Mixed Messages
This from the Herald website:
It is clear from the headline that the editorial slant is towards a levy, rather than increased borrowing. Unfortunately for the Herald, their own online poll has exactly the opposite result.
In all fairness, this is an online poll and will not be terribly reliable. In addition, there will likely be a bias towards Auckland residents who are, apparently, much less in favor of a new levy. This is hardly surprising. There are rumours of the infamous petrol levy being reinstated. Mr. Brown appears to be spending extra money – that he doesn’t have – at an alarming rate. Aucklanders are looking nervously into a future of serious levy and rate rises and are none too keen to add to them.
Having said that, it should be pointed out that the Herald takes every opportunity to use their online polls to imply that this is what people are really thinking. So it is only fair that small amount of gentle mockery is in order. Especially since the sub-editor apparently thinks that the word “majority” applies to 40%. Last time I looked, the word meant more half.
Besides, the poll that generated the headline is one by UMR, Labour’s favorite polling company. True to form, UMR have used the “divide and conquer” ploy to get an acceptable result for their paymasters. The poll gives three options: A levy, an increase in debt and a cut to state services. However, there are not three choices, but two. A levy or a simultaneous increase in borrowing and reduction of state services to off set it. Without the two combined, the option of borrowing merely translates to extra taxes later, rather than upfront.
If you combine the results for the second two options, suddenly 51% of the country is supportive of National’s plan, against 40% who wish for a levy. The “majority” of 40% is, in fact, a minority. The picture is even murkier when you realise that the government will not be able to rebuild Christchurch without borrowing – even with a levy. If we want to rebuild Christchurch, we are going to have to borrow.
Higher taxes reduce GDP
”Interestingly, the split in the UMR poll closely matches the current split in the polls, with National above 50% and Labour and the Greens combined at 40%. I suspect this is not a coincidence.
Russel Norman seems to think that reducing government expenditure will somehow extend the recession. Even if you accepted this to be true (and you know that the MacDoctor thinks it is nonsense), the government is also proposing to spend billions of dollars on Christchurch. I find it hard to see how a reduction of government expenditure in welfare for families and students can cause a recession when it is being matched by a massive capital expenditure in Christchurch. Actually, recent research indicates that such expenditure for rebuilding will not change GDP at all, rather confirming the Broken Windows fallacy, but I digress.
Let’s face it, a levy is just a name for a tax that is earmarked for something specific. If there is one thing we do know in economics, it is that higher taxes reduce GDP. For a country teetering on the brink of a second recession, the last thing we need is a new tax. I suspect that the question “Do you support a temporary levy to help the Christchurch rebuild?” would get far less support if it was phrased “Are you prepared to pay an extra 1.5% out of your salary for the next 10 years to help the Christchurch rebuild?” Far better we commit to spending less on services that we don’t really need as a country than drain yet more of our hard-earned income into the bottomless pit that is government.
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Apr 5 11 9:51 am
Many years ago Gallup in the UK ran a poll on health spending.
In response to the question ‘Do you support signifiantly increased spending on the NHS?’ or words to that effect, there was a massive positive response.
However, when the question was worded ‘ Do you support increased spending on the NHS which will mean you paying at least 5 pounds a week more in taxes’ then the response was somewhat underwhelming in positivity
Many will often support a feel good type question, but when faced with specifics will recoil in ‘horror”
Apr 5 11 9:55 am
I would have thought the most important part of the poll was it stipulated the levy to apply to income over $48,000. You’ll always get a plurality to spend other peoples’ money.
JC
Apr 5 11 10:14 am
“Rebuilding’ Christchurch is going to cost at least $200 Billion – perhaps far far more.
NZ simply cannot afford it
Whether by borrowing or taxing, we simply don’t have the money.
OK – there’s one thing we could do: eliminate basically the entire welfare state including super.
Then we can afford it – but then we can afford lots of things.
The welfare state – health, education, super, benefits – is where the taxes go.
There really isn’t any “fat” to cut anywhere else that makes any significant different (on the order of billions of dollars).
so the fair question is:
a) Do you want to demolish and pave over Central Christchurch – or b) do you want to privatise state schools, hospitals, and stop all benefits and super payments
There’s no question a huge majority of Kiwis will choose b).
The government should call in the RAAF F-16s, get them to waste central Christchurch – starting with the cathedrals & “arts centre” – then bring in the dozers and flatten the lot. Game over.
Apr 5 11 10:20 am
Ahh, option c) both options a) and b)
The only option that might conceivably allow NZ to continue as an independent economy.
But tax cuts? You must be kidding!
Apr 5 11 8:24 pm
Actually, there is probably enough money in the Cullen fund for a reasonable rebuild of Christchurch. That is the only other option to borrowing (except, of course, not rebuilding)
Apr 5 11 10:11 pm
The situation with Christchurch illustrates how the notion that “if you’re insured, you’re ok” is fatally flawed. If the insurance model worked, there would be no issue.
Apr 5 11 10:23 pm
The role of insurance is to deal with the financial implications of the rebuild. It is silly to think that insurance has any role in the immediate management of a disaster.
I fully expect most insured people to recover well in the medium future when their policies pay out. The uninsured will be destitute for years to come, unless they see to their own recovery, rather than relying on government intervention
Apr 6 11 9:51 pm
Silly thing was that the Green’s own survey found 30% support for spending cuts.
scrubone´s last [type] ..Simile and say “We’re about to get very- very wet”