Matt Nolan

Taxonomy changes to rebalance New Zealand

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In a shocking report on Scoop (ht GLS) I heard the following:

A recent report revealed New Zealand has some of the lowest taxonomy rates in the OECD.

:O

If we are going to catch Australia in taxonomy rates, we need to have higher taxonomy rates!

Bill English also made the following excellent point regarding spillovers from taxonomy adjustment:

You’ll have to wait until Budget day, but I can say taxonomists not having to faff about with the difference between Archaebacteria and Eubacteria would boost productivity as much as any other change we’ll make.

Agree 100% …

Matt Nolan

Labour’s alternative budget

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Ok, I haven’t seen an actual alternative budget – but given they are the main opposition I’ll turn what they have said into one, so that I can give them the same airtime as others.  We have already discussed Act, Libertarians, and National – and I aim to get something on the Greens out by week end.

So judging by this speech here, post Budget

Labour will take a different approach
to savings,
to exports
to foreign investment,
to monetary policy, and
to support for research and development, and innovation and skills.

How are these policies different – and what trade-offs are involved.  That is what we will discuss here.

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goonix

Govt considering SOE sales

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Bill English has been quoted as saying the Government is considering the sale of certain state owned enterprises in its next term. Apparently the Government are currently preparing an “investment statement” that will outline what it considers possible.

Currently a significant portion of Government capital is tied up in the SOEs, around $40 billion dollars (around four times the size of the largest projected Government deficit).

SOEs perform, as a class, very poorly. Recent reports suggest that in the last financial year they returned 1.5% on equity. This is below the risk free rate of return.

Such poor allocation has real costs to the New Zealand economy. The opportunity cost of maintaining investment in such low returning assets (as a whole) effectively amounts to taxpayer resources being wasted.

It is therefore very worthwhile that the Government looks at its investments and considers whether SOEs might be better placed in the private sector’s hands.

Matt Nolan

Budget 2010

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Apologises for the EPIC delay in doing this.  I wanted to have comments up by 6 (it was not out till nearly 10), but a meeting ran overtime, work servers went down, and my trip home from work on this was slower than expected. [ed. And the site went down …]

First here are links to other round up post round the country as of now:  Offsetting Behaviour, The Standard, Red Alert, Kiwiblog (*,*,*,*), Dim Post, NZIER, Infometrics, Rates Blog (*,*,round up post!), NBR, Not PC (*), Public Address, Education Directions (*,*,*).

So far we’ve done a review of the ACT and Libertarian alternative budgets.  Now it is time for the actual Budget, and then if we see any other alternative budgets we will have a look of them too 🙂  When reading all these reviews, keep in mind that I am aiming to be critical – I am putting up trade-offs so I will NEVER say “that is a good policy”.  I am not trying to say I hate any of these groups by doing this, I am just trying to describe other ways to look at policies to give them context.  If you keep that in mind when looking, then hopefully it will be useful.

Ok, so let me roll with my personal opinions – hopefully supported by a sound economic framework 😉

Also note that this is a first brush on what seem to be the main issues.  Over the next few days I plan to get down into more specific policies – and I will see if I can discuss some things through the weekend.

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Matt Nolan

You have thoughts on the Budget?

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I have seen Bernard Hickey discuss the Budget.  I am sure more will come.

I will write tonight, and other authors will pop things up today – I can’t do any sooner as I am out of the office.

It looks like it was a substantial change to tax rates – most of which were expected.  On the spending side things are how things usually are.

Matt Nolan

NZ Libertarian party alternate budget

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The Libertarian party is the next group to release an alternate budget for Budget 2010 with further discussion here.

I am glad to see more people doing alternative budgets, but as always I have some concerns:

  1. It is subject to the same criticisms as Sir Roger’s budget – namely the trade-off between equity and efficiency is not based on the revealed democratic process from the previous election … although having a transparent budget DOES mean that people know what they are voting for in the future.
  2. The limiting scope of government in there budget is far too extreme – even if solely on efficiency grounds.  Why?  It ignores any scope for co-ordination issues and the such in government policy.  However, the size of this issue depends on relative value judgments – so I really just think they are saying that they have a value judgment that other co-ordination issues are irrelevant, which is fair enough I guess.
  3. Also – it presumes optimal redistribution equals zero, which is highly unlikely given that luck and the such does exist.
  4. It targets a tax rate of zero while still having government spending – based on a belief that voluntary provision of funds will be sufficient.  However, I disagree.  If we want any central government we have to have some type of “coercive taxation”.  Setting the tax rate to zero is effectively the same as asking for anarchism as it implies that this specific governmental institution will disappear into irrelevance.

Fundamentally, redistribution is a valid role of government – and the libertarian party bases its policy on the idea that it is not.  There is no theory – even among many of the most right wing economists – that justifies zero redistribution.  However, they are transparent about their value judgment here and they are consistent between budgets, so that is good of them.

So now we have an ACT and a Libertarian budget – the National (government), Labour, and Green ones will be still to come (if there are any others yell out to me).  Very exciting.

Update:  Link for Libs release here and excel sheet here.