NZers and Aussies: Switching it up

[The Anti-Targ]

Since I am giving myself the honour of starting a new thread I thought I could take some liberties with the title. How presumptuous!

Hope it doesn't cause too much confusion.

Per thread rule, apropos of some of the talk at the end of the last thread about who has the best cyclones, and of course the existential issue of our time.

Edited October 5, 2022 by The Anti-Targ

[Paxter]

Haha. Only thing is that you need to edit your opening post to include a link to a classic Aus/NZ tune.

It’s tradition!

[The Anti-Targ]

40 minutes ago, Paxter said:

Haha. Only thing is that you need to edit your opening post to include a link to a classic Aus/NZ tune.

It’s tradition!

I read and I obey.

I was hoping this would be the thread that takes us through the NZ general election next year, but looking at the lifespan of the previous thread it won't make it, unless the govt announced a snap election, which they won't because they need all the time legally available to try to win back enough voter support to get back in.

Interesting relatively recent history. In my lifetime the average time a Labour govt is in power is 6 years (assuming the current govt lasts another year (more or less). The average time a National govt is in power is 9 years. In my life there have been 4 Labour govts (including the current one) with terms of 3, 6, 9 and 6 years. There have been 3 National govts all of 9 years duration. The first 3 years of my life were the last 3 years of a 12 year National govt. So I didn't count that one since I was only alive for 1/4 of that govt's time in power. But if you count that full time then the average National govt in my lifetime is 9.75 years.

So probably the safer money is on a change of govt next year.

Edited October 5, 2022 by The Anti-Targ

[Paxter]

Yeah actually a lot of similarities there. Aus has had more PMs of late, but in terms of parties in power in my lifetime (and just prior) we’ve had the Coalition for stints of 10 (Howard) and 9 (Turnbull/ScoMo/Crazy Onion Eater) years and Labor for 13 (Hawke/Keating) and 6 (Rudd/Gillard).

I’d expect the left to win again in NZ next year but it’s really too early to say. I didn’t think Aus would vote for a change this year.

Edited October 5, 2022 by Paxter

[The Anti-Targ]

Labour / Greens won't win if most of the campaigning narrative can be taken up by talk of high interest rates and high inflation.

To whit, another 50 point increase in interest rates today https://www.interest.co.nz/bonds/117873/reserve-bank-has-raised-official-cash-rate-35

On top of the topsy-turvey notion that high interest rates can address supply side driven inflation, we now have a weakening dollar as another motivator to increase interest rates. So more rate hikes on the horizon.

The govt can do piss all about this inflation cycle, so it better hope inflation starts to drop and interest rates along with it at least 6 months out from the election. The one bit of good news for the govt is that we have avoided a recession, so no one can credibly throw around the stagflation word, yet.

[Kalbear]

Finally the creators of the Pavlova are given top billing

[The Anti-Targ]

5 hours ago, KalVsWade said:

Finally the creators of the Pavlova are given top billing

And the flat white

[Paxter]

From a Labor MP on the legislated tax cuts:

Quote

He said those earning $120,000 “or even a bit more than that” were “not rich people” but people working hard to pay off their houses, educate their kids or, in the case of older workers, trying to engineer a comfortable retirement.

I'm sorry, $120k per year is a fucking great income. It may not be "rich", but it isn't someone who needs a lot of help from the government. Median earnings in Australia are currently around $50k per year. When are we going to focus on the millions of Australians earning around this amount or lower? 

Just tells me that both sides of the aisle are completely fucked when it comes to our tax system. 

Edited October 5, 2022 by Paxter

[The Anti-Targ]

I would say that in New Zealand $120K is roughly the level where, if a sole income home with a couple of dependant kids, the household can afford all the basics, service a mortgage on a basic 3 bedroom home in the non-swanky parts of town, enjoy modest luxuries (e.g. buying a new phone when I need it, though a mid-range one not the latest top of the line model, certainly no overseas holidays every year, or more cars than is needed for everyday use) not  and put away a meaningful amount into a retirement savings scheme without going further into debt. There's really no room for a lavish lifestyle at that income level, but you are certainly not wanting for anything.

