socialist systems with to many beneficiaries in the last two to ever recover properly. The USA will be saved by it’s people, who thank god are optimistic and forward looking. and the majority of them get ahead without the government.

              Actually it’s capitalism that’s outmoded and the USA is headed towards civil war. The chances are the USA will be using the French solution to their Aristocracy (which is what their government and the corporates have become).

    • joe90 8.2

      How about those lefty Populares and their grain dole TR, fucking loser co**ie Republican bastards taking money off the …

      • TightyRighty 8.2.1

        nice to see another creationist. How is it not believing in the evolution of anything? got a cell phone yet?

        • joe90

          And you don’t seem get it TR that in 62 BC the penny dropped and the Patrician realised that a civil society is entirely dependent on a well fed plebs.

          • TightyRighty

            the only hungry people in this country are those on a diet or those too lazy to go to the fridge. If you are going to quote the kids, spare me, harangue their parents.

            • r0b

              No wonder you’re a right winger TR. You haven’t a single clue about the country that you live in.



              • Draco T Bastard

                You haven’t a single clue about the country that you live in.

                If he doesn’t know about the reality it helps him to deny and replace it with the “wishful thinking” that is the modus operandi of the RWNJ.

              • higherstandard

                Luv that first link.

                “A new analysis of a 2002 Ministry of Health survey of children’s nutrition has found that 40.8 per cent of Pacific Island children, 22.9 per cent of Maori children and 7.7 per cent of European children aged 5 to 14 sometimes or always ate nothing before school.

                Public health consultant Rob Quigley said that on 2006 census figures, those numbers added up to 83,250 children – one-seventh of all children in the age group.

                But Mr Key, who has called for businesses to donate food to needy schools, cited a 2005 survey at nearby Wesley Intermediate School which found a quarter of its 160 pupils were not getting breakfast – or lunch.

                Early yesterday Prime Minister Helen Clark dismissed that figure as “extrapolated from an anecdote” and said there was no evidence to back it up.”

                Which ever retarded party is in power nothing changes politics, politics and more politics … fuck them all.

            • Colonial Viper

              There are tens of thousands of children living in NZ in conditions of severe deprivation. They are mostly not in Epsom or Karori.

    • Marty G 8.3

      tighty, your mate roger douglas was talking about this – although not as good – when I was still in short pants.

      It’s not a left or right idea. In fact, the idea of negative tax, which is what the minimum guaranteed income is, is a favourite of many economists.

  9. Olwyn 9

    What I like about Marty’s analysis is that it is predicated on a proper understanding of what poverty is, and what makes people feel poor when they don’t look poor to others lower down the food chain. The belief propagated by the neo-liberal faction is that debt and insecurity act as spurs, to make people more productive and creative, and there will be limited circumstances where this is actually true; namely, where you have screwed things up and there is a viable way for you to turn things around for yourself. However, as a permanent state of affairs they produce only cynicism, bitterness and despair. A modest but reliable level of wealth for all is the cure to both debt and insecurity. But to implement Marty’s grand plan, we would have to get people past their collective addiction to the paradigm outlined above.

    • Colonial Viper 9.1

      The belief propagated by the neo-liberal faction is that debt and insecurity act as spurs

      And you know spurs have been banned in different countries as being cruel to horses.

  10. BLiP 10

    Brilliant post. This is the sort of thinking we should see coming from the Labour Party, not the resurrection of mutated Rogergnomes.

  11. ZeeBop 11

    I think people are missing the point if they think a fiscal solution will work (the right), or a redistribution solution (the left). Patently changing everything when everything is about to change won’t work. Or rather, why are the rich talking about more taxes on themselves, and redistribution. Obviously there are huge debts sitting on the global accounts, and huge future costs and risks from resource, fuel, food, climate, population.

    So the question for me how do we best utilize the people to produce the right decisions, to consumer less, or differently, to build the new infrastrusture, and to have happy contented lives. We know we can have happy lives, many generations have live very contently on much less, with higher health risks, lower mortality, etc.

    So I’m against writing off peoples debt. Any systemic change must be proportionate.
    Second, we need people to engage in capitalism, so they need room to take risks, that
    means a basic secure income that covers basics. Free healthcare. Free child care.
    Lower risks on individuals, make them work harder for luxuries. And stop bashing
    the artists who are happy not working, they make great art that is worth billions over
    time. Sure Morgonlikes want a capital tax, they own more and it will shrink
    at the same proportion! What we actually need is top tilting, excessive wealth taxes
    and use the taxes to balance at the other end.

