OPINION: Before Auckland Mayor Len Brown raises the scourge of a tarted up poll tax he should scrub off the shine of his nice black shoes and visit some of the streets in Auckland that house the people who voted him into office.
If he bothered to venture beyond the doors (upon which he once knocked) Len Brown would find families struggling. It isn’t just a budget thing. It is a total lack of hard cash.
This week BNZ chief economist Tony Alexander predicted the Reserve Bank will next week begin to lift the official cash rate (OCR), that in turn will cause banks to increase their floating and fixed mortgage interest rates. This in turn will see an increase in rent for many, and a reduction in the already meagre disposable income that is the reality for most.
Tony Alexander wrote in his weekly overview: “You never know for certain how borrowers, savers, businesses, and the exchange rate will react to rising interest rates. Last time the RB started raising rates just over a decade ago the common view was that the cash rate would rise from 5% to 6.25%. I picked 7.25%. The actual peak was 8.25%.”
This is a time for preserving as much certainty in economic thinking. It is not a time to seed radical neoliberal taxation plans.
But Len Brown, this Mayor, this week raised the specter of a bastardised version of Margaret Thatcher’s poll tax (which he prefers to call an income tax). He also had the cheek to say the current system is “inherently unfair”.
Fairfax Media further cited the Mayor as stating the rates system is unfair ‘on people living on fixed incomes and paying high rates because of the value of their properties in areas like Devonport-Takapuna.’
Len Brown added that ‘only property owners pay rates but the Council is spending money on infrastructure and services for everyone’.
What absolute nonsense.
For those who rent, they too pay their fair share to keep this city’s infrastructure maintained, its facilities oiled, its bureaucrats, and administrators, and CEOs, and parks staff, and rubbish collectors, and communications officers, and strategists, and advisors, and secretaries, and librarians, and ethnic policy advisors, and art gallery workers, and Mayors in paid employment.
And yes, I know, they don’t pay rates directly to the Auckland Council, but by God they pay it to their landlords who in turn pay the Council for the privilege of owning a house in this good city.
Everyone… everyone already pays. What Len Brown needs to realise is we all know what he needs is more money, this idea isn’t all about fairness and equality. Far from it.
While it is difficult to prove that Thatcher’s trickle-down theory works, it is easy to prove the trickle-up reality is in evidence all over this City (and country).
Len Brown argues that the only way to arrest anticipated rates increases is to rethink how Auckland Council acquires its revenue.
No, Len Brown, you need to run a Council that is fiscally prudent, fiscally responsible, and fiscally true to the people who put you in this office. You need to seek a political solution when central government abandons its previously-announced contributions to your vision or essential development.
This city’s peoples have already seen rates climb by unsustainable proportions. I will give you an example:
- In Mt Albert lives a family of three. They bought their new home in 2010 and understood their annual rates bill would be $1600.00. Within three years their annual rates liability had climbed to $3143.09 and has a baseline adjustment of $207.07. That’s an increase of… Oh My God, you do the maths.
This family, just like the family of four next door who rents a Housing New Zealand home, all pay their fair share.
But this Supercity wants more.
Back in the 1990s when Papakura District Council became the testing ground for a burgeoning ACT Party economic theory, similar arguments to Len Brown’s were put forward.
The argument went like this:
- An elderly woman lives alone on Old Wairoa Road. She uses only a small amount of water compared to the large Pacific Islands family who lives next door. Yet, due to a universal water charge, the old woman has to subsidise the water used by the big family. This is fundamentally unfair. The ACT solution: to establish user pays, do not sell off the District’s water and wastewater infrastructure, but franchise it out for 20 years to a multinational utilities company called United Water.
It is a difficult argument to counter. Except, you will never hear a politician who subscribes to such remedies suggesting a rebate for the elderly woman, nor arguing that a community should share the burden of assisting all within its boundaries to reach their potential and lift their quality of life.
It is a sad realisation that this mayor has subscribed to the individual-is-all ideology.
Anyone who has observed the juxtapositions of Auckland Council politics versus the Beehive over the past twelve months will know, this National-led Government will only cough up a fair return for the proportion of tax we have already issued through Inland Revenue Department liability if it believes the people of Auckland will abandon its party at this year’s General Election.
