And let's not forget corporate welfare...

Just in from the Taxpayer's Union:

• Since National took office, corporate welfare has cost taxpayers $1-1.4 billion ($600 - $800 per household) per year
• If corporate welfare was abolished, enough money would be saved to reduce the corporate tax rate from 28% to 22.5%
• If applied to personal income tax rates, the saving would allow the 30% and 33% income tax rates to be lowered to 29%
• Alternatively, the 10.5% rate (applicable to the first $14,000 of income) could be reduced to 7%.

Report can be  downloaded as a .pdf.

The land of the less free

The Cato Institute reports:

There was a time, not so long ago, when the United States was considered the world standard for economic freedom. Yes, there were countries out there, like Hong Kong and Singapore, that might have had lower taxes or fewer regulations. But the world could still speak confidently of the American free-enterprise system. No longer.
This week, a consortium of think tanks from almost 90 countries released their Economic Freedom of the World Report. The United States is no longer among the top ten countries when it comes to size of government, rule of law and property rights, soundness of the money supply, regulation, and free trade. We now rank twelfth, down from second as recently as 2000. For the record, we now trail Hong Kong, Singapore, New Zealand, Switzerland, Mauritius, the United Arab Emirates, Canada, Australia, Jordan, Chile, and Finland.

More

NZ Table here

Note our poor 'size of government' rating - ranked 89th

Quote of the day

From the Future of Freedom Foundation, today's quote:

A zoo is a welfare economy, and the zoo animals are privileged — and enslaved — animals.
 

- R.J. Rushdoony

Education and income inequality

A reader drew my attention to an article in the WSJ about educational achievement being both a driver and outcome of income inequality.

It appears there are plans to make the tests 'fairer' but the reasoning seems dubious.The writer concludes:

Family wealth allows parents to locate in neighborhoods with better schools (or spring for private schools). Parents who are themselves college educated tend to make more money, and since today’s high school seniors were born in the mid-1990s, many of the wealthiest and best-educated parents themselves came of age when the tests were of crucial importance. When the SAT is crucial to college, college is crucial to income, and income is crucial to SAT scores, a mutually reinforcing cycle develops.

And a similar pattern is replicated here. I extracted the following from the latest NZ Income Survey.

It shows the personal weekly income by estimated number in eligible population (000). Generally, the higher the educational qualification, the higher the personal income.

Highest qualification(7)	$1,190 & over	Under $210
No qualification	55.7	178.8
Lower secondary school qualification	40.2	83.1
Upper secondary school qualification	61.9	204.9
School qualification not specified	S	3.1
Level 1-3 certificate post-school	10.4	18.1
Level 4-7 certificate or diploma	184.9	79.7
Bachelor's degree (incl Honours)	191.2	73.8
Postgraduate qualification	117.6	25.8
Other post-school	33.0	28.3
Post-school not specified	6.3	5.2
Total(5)	706.6	706.7

(The seemingly anomalous figure in the second column is probably influenced by working-age females not in the workforce eg stay-at-home mums. Data comprises all individuals aged 15 and over)

The real value of today's benefit compared to pre-1991 benefit cuts

In search of a child poverty scapegoat, much is made of  the comparative value of today's benefits to those pre-1991 cuts.

In 1989 the maximum DPB payment for a sole parent and two children (incl. accommodation benefit and family benefit) was $332.87 weekly.

In 2014 the equivalent sum was $680.45

The following table shows various expenditures as  percentages of those payments:
 

	1989	% benefit	2014	%  benefit
litre milk*	$1.23	0.37	$1.79	0.26
rent weekly average 3 bd house	160	48	360	53
bread*	1.65	0.5	1.1	0.16
men's shirt	55	17	50	7.3
petrol 10L	9.12	2.7	21.6	3.2
haircut (women's wet)	27.58	8.3	63	9.3
TV colour 53-65cm	1479	444	279	41
toilet paper 2-ply (4 rolls)	2.79	0.84	3	0.4
eggs (dozen)*	2.6	0.78	3.69	0.54
Fridge/freezer .32 cu mm	1187	357	479	70
*2014 - based on the cheapest available brand or variety in each retail outlet at the time of price collection.
http://www.stats.govt.nz/browse_for_stats/economic_indicators/CPI_inflation/haircuts.aspx
http://www.aa.co.nz/cars/maintenance/fuel-prices-and-types/petrolwatch-weekly-and-monthly-updates/petrolwatch/march-2014-petrol-and-diesel-prices/
http://www.enz.org/house-rents-in-new-zealand.html
http://www.hallensteins.com/category/Mens-Shirts?i=13
http://www.thewarehouse.co.nz/red/catalog/electronics/visual/televisions
http://www.thewarehouse.co.nz/red/catalog/everyday-needs/toilet-tissue

Proportionately, low-cost groceries and clothing are lower.

TVs and whiteware are massively lower.

Petrol is higher.

Rent is also higher but only 5 percentage points ahead of 1989.