    Because once we do get a rebalance we know the min.income guarentee (or whatever)
    will be wrong and the super rich would be cut in their gross wealth. Any inquality
    measure will have to be non-linear and burden the wealthy most! Now a stepped
    system, where we grow the min. income level will come from growing burden
    of the excessive money at the top end. Of course the wealthy need to keep their
    realtive positions with other wealth and not so wealthy.

    But all this is useless without leadership on what really is at the heart of the global
    malaise. Aging pop. Oil peak. Food crisis. Climate Change. We need flexibile
    open participatory populations who are stressed more by real problems afflicting us.
    Not market, or political drive, but the actual future physical limits of our human condition.

    • Colonial Viper 11.1

      So I’m against writing off peoples debt.


      Debt moratoria have been used many times before and have a long use in human history.

      Lenders who lend foolishly deserve to take a sharp haircut.

      Why should the European countries and European banks who leant Irish banks such extraordinary and massive levels of debt now be permitted to make every ordinary Irish person pay those debts back and suffer for something that they had no hand in?

      It really is enough to make me tetchy.

      Obviously there are huge debts sitting on the global accounts

      Ummmm anything which looks like a huge debt incurring regular interest costs in one country’s (or one person’s) accounts, in somebody else’s accounts is noted down as an income earning asset.

      That’s how (and why) this frakin game is the way it is.

      • KJT 11.1.1

        There is absolutely no reason why those who have benefited most from the whole Ponzi scheme should not take a bath.

        For example the USA could have got out of the mess much more cheaply than the bailout simply by forgiving a proportion of mortgages. Letting the banks eat the losses from their own foolishness.

        • Colonial Viper

          At the least, with the bail outs the US Govt should have forced partial nationalisation of the big banks, forced their way on to the Boards, and then forced those banks today to loan out to Main St, get out of high risk proprietary/derivatives trading and limit exec compensation.

          Instead they got nuthin back but the status quo – more banking hyperprofits at the real economy’s expense.

          • Bored

            Cant quite work out which was the bigger larceny: that which caused the bail out, OR giving the bail out free of conditions to those same people who caused the bail out?

            • Colonial Viper

              All I know is that the Bankers and their Advisors* were way smarter than the Pollies and their Advisors*

              *usually the same set of peeps

              • KJT

                Now they get bailout loan money from the Government at 0% and loan it back at 3% so the Government can give them more.

  12. Sam 12

    How does the CCT work? The linked article didn’t really explain that…

  13. Peak everything heralds the reverse of everything ‘good’. For everyone to get a ‘fare share’ we have to live like the Portuguese …. at best.
    That means no TV, no computer, no dole, no WFF, next to no medical care, etc etc, sure you lot can work that much out.
    It doesn’t matter how you ‘stack the crap’. Simply in a post peak world, were the planet might be able to support (read feed) between 1-3 billion (I don’t want to sound to shrill .. but maybe 300 million?) life as we know it is going to be a shit load different.
    The so called ‘rich’ will eventually be as screwed as ‘all of us’, I think having a nightly hot shower is rich, well compared to a Portugueseian it is. The ‘rich’ have to pay someone to do their bidding (food, security etc) what use will $$$ be when the shops are empty?
    Do you think us ‘poor folk’ are going to let the rich have electricity or free range on the roads if we don’t?
    Like hell we will, we will chuck rocks at them if they dare to drive passed, and we will pull down the power lines if ‘they’ have their lights on and we don’t. ‘We’ will raid their homes for any food, a locked gate will just be saying we have something you want.
    I know back in 16 century England or Rome the rich controlled the masses, but only while they could feed them and keep them passive (just like today’s welfare system), if the govt wasn’t keeping most of the people just above subsistence level NZ might not be such a ‘comfy’ place.
    With the BS spouted from every idiot politician/community leader/teacher/MSM/etc – that “tomorrow will be a better day” (keep pumping out the kids), the general dumb public believe it! So remain passively apathetic, and while they can the wankers at the top will keep pulling ya strings and feeding you all bullshit….. and I am also meaning people who write the above day dreaming rubbish.
    Nature bats last, there is no fare share.
    In New Zealand – peak Moa equaled people eating each other, well peak oil will mean the same but with bells on 😉
    My advice to people is stock up on food and ammo, because we are all on our own.

