Every year on ANZAC Day, the 25th April, New Zealanders celebrate their "coming of age" as a country, when as combatants in the First World War campaign in Gallipoli, along with their allies, Australia, France and Britain, they met their doom in the unsuccessful campaign in the Dardanelles to relieve the stalemate in the European theatre of the war, by attacking Germany's allies, the Ottoman Empire, directly. Winston Churchill was the main proponent of this course of action, and the idea was to support the troops with the overwhelming sea-power of the British Navy, providing the necessary bombardment of Turkish positions. But the plan came unstuck for various reasons, and was, with the forces provided, always going to be a difficult and marginal endeavour, but not impossible. In fact the Turkish forces at one time were very much fearing loosing, but they thanked irresolute British command for scraping through . The failure cost 120,000 British casualties, 27,000 French, 7,500 New Zealand and Australia 26,000. But dire as these figures were, they were but a foretaste of the numbers of casualties yet to be seen on the Western Front. The first landing took place on the 25th April 1915, and is commemorated by Australia and New Zealand as ANZAC Day (the ANZACs being the combined Australia and New Zealand Army Corps). For New Zealand in particular this day is, after the Treaty of Waitangi, the most important symbol of New Zealand nationhood. Each year we remember and mourn the sacrifice of so many lives in war, a sacrifice made for the British Empire, and for the coming generations in this country. In this war, New Zealand suffered proportionately more deaths than any other allied nation, about 16,000 from a population just over one million.

Only twenty-four years later, New Zealand again became involved in an even more deadly world-wide conflict, and again its soldiers, sailors and airmen made great sacrifices, over 11,000 loosing their lives from 30,000 casualties. We don't have a separate day to commemorate these sacrifices, as ANZAC day now remembers both wars. Last year, one further major event occurred with the internment of the Unknown Warrior, disinterred from the fields of France, and reburied here in Wellington under a simple black marble slab in front of the National War Memorial. I attended this moving ceremony. Subsequently, skateboarders have shown their disinterest in history and sacrifice by skateboarding over the memorial and leaving their own imprint on history in scratches on the marble.

New Zealanders also take great pride in their pioneer history. Whilst history can also record the illegal confiscation of Maori land, now being partially rectified by the Treaty of Waitangi Commission, it also records the great hardships and continuing endeavour to make a better lives for themselves and their families and children. Most immigrants came from the UK, and they left a hard life there too, in big industrial cities, and farming areas, and they must have found the "taming" of the virgin land an heroic endeavour. That pioneer spirit continues in the New Zealander's reactionary attitudes to land ownership and development. There is a very strong, and now anachronistic, attitude to land ownership that seems to say, simply, "it's my land, I can do what I bloody well like with it, and no-one is going to tell me any different". This explains the difficulties we are presently experiencing in regard to public access to farmland, and controlling development along the coast and in "iconic" areas. It is an aspect of New Zealand society that I find hard to be sympathetic with. But the tales of the pioneers, of the drovers, the gum-diggers and bushmen, and stations (large farms) of these early New Zealand days are to the New Zealander a source of pride and legend. We should though also recognise the huge scale of environmental destructiveness that wresting productive farmland from temperate forest engendered, and we shouldn't use too strongly tinted rose-coloured glasses in providing an altruistic motive for a good deal of basically mercinary endeavour. But still, no-one living in this fair city of Wellington, with all the amenities that this brings, sitting comfortably in their heated lounge, with their computer on their lap, typing these words as I am, can fail but be impressed by the continuous labour that these pioneers endured, and the optimism required to overcome the difficulties they faced, in their efforts to improve themselves and the prospects for their descendants.

And what of today? What sacrifice is our society prepared to make for our descendants?

I write this now, as you may have noted, we are not far off an election. I have written elsewhere about taxation and society and I have also written about the coming revolution related to global warming and oil depletion. We are being promised tax reductions by National, (though I note a recent downplaying of expectation here) and very major ones by Act. But this is an out-and-out bribe from an unconcerned and uncomprehending polical clique. You will know if you have read other parts of my site, that Don Brash doesn't seem to have a clue about the imminent dangers our society faces. I have likened these leaders to the leaders who took our ancestors over the trenches at the Somme, and ourselves to lemmings if we choose to follow them and don't think for ourselves. I can't tell you who to vote for, but I can reasonably ask you to learn and to think, activities innate in our human species, but not always exercised to their fullest extent. To deal with the imminent energy and ecological revolution will require foresight, commitment, collective endeavour, qualities singularly lacking in almost all politicians and far too many business people. There are honourable exceptions, and in New Zealand the Green Party and the Maori Party (see also Tariana Turia's comments on Peak Oil) are doing their best to take these challenges seriously. To reiterate, the particular challenges we face are:


Of course, all these issues are interconnected. The main thing that connects them though is there overwhelming importance and their immediacy. No other issue, with the exception of nuclear proliferation and warfare, comes close. To overcome these challenges will take major, and continuing investment. We have to make up for years of infrastructural neglect, and then add major infrastructural improvement.

