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Insights 4: 15 February 2019
Bryce Wilkinson writes for the NBR on the case against taxpayer guarantees for bank deposits
Latest report: KiwiBuild - Twyford’s Tar Baby
Eric Crampton writes for Newsroom on skewing procurement

Share the data
Dr Eric Crampton | Chief Economist |
Only the officials at Inland Revenue know why they commissioned a poll on Kiwis’ attitudes to tax that included questions about the respondents’ general political orientation. Releasing the polling data should be part of fixing any perceived problems.

Hamish Rutherford’s reporting at the Dominion Post raises questions about the Department’s political impartiality.

If the Department had polled Kiwis about potential changes to the tax system in order to assist the government’s messaging around the Tax Working Group’s proposals, or to assist in intra-coalition negotiations around the government’s response to the Tax Working Group, that would be just a little off.

But there are plenty of other potential explanations. Sincere curiosity is one. Testing that proposed tax policy changes are not likely to generate substantial dissatisfaction and affect tax compliance is another, as it might affect staffing decisions within the Department. A tax facing broad opposition may require more auditors and investigators to ensure compliance.

It is even possible to imagine a Department desperately trying to stave off damaging changes to the tax system by seeking evidence that opposition to those policies is not restricted to the rich, or to right-wingers.

We just do not know.

The Dominion Post reports that State Services Minister Chris Hipkins has asked State Services Commissioner Peter Hughes to investigate the polling, with Hipkins laudably noting the paramount importance of a politically neutral public service.

Thorough investigations take time, and the Tax Working Group’s report is due to be released next week.

It seems unlikely the data was collected for partisan purposes. If the Dominion Post had reported that MBIE’s Provincial Development Unit were up to partisan shenanigans in constructing implausible job-creation figures, it would not be that hard to believe. Inland Revenue is different.

Regardless, there is a good way of ensuring the data does not provide partisan advantage, whatever the reason for its collection: release the data to everyone. It is harder for data to provide partisan advantage when all parties have the data – and quickly.

I have consequently made an Official Information Act request for the full survey data. When we receive the data, we will immediately make it public. We hope the data is released promptly, whether to us or as a broader public release, helping preserve New Zealand’s public service’s well-deserved reputation for political neutrality.

A better local treatment of equal unequals
Dr Patrick Carvalho | Research Fellow |
“When equality is given to unequal things, the resultant will be unequal,” Plato once said.

The ancient Greek philosopher would then have certainly condemned our local governance rules.

Life in fast-paced Auckland is as different from rural Grey District as the humming touristic Queenstown-lakes area is from quiet Gore.

Nonetheless, in a highly centralised New Zealand, unbending regulations are equally forced upon all communities regardless of their unequal circumstances.

This political arrangement is counterproductive.

Thus, it is encouraging that the Productivity Commission is inviting submissions to improve local government funding and financing.

In our submission delivered today, The New Zealand Initiative is recommending a fresh rethink of local government through the lens of localism.

That is, self-rule should best rest at the lowest possible tier of government.

Rather than looking for preferential treatments for the unequal circumstances among local governments, we instead advocate the freedom – and responsibility – of self-determination at a local level.

Take the housing shortage kerfuffle in New Zealand, for instance.

Our research since the past seven years has consistently shown that the much-vaunted housing crisis is a self-inflicted harm. Poor incentives lead to poor results.

Due to rigid central rules, local governments – and by extension local ratepayers – bear much of the cost on new developments such as high upfront infrastructure charges and financial liability for any flaws in building consent.

On the other hand, most of the fiscal gains from new housing flow directly to central government in the form of increased income and GST collections.

Little wonder local councils are reluctant to issue pro-growth zoning plans.

Similarly, tourism has been an increasing source of funding pressure for some communities, particularly those with a small ratepayer base and a large number of visitors.

Without proper funding arrangements, local infrastructure – from wastewater to congested roads to overcrowded public spaces – fails to deliver fit-for-purpose services.

This situation is bad for the tourism industry but even worse for frustrated residents.

Despite a few tourism-specific revenue streams, much of the related financial burden still rests on ratepayers, while the economic gains (again) largely flow to central government coffers.

Surely alternative arrangements could, and should, be in place to deal with these incentive mismatches.

It is high time local issues are paired with local solutions.

The dangers of lawn bowls
Joel Hernandez | Policy Analyst |
Lime scooters are Satan’s own vehicle. If you ride one, you will lose control, scrape your knees, maybe even break a leg. God forbid someone die on a Lime scooter. At least that’s what the worry-warts want you to believe.

Since the arrival of Lime scooters in New Zealand late last year, an e-scooter brouhaha has overtaken Auckland, Christchurch, Dunedin and now Wellington’s Hutt Valley.

Sprawled all over the NZ Herald and Stuff are articles about public outrage, demands for regulation, and a call to ban e-scooters. This clamour for change was triggered by news of the ACC receiving more than 600 claims in the first few months of Lime’s arrival.

At more than 1 million Lime scooter trips completed, 600 claims translate to a perilous 0.06% accident rate. Notably, only 20 accidents were the result of a crash; more than 500 were the result of people losing balance or personal control.

Although some of the crashes were due to Lime scooter malfunctions, banning e-scooters would be a heavy-handed response. We didn’t ban cars in the 1950s when they were death traps; instead, we recalled and improved them.

If we’re going to start banning Lime scooters based on ACC claims, then we better start banning every activity under the sun too.
Want to play rugby? Can’t do that because of the 57,000 or so claims per year related to rugby union.

What about other modes of transport like cycling? Not a chance. Cycling is an ACC claim on two wheels. Kiwis make close to 20,000 claims per year – 6.6% of them related to vehicle collisions.

Want to celebrate your birthday with a few drinks and some dancing? That’s banned too. With an average claim rate of 7,000 per year, dancing is even more dangerous than riding a Lime scooter.

Now that we’ve banned everything, are we all to succumb to the quiet life of a grandma or a grandpa? Yes, but only if you don’t play lawn bowls, which has an average claim rate of 1,100 per year and costs the ACC $1 million in claims every year.

At the end of the day Lime scooters may be a little unsafe, but so is everything else.
On The Record
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