  14. Gina 14

    It looks like Labour are also looking at redistributing wealth. There new scheme for savings will favour high income earners big time. And that of course disadvantage women who give up condiderable work time and don’t opt for pushing their careers because they are too busy doing free work for their families. This will be a huge redistribution. I’ve mentioned it to a few women and they have already picked up what this means for them in the retirement stakes.

    Ive read articles online about the situation in Australia where men’s savings are double what womens savings are.These articles talk of women desperate with worry about how they will survive if their marriages end. In Germany mens super saving are tripple what womens are. I will not stand by and support further degredation of womens financial position in relation to mens while labour bullshit us that they are a party for equality. Women will not buy this crap sorry. It looks like Labours gender equality policies left with Helen Clark.
    Goff was spouting this crap at his recent speech. Get rid of the creep is all I have to say.

    • Colonial Viper 14.1

      – What new scheme for saving are you referring too?
      – You are aware that unemployment for women has spiked much higher during NAT’s reign, and that pay for women has dropped under NAT’s reign?
      – You do know that LAB fight hard to get more women into every level of the party?
      – You do know that NZ LAB cannot do anything about the examples you talked about i.e. Oz and Germany?
      – You do know that every country sees the same phenomenon of women on average working fewer years (because of child rearing) and on less pay then men, and that no solution suggested so far has been perfect (why blame LAB for that???)

      BTW how does attacking Goff help you come up with a solution for LAB to implement?

  15. Gina 15


    I don’t think theres much need to worry about peak oil. Read this articl.e


    Anything Into Oil
    Technological savvy could turn 600 million tons of turkey guts and other waste
    into 4 billion barrels of light Texas crude each year
    BRAD LEMLEY / Discover v.24, n.5, 1may03

    They say there is enough waste to completely do away with imports of oil to the US.
    The technolgy can convert old tyres, sewege etc etc. Any waste that can be carbonised through superheating it can then be converted to oil at cheaper prices than we are currently paying. The fuel doesnt need refining keeps the environment free from waste and will be a great intermediatory while we develop electric cars and solar power stations etc.

    Ive sent the article to labour who told me they would recomend the government look at it. Why are labour not investgating this and considering it as election policy. What a terrific advantage it would be to NZ to be able to use our sewrage to produce oil and all our other rubbish. Financially it would reduce our imports to a massive degree and protect us from the BS peak oil propaganda we are being fed by the elites who want to impoverish the average person as they continue with globalisation and march toward a world dictatorship. Keeping us poor keeps us quiet and helps them gain control without resistance, but they must have a legitimate reason for our poverty. Peak oil is Bullshit.

    • Colonial Viper 15.1

      Where would the energy for superheating come from.

      Why is this a better solution than getting oil from tar sands.

      Where has it been shown that this process could practically create even say 10,000 barrels of oil per day.

    • no oil = next to no rubbish, or turkey guts for that matter.
      We eat oil http://oilcrash.com/articles/eating.htm
      Sorry way to much reading for you or Labour.
      I got over 3,000 views of this essay in the first 48 hours it was ‘published’ back in 2003, not that it did any good or ever will.

    • Gina re – peak oil is bullshit. The government doesn’t agree with you http://oilcrash.com/articles/wake_up2.htm
      >Organisations including the International Energy Agency and the US military have warned that another supply crunch is likely to occur soon after 2012 due to rising demand and insufficient production capacity.<
      'Supply crunch/insufficient production capacity' is parliamentary speak for peak oil.
      Demand is exceeding supply now, that is why you are paying $1.92.9 pl. When Key and co can't borrow the money we use to buy oil, NZ will start to look like Zimbabwe.
      And because people will not get off their apathetic asses and learn about this shit storm, and prepare, it will be way worse than that.
      Mind you Nick 'the dick' Smith agrees with you http://www.youtube.com/watch?v=KIMiKUxCY4U
      Don't hate me for being the bearer of bad news …. it will not make the facts go away

      • Lanthanide 15.3.1

        Personally I wouldn’t bother trying to argue with someone who thinks we can recycle the waste of society and live off it perpetually, at least not at a blog like this.