Here are some things we need to spend money on.

Transport infrastructure

For instance, just today (20/6/05) an article in the Dominion confirms the problems with our rail infrastructure. From knowing the the rail infrastructure was bad, a review of the rail network now reveals that it is "appalling" (surprise, surprise) . The previous owners of the rail network, including two wealthy expatriates who now reside in Switzerland, bought the network and the ferries for a song. They then asset stripped what they could, and raked in what money they could from their monopoly without making any investment at all, and when the rail network was no longer able to function in any meaningful way, sold it off. (Though this process of asset stripping was begun earlier by the Labour administration of the eighties) The government bought back the rail network for a nominal $1 and now face an expenditure of hundreds of millions of dollars in trying to restore the crumbling infrastructure. In addition, Toll Holdings, now the owners of the ferries and rolling stock, also face major investment. Our railways have been allowed to deteriorate to such a level as to make comparison with the third world invidious, mostly the third world do a better job. And how did this happen? A government anxious to avoid expenditure, uncertain of public opinion, (a public welded at the hips, as one minister recently said, to the car) thought that by privatising this asset they would be able to avoid these difficult decisions, washing theirs hands as it were. So much for the benefits of privatisation (see also Air New Zealand). It is difficult to know what expenditure is required merely to bring the existing service up to scratch, making the lines and bridges safe and renewing the entirely decrepit rolling stock, but I would suspect at least a billion dollars. To include upgrading, which will be required because of the need to improve rail to mitigate climate change and oil depletion, means fully electrifying and upgrading the trunk lines, investment in suburban rail in Auckland, and light rail in this and other cities, we are talking several billion dollars. Just as in Britain we are finding to our cost that repairing deteriorating infrastructure is a lot more expensive than investing in it on a continued basis. The Americans have still to find this out, as they haven't even started yet.

Other transport infrastructural needs are a much improved bus service in our major cities, a much improved cross-country bus service and an expansion of the trolley bus service in Wellington. There should be no further major investment in road infrastructure other than relieving major accident black spots and in ongoing maintenance and upgrading if needed of our present roads. So no expenditure on Auckland motorways (though see this analysis from the Alliance party) Wellington Transmission Gully, or Auckland Harbour crossing for road traffic. An Auckland harbour crossing might be needed for a rail network. You can see here where billions of dollars are needed. All the billions that people have up to now been insisting should be spent on roads, must be funnelled into public transport. Increasing petrol tax as mentioned elsewhere on this site will help pay for this. A rise of petrol tax of 50c per litre will bring in about $400 million per annum, allowing for about 20% reduction in petrol usage, though these figures are highly debatable, because we really have no idea exactly what will happen post peak-oil. Over twenty years, this will provide about $8 billion for rail and public transport infrastructure. Long before twenty years are passed, petrol shortages and prices of oil at US$100 or more are going to mean that this investment will be a godsend to this country, which will otherwise be at risk of terminal economic decline from the lack of transport facilities. Even higher rates of taxation might be inevitable, lower speed limits and additional import duties and higher license fees for low-efficiency vehicles will reduce oil consumption and help towards a more efficient economy and provide a few short years of breathing space to deal with these infrastructural issues. .

Energy Efficiency

Mentioned elsewhere on this internet site. But to reiterate. At least 500,000 inadequately insulated older properties, costing about $3000 per home to insulate floors, attic space and walls, equates to $1.5 billion. Pay back time for this investment within ten years. Also additional benefits in a more comfortable home, and major reductions in childhood asthma, eczema and other diseases associated with damp and cold homes. Solar hot water heating would also feature strongly in energy conservation, renewable energy. The Green Party have a suggested a government organised scheme to install such facilities in 125,000 homes. Additionally, solar hot water heaters should be mandatory in all new private homes, as should minimum design for passive solar heating. Low energy appliances, help with purchase and installation of heat pumps, etc. This all points to an expenditure of several billion dollars.

