Crown ownership of foreshore

Hugh Barr
Wellington

There is too much secrecy over the government’s plan to privatise the foreshore and seabed. In comparison to the proposal to mine 7000 ha of Department of Conservation land, which everyone knows about, we are finding that the public is largely unaware that the government intends to repeal Crown ownership of more than 10 million ha of the foreshore and seabed. 

This includes all of the seabed out to 22km from shore. It is more than 1000 times larger than the Schedule 4 areas proposed for mining, and is larger than one third of New Zealand’s “dry” land area. 

Instead, the government intends to place most crucial coastal activities – including mining, aquaculture and development – in Maori control. This was not part of National’s 2008 election manifesto. It is new policy that has come about through lobbying by the Maori Party. So it needs detailed discussion with the public.

Compared with mining in the Coromandel or the Paparoa National Park, National’s foreshore and seabed proposal will have a major adverse impact on coastal users in all regions of New Zealand.

It is clear that National is hoping its plan to effectively privatise the foreshore and seabed can be rushed through Parliament without the public really understanding what’s going on. 

The government quietly released its sham review just before Easter, leaving only 20 working days for people to find out about their radical proposals and make a submission. Our attempts to extend the timeframe fell on deaf ears with a petition supported by more than 5000 citizens to the Prime Minister and Attorney General being ignored. 

In contrast, the mining review was readily granted an extension of 16 working days.

It should be the responsibility of the government to inform the public. We know the National Party is keen on privatising state assets but repealing Crown ownership of the foreshore and seabed so it can be privatised in favour of Maori interests is a massive step too far.

Hugh Barr is spokesman of the Coastal Coalition www.CoastalCoalition.co.nz

Emission trading

Paul McClean
Auckland

The government’s assertion that the Emissions Tax Scheme will cost average households $3 per week is simply not true. 

Indeed, these numbers even contradict the rises in prices, across the board, as indicated in the budget. This contradiction was also highlighted by Nick Smith’s view on the ETS’s impact through a rise of 0.4% in the CPI yesterday. Indeed, Mercury Energy came out this week saying a $100 power bill will increase 3.3%. 

My calculations using Statistics NZ 2009 data, for an average two-income household spending $956 a week on items such as rent, power, food, fuel, education, telephony and health, using the forecasted 0.4% rise in CPI, show the ETS, in conjunction with the GST rise, will raise their cost of living by $180. 

The point here is that the ETS should be considered in terms of another form of goods and services tax. This is due to its spread effect on all goods produced across the interconnected layers of industry, retail and distribution and so on. 

Using the totality of on this average households expenditure, total cost uplift creates a combined effect of the ETS with the GST rise as equivalent to raising GST to 18.84%. The costs for an average small business are therefore much higher. 

In doing so, I have revaluated this ETS/GST example using my own numbers, based on multiple supplier throughput (the supply chain of say four interactions from manufacture to tax payer/business). This means ETS/GST compounds along the chain. On the basis, and using a scenario where only 25% of businesses pass on the cost (which is conservative) the GST (inclusive of the ETS pass-through) equates to a cost to the taxpayer of 20.46%. The net effect is that the ETS will cause a dramatic slowdown in the economy due to sharp and relatively immediate price rising. 

When you look at the debt levels of what Bill English describes as a “brittle economy,” made up of numerous small to medium businesses, this creates a serious economic risk given the $250 million debt being taken on. 

Indeed, if ETS is considered as an insurance policy, as the government says, the risks become incredibly expensive premiums to pay for minimal effect on global warming.

Paul McClean is a consultant at www.raregroup.biz

Company tax

Noel Reid
Auckland

I have just come to learn of the “craziest” impost placed on companies in living memory; without publicity, notification or any justification. It also seems to have created a lot more work for Inland Revenue (it seems it has had to change or update numerous systems and records) as well as companies, all just for a “money-go-round” game.

Apparently, when the company tax rate was reduced to 30% a few years back, it was decided that companies would still have to “pay” 33% tax on dividends. This was achieved by requiring them to pay a 3% “RWT” (resident withholding tax) to IRD at the time any new dividend (with 30% imputation credits) was paid.

But nobody advised businesses, and not even your publication mentioned it. So the company gets extra work, as does the shareholder who has to claim the RWT back (true, a portion may otherwise have to pay extra tax. But why make everyone have to do something rather than just a few?). And of course there’s more work for the IRD to process and check the extra information.   

But wait. There is an upside for the government. Let’s not tell companies about it, and then when they fail to “comply” we can make a small fortune from the penalties we can impose.  

I propose the Joseph Stalin award be granted to the deviates who came up with this one. 

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