        • Robert Atack

          I was just using Gina as a sounding board to go over some of the facts again, just another chance to get some details on record?
          As her last post indicated it all fell on deaf ears, no ones fault, that is what being human is all about.
          This helps me from stressing about it these days.
          «As for pointing to our mental failures with scorn or dismay, we might as well profess disappointment with the mechanics of gravity or the laws of thermodynamics. In other words, the degree of disillusionment we feel in response to any particular human behaviour is the precise measure of our ignorance of its evolutionary and genetic origins.»

          – Reg Morrison

    • Marty G 15.4

      even if that would work, which it wouldn’t, 4 billion barrels will last the world for 50 days. Less, actually, because of the massive expenditure of energy required to do the process.

      The same is true of the tar sands, of course. the energy may be there but the energy cost (which, essentially is translated into the dollar cost) is too great to ever run the world we do now on energy that expensive.

  16. Gina 16

    “You are aware that unemployment for women has spiked much higher during NAT’s reign, and that pay for women has dropped under NAT’s reign?”

    What you arre telling me is that National are worse than labour and that women don’t have any other choices. That’s really nice Viper and demostrates real concern about womens issues.

    I’m sure you know about Labours recent announcements about making kiwibank accounts compulsory, so I’m a mite peeved that you have claimed no knowledge of this policy direction.

    It doesnt change the fact that Labour have been talking about making kiwi bank accounts compulsory. With financial meltdown looming I’d rather have my money in mortgate free property than a bank. With the massive corruption occuring in wall street and the banks i don’t have one iota of faith in being forced to deposit my savings in a bank. Even a government owned bank can be affected by a world wide meltdown.
    What the hell, lets all be scammed by financial consultants and loose our retirement savings eye.

    • Colonial Viper 16.1

      What you arre telling me is that National are worse than labour and that women don’t have any other choices. That’s really nice Viper and demostrates real concern about womens issues.

      Ahhhhh I see. Now you are telling me what I am saying. Please don’t.

      That’s really nice Viper and demostrates real concern about womens issues.

      Sarcasm much?

      What i was trying to communicate to you is that you can get involved in the Labour party and make your voice heard. Hell, I reckon the Labour womens caucus would hear you out if you felt this strongly and had suggestions for a way ahead. You should also direct some of your venom at NAT because they really deserve it when it comes to issues of burgeoning inequality. (Interesting you haven’t done that because it suggests to me that you are a strong NAT supporter).

      With financial meltdown looming I’d rather have my money in mortgate free property than a bank.

      So you’d prefer to use your money to pay your mortgage off? Fair enough? That’s not a bank you would be paying your money to, would it?

  17. Gina 17

    “Where would the energy for superheating come from.”

    I haven’t re-read the entire article but as I recall it produces enough energy to power itself and produces fuel also.

    I read this article or one similar a while ago and just looked for the link without re-reading.

    Ive just checked again and the article has the same title but its not the one I originally read.
    Here’s the link to the original article.


    “Last summer Appel gave presentations to government officials and private investors throughout Europe, and the company is planning projects in Wales, Ireland, England, and Germany. Europeans are making the pilgrimage to the Carthage plant. In May Renewable Environmental Solutions ran 360 tons of beef waste through the Carthage plant for a visiting delegation from Irish Food Processors, the biggest beef operation in the British Isles. The Irish newspaper Sunday Tribune wrote that CEO Larry Goodman “is understood to be planning a biofuel facility . . . and hopes to have it built by next year.”

    • Colonial Viper 17.1

      Just so you know, any return of energy less than a ~10:1 ratio makes a source of energy pretty marginal. The article very cleverly avoided saying what its energy ratio was.

      BTW looks like the whole operation has gone bankrupt.

    • >I recall it produces enough energy to power itself and produces fuel also.<

      The words for this – perpetual motion, and goes against the law of thermodynamics (LOT) … did you take into account the energy it took to grow the bird guts? You say 'they' have/had to pay for the guts, that is in fact paying for energy, and if that energy is removed from the final product then it becomes an energy loss re LOT or as buying the energy – it raises the cost or shows the total energy/dollar cost of the energy, just like wind farms, hydrogen/electric cars etc remove the artificial subsidies, be it energy or dollars and they just do not work.

      • Gina 17.2.1

        The turkeys were not grown for oil production. They are the leftovers and yes they took money to grow but they were not grown for oil production. So the turkey remains are there and can be converted nto oil rather than us paying to dump them. in this case there was another use for the remains hence the pricetag.

        Remeber this process converts all types of waste to oil. Sewrage. Should they pay for sewrage. In other countries there is no demand for turkey remains which have to be dumped at cost so because so many types of waste can be carbonised then you have a choice.