Well Mr Brown, how about asserting that mandate you suggested you still have and demand on behalf of 1.5 million Aucklanders that the National-led Government meet its obligation to this city’s infrastructure needs now, not in 2017, not in 2020, not on the never never.
No, you wont do that because you cannot assert this mandate because you no longer have the Mana to carry a unified message to Wellington. You no longer are able to deliver on the visions you brought to the table, visions that Aucklanders gave a resounding degree of approval for. Why? Because you no longer represent a unified city, and the Beehive’s gaggle of good guys know it.
So what do you do… You need to save face, save your vision, so you trump up a poll tax idea to flog this city’s good peoples of what little cash they have left to live off.
That is a disgrace.
Instead, Len Brown has fallen for the National Party’s gambit. Should he seek remedy through creating another layer of tax liability, it seems probable that the Prime Minister would announce in his casual way how the good voting people will be rewarded in 2017 with cuts of up to 7% off the personal tax rate. Meanwhile, Len Brown slaps a new income tax on the City’s peoples, slaps another 3% on top of the current GST rate for all goods and services ‘consumed’ within the greater Auckland area, and the rest of the country applauds how the Government has whacked the Jaffas… that is until their own city and district councils follow suit.
Len Brown even had the audacity to suggest he had an ‘open mind’ on the various mix of tax options.
Options that include:
- A tax on people’s incomes (do you propose a regional layer of progressive taxation, or enforce a flat-tax option?);
- GST (do you propose to slap another 3% on top of IRD’s 15% GST in this region?);
- User pays charges (by this do you mean ratcheting up the prices on swimming pools, access to libraries, entering Aotea Centre, Lloyd Elsmore Park, Bruce Pulman Park, David Lange Park, Fowlds Park, the Waitakere parks? Driving on our roads?)
Pause for breath. A Labour Party aligned politician should know that when the likes of KiwiBlog’s David Farrar sweetens your message, supports it, encourages it, then your policy, your politics, your personality has gone beyond the rubicon – you have exceeded the limits of your ideology AND pragmatism to a point that permits no return.
There are three words that spring to mind here: Neoliberal Sell Out.
For the record I call this a poll tax because what Len Brown proposes is a transition from a rates based tax applied to the number of houses on a street, to a tax applied to the number of individuals who are income earners who live within the city’s territorial boundaries.
In 1990 the New York Times defined Margaret Thatcher’s poll tax as:
- replacing domestic rates—a tax based on the nominal rental value of a home—with the Community Charge (or poll tax) in which the same amount was charged to each adult resident. (ref.)
Now the defining difference between Thatcher’s miserable poll tax, and what Len Brown has floated for discussion is he is “open minded” (as I mentioned above) about the various other layers of revenue grabbing that come with right-wing consumer-based taxation.
The gross effect such policies will have on the population is a liability-demand that is disproportionate to a person’s or family’s disposable income. It means the poorer you are, the higher is your tax liability as a proportion of your income, and the richer you are the less impact your tax liability has on your livelihood.
The impact this policy would have on the Auckland economy is deliver an imbalance where distribution patterns that have found a predictability will become erratic. The Auckland Council will acquire and consume more as a percentage of the city’s net economic product and syphon value from the micro-economies in the communities.
This will cause a degradation of living standards, arrest the ability of hundreds of thousands to emerge from low socio-economic status, and shackle our people into a bureaucratic subservience of which we have never before seen.
Our people, our children, deserve better than this.
This folly must be resisted at all costs – even if it means the beginning of the disestablishment of the all consuming Supercity.
This is ACT policy. How can Len be sucked so far into the right.?? National and ACT will be thrilled to have the “yes” man in the big seat. Shame on you Len.
Maybe (but only pure speculation on my part) Len has been frightened by the power of the dark forces which he previously seemed quite oblivious to (till that scandal errupted and was directed by these dark forces). So perhaps instinctively or consciously he is altering his behaviour in the hope of appeasing these dark forces. If this was indeed the case, then no Len Brown would be better for the left than a mortally wounded Len Brown.
Because Len Brown never really was a representative of the left. He only appeared left by comparison to John Banks (hell even Margaret Thatcher would look left compared to Banks) and used this on unsuspecting voters to gain power. His time as mayor has shown him to be a centre-right figure, leaning more to the right as time goes on.