ODT: 100 years ago

Table DP.2: Numbers granted a Domestic Purposes Benefit

Client age when benefit granted	Grants of a Domestic Purposes Benefit
	2007/2008	2008/2009	2009/2010	2010/2011	2011/2012
Benefits granted to working-age clients	36,494	41,811	40,616	38,072	36,258
Benefits granted to other clients	1,054	1,100	942	799	751
Total benefits granted	37,548	42,911	41,558	38,871	37,009

The annual grants above would be mainly to mothers who have lost the support of a partner or never had one. Some would be to 'deserted wives'. I note this to contrast a report in the ODT from 100 years ago:

The problem of the deserted wife is causing the Auckland Charitable Aid Board just now to think over the defects of legislation in this respect. The army of wives seeking fugitive husbands is assuming such alarming proportions that recently there have been exceptional calls upon the resources of the Charitable Aid Committee by those unfortunate women who have been left by their callous husbands with the burden of a family upon their hands. Recently there were no fewer than seven such applications before the committee, which felt so strongly on the subject that it passed a resolution recommending the board to draw the attention of the Government to the increasing number of cases of wife desertion, and urging it to instruct the police to bring the deserters back.

Seven!

This is definitely not a contender for, The more things change...

The investment approach

As Bennett leaves social development there is a bit of hoopla about the investment approach and what else she might achieve across other departments. She is viewed as a great success and in some ways I think that's correct. But you'd want to see the numbers really starting to improve from here on in.





Although the numbers are dropping slowly in both absolute terms and as a share of the working age population, that demographic is shrinking relative to the 65+ age band. Here the recipient numbers continue to climb steadily (Call Super whatever you want but it comes out of the MSD budget and is a cost to govt/taxpayer.)

The investment approach to working-age welfare meant spending more on those who would cost more over their 'working' lifetime, aiming to reduce their dependency.

I wonder how the investment approach would work with Super? It can hardly be identifying those who will be on Super longest and investing more to prevent this from happening.

An investment approach to Super would be to keep people working, productive and paying taxes for longer. Oh, but that's Labour policy.

Craven Key

Talking on RadioNZ about the new cabinet line-up, the PM utterly pisses me off. To think I voted for this rubbish,

Mr Key said the portfolio titles themselves are not immune to change.
"Like if you take Women's Affairs for instance, I just think that's a very outdated term - it's probably 50 or 60 years old as a name for that portfolio. There is a role for a ministry there, but it will be called the Ministry for Women, I just think that's a better reflective title."

It isn't just the name that is outdated, it's the very concept.

Women make up almost half the workforce; are out-performing males in tertiary achievement and numbers; and are free from legal discrimination. Enough of  the privilege and  patronization.

It's got a budget of  $4.5 million spending $3.1 million on personnel. It is staffed with highly paid career bureaucrats advising other highly paid career bureaucrats.

There is no ministry for men and neither should there be. It's an anachronism that nobody has the courage to abolish.

Changing the name won't stop it being an anachronism. It'll just waste even more taxpayers money.

70 years ago - The downfall of Sir Apirana Ngata

Sir Apirana Ngata was a highly practical man who harnessed the resources of the state to develop Maori land; to get his people working and productive. But Pakeha weren't always happy with the flow of money going into his schemes. It's shame they didn't have a glass ball enabling them to see the future flow of money going into making Maori unproductive.

It was Alan Duff, in Maori:The Crisis and the Challenge, who highlighted Ngata's fierce opposition to Maori receiving welfare (then social security) fearing its corrupting affect on his people.

The following piece is from the NZ Herald 70 years ago today but I hesitated to categorise it under "The more things change..." firstly because the tone of the debate is exceptionally civil, quite unlike today. And I didn't want to give the impression that I thought Ngata was comparable with a few contemporary Maori who self-interestedly rip of government grants.

 More

If you read that piece you will be interested in what happened next:

"By the beginning of 1932 Ngata and his department were being roundly criticised in Parliament and the press. He was required to accept a reorganisation of his head office, but the controller and auditor general refused to pass the accounts. Irregularities were found in some of the district offices of the department. A civil servant from the office of the public service commissioner was put into the head office in place of R. N. Jones, who was both chief judge of the Native Land Court and under-secretary for the department. But the crisis was not yet over, and one of Ngata's trusted lieutenants on the East Coast was found to have falsified accounts. Ngata offered his resignation, but instead of accepting it George Forbes, the prime minister, adopted a recommendation from the Public Accounts Committee to appoint a commission of inquiry into Ngata's handling of his department and the land development schemes. It reported in 1934 and was critical of Ngata's administration, especially his personal style and contempt for bureaucratic regulations, alleged that he favoured his tribe, Ngati Porou, and his family (although providing little evidence to support either allegation), and pointed, correctly, to the corruption of some of Ngata's subordinates. Ngata honourably accepted responsibility for the shortcomings and immediately resigned from cabinet. His downfall had a powerful impact on Maoridom, which regarded it as a Pakeha attempt to undermine the success of his land schemes."

The more things change...October 5, 2014

Welfare is cyclical.

Governments institute programmes of cash or in-kind assistance which over time - usually due to over-subscription -  become unaffordable.

Source: NZ Herald, October 5, 1934

The scheme ended in 1967 on account of cost.

The experiment will be repeated though, except this time the calls are for breakfast and lunch as well...despite low and middle income families already receiving specific payments to assist with the cost of raising children.