        I think they came a little unstuck because they are not a big company have a new process and not the funding to keep things changing to meet conditions. But as I said most waste we pay to dispose of and we would be getting a great deal if someone would save us the tip fee.

        If building plants to convert waste saved us $500,000 000 in sewrage treatment plants then this form of enegy production saves the huge costs of waste disposal as well as providing fuel so would warrent a subsidy to offset the massive sewrage treatment costs we would normally be up for.

        • Robert Atack

          That is the problem we face in a post peak world, we will stop creating ‘waste’ ummm take fish and chip oil, when petrol becomes so expensive that people stop driving through McDonalds then running your car on chip oil also becomes expensive, and if lots of people have converted their cars then the chip oil runs out faster.
          We passed peak sustained crude oil extraction in 2005, as the above mentioned report states, or links to US reports that say so. This *doco http://www.youtube.com/watch?v=DVSCA0z8ZjM is about the best for explaining why people can’t get their heads around limits to growth or worse still reverse growth. It just isn’t human.
          *I guess I can supply copies if anyone wants one … yawn

  18. Gina 18

    “Just so you know, any return of energy less than a ~10:1 ratio makes a source of energy pretty marginal. The article very cleverly avoided saying what its energy ratio was.

    BTW looks like the whole operation has gone bankrupt.”

    Can you give me some links please. I did hear they nearly went bankrupt earlier on in 2010. The reason was that they were using Turkey remains to convert to oil which they had expecterd to be free however for some reason I have now forgotten they had to pay for the turkey remains which almost drove them bankrupt. As far as I know they are still operating but if you can show me a link that proves I’m wrong please do.
    And the energy ratio “where did you get your numbers?

    • Some numbers for ya Gina, as I supplied every politician in 2001 (ish) 5 times http://oilcrash.com/articles/running.htm
      I then printed and handed out 10,000 copies over a few years, back when I was stupid enough to think people cared.
      3,000 around Wellington on 1 day …. at least one person gave a flying stuff…. me
      The greed party had a stack in their head office for a while … I placed it there (200 copies)

      • Gina 18.1.1


        I do believe you are right Robert but there are solutions and we should be moving quickly to implement them rather than submitting to poverty.
        Im very suspicious of the oil industry. Oil production is declining and I suspect this is intentionally cutting production rather than there not being enough oil. There have been improvements in technology of the recovery of gas. Most of the Gas is in Iran and Russia but estimates are there is enough natural gas now to keep the world going for 400 years.

        There is also the solution of converting our sewrage to oil if the technology Ive posted on turns up good. There is solar. The chinese are installing solar hot water cylanders en mass on homes for $200 US a pop. They are preparing to keep their people warm. They are moving quickly and efficiently to substitute energy sources. The costs are massive and maybe we could look at using our super fund $15 billion to quickly build solar power stations and buy electric cars from china. Kiwis could have shares in the new Solar energy grid.

        There are solutions and we must move now.

        • Robert Atack

          Respectfully you are thinking the same as Robert Hirsch was when he started researching for this report http://oilcrash.com/articles/hirsch.htm he was commissioned to write this by the Bush govt, it was suppressed for a while after it ‘came out”, but maybe that was BS? Anyway this is the first reference in the Parliamentary services report from October. Robert thought ‘well we have this and that all we need to do is crank up production etc’,
          They worked out at a 3% decline rate post peak, ‘we’ better go at near WW2 industrial speed (USA) 10 years before the event. 5% – 20 years etc, that was to be able to maintain business as usual with growth and ‘prosperity’ for one and all, meaning a population heading for 9 billion etc. The REVERSE if we didn’t.
          Well ‘we’ are 5 years pasted the ‘event’ and the International Energy Agency have predicted a 9.1% decline, and that doesn’t take into account the BP fiasco in the GoM. Meaning the IEA is banking on Deep Water Oil to keep us from being even deeper in the poos.
          Robert said “We have a people problem, simply the people do not want to know” …. so the most recent and best report out from Parliament on the issue of our future was ignored by one and all, this blog is one of the only places it got an ‘airing’ and it is on my site … big deal . http://oilcrash.com/articles/wake_up2.htm
          sorry for double post.

        • Lanthanide

          There’s a word for people like you. Cornucopist.