What this Council hides is frightening. In the Unitary Plan it was discovered that the Council also had an idea that if the Unitary Plan for your area meant that your house would go up in value as a result of Council rezoning , that the Council would take a share of that added value, and maybe even demand the money before you sold your house!
This process is called “shared-value uplift”.
It does not relate to housing per se. It applies to large areas of land which are rezoned to higher value properties, eg. rural land being rezoned into residential zoning. Many cities around the world employ this method of development contribution – and it only applies WHEN that land is developed.
It makes sense. Everyone who is not included in this wholesale rezoning – goes through a lengthy process of Private Plan Changes and RMA consultations and hearings – and development contributions and infrastructure charges are worked out accordingly.
The rise in value can be extreme – and without any input at all from the landowners (unless they are good lobbyists).
The whole section devoted to this is the Draft Unitary Plan – has disappeared from the released document. It was considered unnecessary. Cities around the world – London included, consider it a reasonable way to mitigate the effect on surrounding communities.
Any rezoning that occurs from the Unitary Plan and the SHA’s are capital gain gifts to those landowners. (The landuse is never rezoned down in value)
I’ve got no idea why Len doesn’t just join ACT. His policies aren’t much different, he seems to see militant wharfies as an impediment to selling of the port, and he even likes young Asian women. He’s perfect for them.
In the meantime, we need to prepare a better candidate for the next election. My heart says John Minto, but would enough people see past their ideological straightjackets and vote for him?
What a disaster this guy is turning in to. A poll tax is just another way of raising more money for the voracious spending appetite of the city under this mayor. I’m guessing this will be fought from the left, right and the centre.
This does not surprise me that much, coming as a new “idea” from Len Brown. He is certainly not fit to call himself a “Labour” man, or one of us. He is more “blue” than anything else, and we know, power tends to corrupt many people.
So yes, he is preparing for a third term under National, and he knows, they may actually like such ideas, and they would let Len try it out in Auckland. If it does not work out, or gets stiffly opposed, they will blame Len. If the people suck it and roll over, like they are mostly now doing it with so much idiocy under this government, then they will pat him on the shoulder and adopt his idea for the rest of the country.
Len the Man, the Loser Man, come next local body election. Your time will surely be up then!
It’s not a poll tax. Maggie’s tax was a uniform charge to everyone regardless of income, Len’s proposing a proportional income tax.
As a non-driver I’m sick of subsidizing motorists with my inner city rates. Let’s target drivers, as the transport infrastructure takes the lions share of council expenses.
Auckland Council is not Auckland Transport. Two completely separate entities thanks to Rodney Hide’s work early in National’s government.
Spending priorities for transport in local governments is dictated by national policy.
Your issue with transport spending needs to be directed upwards to Gerry Brownlee.
Your simplistic view on how funding is collected and distributed requires something else – perhaps a consideration of collective responsibility and contribution in a healthy society.
Anyone who thinks people who pay rent do not pay their share of the rates is just plain barking mad. Who is prepared to bet that if a poll tax were introduced and (I assume) land rates ditched, rents would go down accordingly is even more barking mad.
Since 1986, there is a chronic under-funding of public services in this country that has had predictable consequences. With seven tax cuts since (and including) 1986, what else did New Zealanders expect would happen?
Those tax cuts went from central government (and local bodies who benefitted from central government transfers), into the pockets of individual consumers. I call them “consumers”, because the cash was spent on consumerism, property speculation, and what-have-you.
http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/finalreport/19.htm
This chart shows the explosion of private debt (much of it on speculative housing “investment”) – http://simontegg.files.wordpress.com/2010/10/nz-debt-levels1.gif
Which also explain, in part, why our balance of payments is always in the red; we are importing more than wee are selling/exporting.
In effect, as a nation, we’ve voted for more tax cuts, without considering how our elected representatives will then pay for First World services we’ve come to demand. Our expectations have not dropped in this area.
Instead, our elected representatives have had to make up the short-fall in taxation revenue by indirect taxation (ACC, GST, etc) and more and more user pays – Parents prop up schools to tune of $250m
Generally speaking, New Zealanders are politically unsophisticated, taking their information and insights from TV 6PM bulletins (sandwiched between umpteen crime stories and Disaster of The Day. So it is little wonder that we have achieved a society that demands much – but has few ways of paying for it.