Health

Despite the fact that I am a doctor, I haven't written much about health matters. In fact, I was for a while so depressed by the health reforms of the nineties that I haven't been able to approach the subject unemotionally. The most immediate reform required is the scrapping of the Community Services Card and providing the equivalent low-c0st access to the whole population. This expensive, bureaucratic and socially divisive scheme should never have been introduced. I don't know the exact costs of running the scheme, but I doubt that it is under $40 million p.a. This is money that would be much better expended on health care than a bureaucracy. The cost of scrapping this and providing low cost health care to all would be about $300 million. The cost of access to primary care in New Zealand has been a scandal for years, and is a major disincentive to timely medical treatment for many low to medium income earners. The cost to the country will be zero, merely shifting expenditure from the individual to the exchequer does not in itself increase costs. Indeed, scrapping the community card will release $40 million extra dollars. The fact that well off people will get the same benefits is neither here nor there. Wealthy people pay a lot more tax, and rich or poor, money is not the main issue when you are sick. However there would be increases in taxation on high income earners to help fund this and to try and ensure a more egalitarian society. Most New Zealanders will also be aware of the problems in hospital care. Crowded casualties, inadequate staffing, difficulty attracting nurses and doctors, delays in treatment of serious conditions etc. are all signs of a secondary health sector barely coping with the pressure of illness and injury requiring treatment. This is related to three main factors, first the ageing population, second a rapid increase in population due to immigration and third the increasing cost of medical technology. There has also recently been a substantial (and deserved) rise in salary for nursing staff. Of course there are other major health issues, for instance, teenage pregnancy and the high level of sexually transmitted disease is extremetly worrying and needs a good deal more input to ameliorate. Funding for the care of the old has also been a long-standing issue. The health sector alone could sop as much money as we would care to give it, there are limits, but at present we spend 8.4% (public plus private) of our income on health, we could afford, and need, to increase this.

Education

There are several issues that require attention. I select two.

Continued lack of educational attainment by Maori. This is a very divisive problem, involving as it does positive discrimination and issues across the pakeha-maori cultural divide. I'm not sure what I can add to all the experts that are trying to deal with this, but I know investment will continue to be needed for many years. As long as New Zealand has a substantial section of its population failing to achieve anything like its full potential, then this is an economic and social drag on all of us. Much remains to be done, and money will be required to correct this - it will be an expensive investment, but in the long run this investment will be repaid several-fold by increased Maori economic activity and better social adjustment. Many of these comments relate also to New Zealanders of Pacific island descent. See here for a pdf of education and earnings of maori and non-maori (year 2000) and here for further figures. These latter show some gain by Maori over the last few years.

The student loan scheme. I have been resolutely against this scheme from the start. A meaner and more cynical insult to our future generations would be harder to imagine. That a generation that had their education fully funded by the New Zealand public brought this policy in, merely rubs salt into the financial wounds. The likely plateau of loans will be about $12 billion, a major economic drain on young people setting out in life, and a major distortion in our financial system. Last year I picked up a couple of Danish student hitchhikers. They were horrified by what they had learned about our student loan scheme, they actually get an allowance to attend university and free education (though I have been unable to confirm this on the internet - I will correct this information if someone can give me more details) Now if Denmark was some poor impoverished country then one might agree that the cost of free education and allowances was not helping the country, but to the contrary, Denmark has been consistently much wealthier than New Zealand. I think they have something to teach us. This is a recent government report on the scheme.

One of the unintended, but foreseeable, consequences of the student loan scheme and the way funding is related to the number of the students, rather than the quality or usefulness of the courses, has been the commercialisation of tertiary education, the bums on seats phenomenon, and the proliferation of poor quality courses to boost numbers and income. The shenanigans at the Maori tertiary institute, Te Wananga o Aotearoa, are a prime example of this, with the added complication of Maori education issues superimposed. The funding for this institution increased from a $8 million to $239 million in five years. I cannot understand how the minister of education could have allowed this "bubble" to continue without dealing with it sooner. The meanest intellect would have realised that there is no way on earth that any institution could expand at this rate, and be under any sort of educational or accounting control.