        • Bored

          Gina, I am not sure what planet you live on and whether it adheres to the rules of physics that the rest of the universe adheres to. It sounds to me however that your planet is a happy place where technology can magic things into existence from other things, a bit like alchemy. Not only that,but from limitless pools of supply. What a nice place that must be.

          Unfortunately I and everybody else is stuck here on Earth where we have finite resources and have to adhere to the Lws of Thermodynamics.

          Our turkeys are happy consuming the grain we grow and feed to them in preference to giving it to the malnourished 20% of the planet, in particular the women and children who naturally get less. They think it odd but they accept that men have more brains than turkeys.

          The other bit about the turkeys is that they have asked us why we humans use more oil products to drive the tractors that plough more petrochemical fertilisers into the fields to grow the grain that we will use to fatten them up enough to turn them into less petrol? they want to know who the real turkeys are?

    • Colonial Viper 18.2

      Some indicative energy ratios here. The ~10:1 number is my own estimate of a minimally good energy source. Tar sands is less than that, Saudi oil more.


      Changing world tech bankruptcy 2009


      • Gina 18.2.1

        Thanks Viper

        “filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York.”

        As far as I know they got funding to continue and did not go bankrupt but I could be wrong there.
        According to their spin they have improved their technology further.

  19. Adrian 19

    You don’t even have to get all mathematical on it, just look at your wasteage in the bin in your kitchen and go ” Shit yeah, I could squeeze all the oil out of this or burn it and that would power my…, oh…. ” Unfortunately it wouldn’t even get the car out of the garage, let alone down to the market to replace the tucker.

    • Yeah there is more sun calories in the sticker on the apple than the apple used to grow, but you sure as hell can’t grow an apple from/with the sticker.

    • Gina 19.2

      Yep I do get your drift there but if you collect the family sewrage and include all the industrial waste, old tyres etc there might be quite a bit. Maybe not enough to completely replace oil but enough to. Wouldnt it be better to convert sewrage ton oil than to pay to ttreat it?

      Ive suggested other sources of energy we are all well aware of such as solar power stations. When RFK junior came to New Zealand he was on Campbell live where he said the cost of building a Solar Power plant was the same as building a coal power plant with equivalent output. I’m all for investing our superannuation fund in building energy sources quickly to cope with increased demand to power electric cars. I saw a human powered car online the other day which would be OK if push came to shove it looks better than walking or biking.

      • Robert Atack 19.2.1

        Sorry to keep coming back on this.
        You aren’t looking at the links, but then it took me about 3 weeks of reading to really work it out, then 8 years to learn that people didn’t want to know.
        Lets pretend you are going to build your power plant from what ever ? The next question is what are you going to use the electricity on?, that isn’t reliant on oil or natural gas for its manufacture, transportation and mineral extraction, each computer takes a barrel of oil + to produce, fridge? washing machine? heart and lung machine? And you have to move the electricity from source to use, wires and pillions need more than solar power.And you have to feed all the people along the way, as well as the end user.
        I guess you would have to hope there was an economy worth a darn to invest ‘our’ pension funds in when building a new power plant.
        We are at the top of a steep cliff, both economically and energy wise, the reassion is over we are now entering the depression.So who is going to invest?, who is going to be able to afford to buy power? or appliances?
        This government doesn’t even know how many days/months? supply of insulin there is available on shore.
        And according to international agreements NZ is meant to have 3 months supply of oil in storage in NZ , ‘we’ have an agreement with Norway and bloody Japan (they import about 99% of their energy) that if we need to call on our reserve they will give us some of theirs … the Norwegian stuff might be still bellow the sea bed? We could be 1 tanker away from rationing, and maybe 6 weeks away from the dark ages, marshal law anyway.
        Here is another thought, if I cut a peace of wood and chuck the off cut away, it becomes ‘free fire wood’ but there is still an energy content in the peace of wood, even though it is ‘waste’ it was still processed and delivered so I could cut it, same with bird guts/old tyers/industrial waste etc.

  20. Gina 20


    I’m not too well and pretty tired so sorry I haven’t looked at your links yet. What about all the natural Gas? It does look like our government is not looking at supply issues which doesn’t suprise me one bit. If they don’t get prepared we could certainly be in the poo pretty quickly.

    I’ll try and have a good look at your links in the morning. Hope we are not out of oil by then 🙂

    Best solution might be a quick exit across the tasman. Hopefully the Ozzies have more oil storage capacity.

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