That was basically my situation 7 or so years ago while I still had 2 offspring dependant on me financially. Fast forward 5 years and if I was still in that position I think $120K would feel a bit less comfortable, but still well manageable. However I would never say that I needed a tax cut ahead of those earning substantially less.

Rich is surely somewhat subjective when one gets to that boundary between rich and...comfortable(?). I would not have called myself rich, because to me rich means being able to spend say $1,000 because you want a thing without blinking and having to think about what you won't be able to buy now that money is gone. If you can do that then there really is no real benefit coming. Others might say that if you can spend $1,000 at need without having to worry about how to pay some of your bills for the next month or so, but you may need to cut back on discretionary spending for a bit, then you are rich. I can't say such a point of view is objectively wrong, but a tax cut would be objectively beneficial.

My impression is that $120K/year in Aus represents somewhat more affluence than in NZ as cost of living is a lower there than here, I think. 

[Impmk2]

17 hours ago, KalVsWade said:

Finally the creators of the Pavlova are given top billing

lies and slander.

Re 120k. Complete bullshit. And the biggest beneficiaries aren't on people on 'only' 120k as the largest reduction is on dollars after that point. People on 180k will be very happy though.

Usual crap execuses coming up about bracket creep. Surely we could just peg tax brackets to median income if that was the concern, rather than just giving money to people who are already doing very well.

[karaddin]

I remember looking a few years ago and I'm pretty sure $120k is in the top 10% of the country. It's also still utterly inadequate for buying a house in Sydney if you're paying rent because rental costs are basically the same as a mortgage but you've got to scrape together a deposit while paying someone else's mortgage for them. If you get an inheritance or something that gifts you the deposit, then yeah - it's ok to service the mortgage.

All of which is to say the problem there is, for the millionth time, the housing market. You don't fucking fix that with tax cuts, 120k does not need tax cuts. This country needs a tax hike on 120k, not cuts.

And the above is meant to be agreeing with Pax on focusing on the people that actually need it. If you can't afford buying a home on a top 10% income then how much worse is it for someone on the median income.

[The Anti-Targ]

6 minutes ago, karaddin said:

And the above is meant to be agreeing with Pax on focusing on the people that actually need it. If you can't afford buying a home on a top 10% income then how much worse is it for someone on the median income.

You will have no aspirations, you will rent shit holes, and you will be grateful for your lot in life you whining ingrate!

Or something like that.

[karaddin]

2 minutes ago, The Anti-Targ said:

You will have no aspirations, you will rent shit holes, and you will be grateful for your lot in life you whining ingrate!

Or something like that.

But "just get a better job". Clearly 100% of the population can have jobs that pay in the top 1%! I assume at the actual 1% point you can actually afford to buy a home.

[karaddin]

Decided to check that, top 1% is $246k so not as comfortably as I assumed! The obscene amount of wealth buried at the top of that 1% really just dominates everything, of course they have the power to fuck over countries to their own gain.

Which means that the 180k we were discussing getting genuine advantage would be something like the top 4-5% of the population. Very fairly distributed clearly, that's your core voter base right there Labor.

[The Anti-Targ]

It's preying on the aspirations of people on $70-$100K who believe they will one day reach the rarefied heights of >$150K (before $150K becomes the new $70). I'm not on $150K yet, but when I get there, which if I work and pray hard enough I eventually will be, I don't want to be paying all that tax, so I will vote for the people who are going to protect my future income from being too highly taxed.

Either that, or enough people still believe that money to the top 1% eventually means money for the 99%. Successive governments have conditioned people to believe taxation starves a country of investment and prosperity because successive governments have given large tax breaks to prominent forms of overseas investment (tax breaks to movie studios being a big one in the last 20 years or so). The way the govt has supported the establishment of new industries didn't have to be in the form of tax breaks.

