JD
Having watched Qiulae Wong, the Opportunity Party leader, being interviewed by Jack Tame, it is clear that she, and presumably those who advise her, have no idea when it comes to the two key planks of their manifesto. What will be the effect of their increased tax and land tax impositions and the Universal Basic Income, with all of the costs thereto attached?
If we look at three different aspects of the interview its easy to see where facts end and ‘Opportunities’ begin.
Public Service Job Cuts.
When pressed on this Wong equivocated for a while but finally agreed that the job cuts would number 2,000 and these would come from the Ministry of Social Development staff who would not be required to “Tick boxes on benefit eligibility” because the UBI would substitute for these benefits.
However TOP’s claimed annual savings in addition to the NZ$977 million at MSD also include a further NZ$770 million from savings in IRD, MBIE, Oranga Tamariki and Justice.
This total saving of NZ$1747 billion, necessary to balance TOP’s books, even assuming an average, fully loaded employee salary of NZ$150,000 translates into headcount cuts approaching 12,000.
Clearly not all of the savings would necessarily come from headcount cuts, but, equally, the 2,000 figure Wong quoted to Jack Tame is under-called by several orders of magnitude.
A mistake then? Or a deliberate lie? Or just an example of the pie in the sky figures TOP are bandying around with no basis in reality?
Fiscal Holes.
Tame started with a simple calculation based on NZ population stats that suggested the UBI would cost NZ$80 billion per year. Wong corrected him, saying that not all members of the population would qualify, claiming 500,000 would not and the actual cost was therefore NZ$69 billion.(Based, as she said, on 2024 figures.)
However, there is one glaring example that neither Tame nor Wong touched on and that is the amount of land tax that would be deferred by pensioners unable to pay the $10,000 plus per year from their existing pensions (said pensions would not increase because the UBI just rolls into the current pension: it does not add to it).
Logic suggests that pretty much every pensioner would opt for the deferral out of fiscal necessity and the subsequent result is a likely deferral in the vicinity of NZ$6 billion per annum.
Set against TOP’s estimated UBI cost of NZ$69 billion, that’s a 10 per cent fiscal hole that would have to be plugged by more borrowing or greater tax payments made elsewhere.
Tax and Be Damned.
And so we come to the key statements made by Wong, for which the technical term, I believe, is ‘Wishful Thinking Waffle’.
Tame pressed for answers on two fronts. First, the fact that 500,000 existing Kiwi residents would, for various reasons, not be eligible for the UBI but would, under TOP’s increased tax rates, be faced with “thousands, or tens of thousands of incremental taxes”. Using an example of a professional couple, earning between them $250,000 per year and owner occupiers of an average Kiwi property, Tame, using TOP’S own tax calculator showed the couple’s incremental tax bill to be NZ$27,000 per year.
Second, regarding the 1.5 million of our best and brightest currently living overseas who would not qualify for the UBI for five years if they returned, but would similarly be hit with incremental taxes in the same $20,000 to $30,000 per year ballpark...Why, Tame logically asked, would the 500,000 existing non-eligible residents facing these huge tax increases not simply emigrate to Australia or further afield?
And, similarly, why would the 1.5 million Kiwis already overseas, and faced with a similar tax bill, not simply stay overseas rather than voluntarily coming back to pay extra taxes to fund the UBI for people already here?
And that’s when Wong’s answers entered the realm of Wishful Thinking Waffle.
They would, said Wong, look through the massive incremental tax costs associated with staying or returning and instead adopt the altruistic stance of realising that NZ would become “more attractive in the long run” because of reduced housing costs, student loan forgiveness and more investment in Innovation, thus making the country a better place to live, even though the extra taxes will be kicking them back down the ladder for the first five years.
No facts or cost analysis of these ideas, just the blind assurance that Nirvana would eventually arrive and all would benefit, even those who had paid tens or hundreds of thousands of dollars in extra taxes whilst they wait the mandatory five years for their UBI eligibility to arrive.
In 1766 – Adam Smith, in The Wealth of Nations – said this:
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
Qiulae Wong and TOP seem to think they have invented a brave new world where self-interest no longer holds sway. To which the only answer would seem to be – good luck with that.
However, I should add one rider, the eight per cent of the electorate currently saying they will vote for TOP will probably never see or consider any of the problems, fiscal holes and costs associated with their policies. The only thing on their minds will be Free Money, Free Money, Free Money and damn the consequences as the country sinks even deeper into the slough of redistributive dependency.