This is made worse because the poor are the ones losing out (though the middle classes are feeling the ‘pinch’ as well) – and are subsequently blamed for their poverty by spending on “booze, baccy, and SkyTv”.
It’s a convenient ‘out’ for the Middle Classes not to accept the reality that we have brought this upon ourselves.
By considering a “poll tax”, Brown is buying into this current status quo of tax cuts/reduced revenue/cut services and doing nothing to address the core problem.
Quite inaccurate Frank.
NZ Tax Revenue as a percentage of GDP has pretty much stayed consistently around the 35% mark since the mid 1980’s. Before this it was hovering between the 25 to 30% level and thus was much LOWER before the reforms made post 1984.
You cannot blame tax reductions causing a fall in government revenue and then leading to perceived underfunding of government services because the statistics do not back you up.
Apologies, forgot to add the link to the graph that supports my case.
http://www.ird.govt.nz/resources/6/5/6506bc004c925ec29e8fdf34d41f12c2/bim2008-fig1.jpg
This is a person who wants to hold onto POWER at any cost . Years ago, a Mayor caught with his pants down ( in COUNCIL offices ) would have walked , would have done the decent thing , but these days there is a lot of remuneration associated with power – you get to make you and your pals wealthy …so he’s hung on ( echoes of Rob Ford and Clinton ) . He’s NEVER been a leftie , he’s always been a Brownie , he’s just used his Left wing base to grab power and this move proves his true colours.
“It is a sad realisation that this mayor has subscribed to the individual-is-all ideology”…
Well this was pretty evident when he was getting his rocks off in the Ngati Whatua room…
A very good article.
Why is everyone acting so surprised. This is a man who’s spent the last 3 years dropping in to stay at the SkyCity Casino Hotel so he didn’t have to spend time with his family. He’s got a selfish streak wider then John Key’s smile.
Nothing new. Len Brown has suggested a review even in his manukau days. Hardly selling out. Also how you describe Thatchers poll tax sounds exactly what had been happening in Manukau for a long time. Manukau based rates on annual value but there was also a universal charge and there was also a Government rebate.
Correcting myself I see thatcher’s uniform tax was on each adult resident. So bigger household means more tax.
I hate to say I told ya so but I told ya so . And you aint seen nothin’ yet .
I dislike Len Brown I think he has the morals of an alley cat. I think it is highly suspect that he wants more taxation resources, more power basically but doesn’t discuss how ACC would be more accountable and more responsible. It all seems to be about making Len Brown’s Fiefdom more comfortable and secure.
Having said that all is not fine in our fair cities. We have a problem of housing affordability. Something has gone wrong, the marketplace doesn’t work. With housing if interest rates go down, incomes go up, we move from single to double income families, we provide more government subsidies, WFF, accommodation supplements then house prices go up. All the gains are captured by the property owning class and the property less working class loses out. Inequality rises and a whole host of social problems get worse. This problem is called economic rent and is related to inelastic supply of housing. How we build new houses.
This problem is not seen in other markets, kids clothing down at your local department store hasn’t been going up in price because family incomes have risen. Although you could question if the weekly grocery shop from our duopoly owned supermarkets has a somewhat similar effect.
What to do about it. Well a good discussion is had here
http://www.macrobusiness.com.au/2014/03/nzs-english-ramps-up-housing-supply-side-attack/
And here
http://transportblog.co.nz/2014/02/27/bill-english-on-intensification-vs-sprawl/#comment-100140
Definitely follow the link to the Chris Harris paper about how Labour was on the right track in the 30’s and 40’s.
But then think about the Central government ideological football this created as discussed by Goosoid and myself here.
http://transportblog.co.nz/2014/02/27/bill-english-on-intensification-vs-sprawl/#comment-100212
These are big questions. They are about what sort of cities we want to live in. How to affordably build them. How to reduce inequality. This is a bigger issue than whether we like or dislike Len Brown.
This is what we get for not having a functioning left. And the liberal classes being all about style over substance. Len is a liberal, he just used left speech to get what he wanted – which if I remember rightly, was his cock sucked.
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