. 

[Paxter]

I'm starting to feel more confident that Albo and Chalmers will do the right thing here. The Truss thing has been a boon.

[The Anti-Targ]

Can we coin a new tax policy phrase: The Truss Effect? or the Kwarteng Quandary?

Here there have been some opinion pieces written about how the govt needs to look at tax policy and that it will likely be an election issue. We have some things that should be looked at for sure. One is that family support benefits have not been indexed, so when family support benefits were put in place those benefits were to start to be clawed back at an income of $50K. Now $50K is basically the new $40K, so really the claw-back provisions shouldn't start kicking in until maybe $65K or $70K. And maybe while tax rates shouldn't be changed, the tax thresholds should be adjusted, at least for the middle bands. I don't think there is any need to change the 39% rate for income earned over $180K. 

Without any proper analysis I would change the lowest rate from up to $14K to whatever the minimum wage is annualised on the basis of a 40hr week (~$40K I think). It makes no sense for someone on the minimum wage to be paying anything other than the minimum tax rate, and they should probably be paying even less through tax breaks.  The two middle bands should also be lifted to kick in at about $10 or $20K above what they are now.

I don't really agree that tax thresholds should be tightly indexed to inflation, but they should be subject to regular review and adjustment with both cost of living and the govt budget being taken into account.

It is interesting to see how the tax burden is spread among the population. The spread seems not far from about right, with notably the top 2% of earners paying ~26% of the income tax, and the top 20% of the population paying about 68% of the income tax. 

When you add in GST with its regressive nature it brings more of the tax burden to the lower income earners. And that really needs a rethink.

Edited October 7, 2022 by The Anti-Targ

[Paxter]

Yeah countries like Brazil index social spending to inflation and it ends up being a massive headache for governments as they can never get on top of their deficits. Similar thing occurs on the tax side.

[Impmk2]

Think I'd proposed tying brackets to median wage rather than inflation (how tightly / loosely tbd), in any case there has to be a better way to deal with bracket creep rather than giving extremely well off people a big tax cut every couple election cycles and using it as an excuse. I mean ideally government would deal with it responsibly but that isn't on the cards. How about some sort of biennial independent review and changing the brackets depending on economic conditions?

I know government would be loathe to give up any power, but they do it when it comes to setting minimum wages and award rates, which also impact tax income.

14 hours ago, Paxter said:

Yeah countries like Brazil index social spending to inflation and it ends up being a massive headache for governments as they can never get on top of their deficits.

Aren't pensions here indexed?? Isn't a small part of government spending. I mean I'm probably not helping my point in that we struggle to get on top of the deficit, though that seems to be more a case of using projected surpluses to give tax breaks.

[The Anti-Targ]

2 hours ago, Impmk2 said:

Think I'd proposed tying brackets to median wage rather than inflation (how tightly / loosely tbd), in any case there has to be a better way to deal with bracket creep rather than giving extremely well off people a big tax cut every couple election cycles and using it as an excuse. I mean ideally government would deal with it responsibly but that isn't on the cards. How about some sort of biennial independent review and changing the brackets depending on economic conditions?

I know government would be loathe to give up any power, but they do it when it comes to setting minimum wages and award rates, which also impact tax income.

Aren't pensions here indexed?? Isn't a small part of government spending. I mean I'm probably not helping my point in that we struggle to get on top of the deficit, though that seems to be more a case of using projected surpluses to give tax breaks.

I don't believe that's the case here, but if it is there then that seems like a good thing.

An independent tax commission that would set the tax thresholds could work if it is given the right sort of terms of reference. But that would not stop tax from being a political football I think, since right-wing opposition will always like to promise tax cuts, and left wing oppositions will always like to promise raising upper tax levels. The previous labour government campaigned and won on a promise to introduce a new upper tax rate, and the current labour government campaigned and won with the same promise, while the previous national govt campaigned and won on a tax cut promise, which mostly served the rich.