Kiwi Polemicist

May 30, 2009

• Budget 2009

I’m not going to attempt an in-depth analysis, but here’s three points for you to consider:

1) Stopping the planned tax cuts. This move can be described in three words: stupid, stupid, and stupid. The Socialists/Marxists in Wellington have the idea that your money is better off in their hands and they say that they will use the money to “lead the country to recovery”. It’s more like leading it to ruin, because giving money to the state is like giving money to an alcoholic: it just gets pissed away.

In 2009/10 the government will take more than 30% of GDP in taxes. Studies have shown that a tax take of 15-23% of GDP leads to economic growth and anything more kills the economy; 23% of GDP can be had from an income tax rate of about 10% plus the miscellaneous taxes that plaque our lives*. Naturally I favour a simpler (cheaper) tax regime plus low taxes that will foster growth as has been shown overseas; with a flat income tax rate of 5-10% and no other taxes the economy would take off like a cat does when a child tries to give it a bath (it would also address the chronic shortage of medical professionals because the government could afford to pay a competitive wage and the tax regime would be attractive).

History clearly shows that reducing tax rates increases the tax take, but all the Wombles of Wellington can think of is keeping their sticky mitts on your money. The present taxation levels are simply parasitic and it’s no wonder that the patient is sick.

2) Stopping the contributions to the Cullen Fund (for future superannuation costs) was sensible. However, if the government adopted the tax regime described above they’d have more than enough money to pay for the superannuation that they shouldn’t be providing.

3) If you’re in the financial dung the first thing to do is trim discretionary spending. Here’s some of what this government should, in my humble opinion, cut:

  • $50m cycleway. The idiocy of this beggars belief.
  • $323.3 million over four years for home insulation and “clean heating devices”. Why should you pay for the insulation and heating in someone else’s house?
  • $34m for broadband internet in schools, when schools can’t even get the three R’s right.
  • $10.5m extra over four years for arts, including $3.4m for ballet. Presumably you’re happy to be paying for ballet so a few people can watch it. All arts spending should stop immediately because there is no rational reason for state funding of the arts.
  • $290m for high speed broadband in 2009/10, out of a total commitment of $1.5b. Let the private sector sort it out, and make it easy for them to do so.
  • $52m for defence. Our defence forces are a joke, and they’ll still be a joke after spending another $52m on them.
  • $11.7m over four years for the “financial adviser watchdog”. “The implementation of the Financial Advisers Act and the Financial Service Providers Act will help restore confidence in the financial markets by introducing a minimum standard of competence for financial advisers,” Commerce Minister Simon Power says. “It will also place the supervision of financial advisers with a central regulatory body, the Securities Commission.” How wonderful, more regulations and more compliance costs. Anyone who trusts a financial adviser just because they’re “government approved” is an idiot, therefore this scheme has nothing to recommend it. Caveat emptor.
  • $1.2m to “strengthen local networks and give a voice to community groups that are often not heard in government processes”. Apparently this is necessary “because local organisations often did not have the opportunity to engage in the policy processes of central government”. What’s the point in talking to a government that just nods politely and does what it intended to do in the first place?


Admittedly cutting those expenses would like jettisoning the Titanic’s silverware, and I’m not pretending that removing these things will stop the ship sinking, but I do want to show you that there’s plenty of frivolous government spending.

We have the same problem that the people on the Titanic did: the master has steered us into dangerous waters and we’re sunk. We need a new ship  – a new fiscal regime – and a new master.

What are your thoughts regarding the budget?


*I’ve Been Writing by Richard Prebble, p102


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