We certainly don't need to wait for results of an enquiry (which will be after the election, I'm sure) to know what it will say - that the vast majority of courses were poorly organised or taught, irrelevant, or falling well short of tertiary education standards, that accountability was non-existent, that contracts were not contestable, etc. etc. , because we've heard all this sort of thing before, for instance in language schools and other similar institutions. Public money, lack of accountability and add in the Maori or other racial dimensions, is a recipe for fiscal irresponsibility. But this sort of thing isn't confined to this particular institution. There are many courses in more traditional education institutions that should also be opened to the light of day. With all my daughters having attended university, my personal contacts with students has been quite extensive, and there appear to be a disturbing numbers of courses ill-taught and poorly organised. Students should have the legal right to refuse to pay for these substandard courses, but students are vulnerable to the providers of these courses. There needs to be a thorough re-examination of all tertiary institutions, the sort of courses offered and the numbers of students receiving substandard or meaningless qualifications. We need to involve business and commerce more directly, which is being addressed by the present Labour administration. A return to more apprentice schemes or training positions and night-school further education will be highly beneficial.

For some courses the expenses and the loans taken out are horrendous, e.g. medicine and dentistry. Our student loan scheme seems to be designed to ensure that we loose our best and most needed graduates overseas, where there is a high chance they will remain. This indeed appears to be what is happening. The whole scheme needs re-examination and the scheme should be gradually phased out or at the minimum capped, as we get to grips with these tertiary issues. To students who cannot live at home, there should be a living allowance paid, and there should be financial incentives for graduates to stay in New Zealand .

The Environment

The major environmental issue is Global Warming, and this is covered above and elsewhere on my web site. But there are other major environmental issues. Some I have mentioned elsewhere on my web site. Remember the Millennium Ecosystem Assessment. Here are some local issues.

Soil erosion and continued inappropriate use of vulnerable hill country to grazing. I have mentioned the East Cape region elsewhere, but there is a good deal of land of marginal utility which is vulnerable to major erosion. With the likelyhood of Global Warming and more storm conditions, there needs to be a country-wide inventory of vulnerable lands and a scheme for reforestation or farm-forestry for these areas, with compensation to affected land-owners. Presently timber prices are low, which has caused an unreasonable panic and highly questionable sell-offs by commercial New Zealand companies. But timber, along with agriculture, has always been subject to major price fluctuations. Whereas local timber companies don't seem to be able to take the long view, a major flaw in many commercial endeavours, the government can do this. In fact the best time to plant is now, when forest land is cheaper, we will reap the rewards later. We also need to diversify our plantings.

We need to set up a purchase fund of about $50 million p.a. to buy iconic landscapes and coastline and islands, to protect from the ugly developments that I have also mentioned elsewhere. Successive governments seem extremely reluctant to interfere with New Zealander's anachronistic property rights, and planning laws have been proven to be entirely inadequate. Laws to prevent sales of land to foreign residents will help keep prices lower, and make our money go further. A possible additional fund will be required to purchase land specifically to make up for coastal camping grounds that have been sacrificed to "development" or to purchase important camping grounds as they come up for sale.

Increased investment in fishing, climate and sea-bed research. We still know so little about the effects of our fishing, especially seb-bed trawling. I suspect the latter is highly damaging, I find it difficult to believe, knowing how it is done, that it can't be, but we need firmer information to counter the self-interest of fishing companies. I would personally like to see these actions:





So what will our electorate choose later this year? The lack of robust debate about the nature and direction of our society and the the ostrich-like avoidance of facing the environmental and energy issues coming our way, or indeed, already arrived, make me fear for the future. This fear is not born of despair, because even now the situation is remediable, but every year that definitive action is deferred brings us one year nearer to that irreversible point along that cul-de-sac of "progress" we are presently advancing along.

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I don't wish to rehash remarks related to taxation and equity, as I have discussed this elsewhere. But to summarise the main findings:





My proposals would run along these lines - most have been debated at other times, in other countries and in other political forums. There is nothing unique, but they come from a commitment not to accept the status quo, and from an optimistic outlook that we can overcome the problems that beset us now and the revolution that is imminent, and make this country an even more desirable place to live and bring up one's children. To me, the saddest indictment to the great change in New Zealand society over the last twenty to thirty years is that the phrase one always used to hear about this country "it's a great place to bring up children" has had something of a hollow ring to it in more recent times. I would like to restore this phrase to its rightful place, a ringing declaration of the value of present and future life in this beautiful land. Wikipedia have quite a lot of general information about taxation here, you can follow their own links. Also this article from the OECD gives an interesting background to taxation issues internationally. But it is vitally important that governments who do promote a reasonable degree of social expenditure, and take it on themselves to provide services that I would agree are best and most efficiently provided centrally, should keep a tight rein on such expenditure, and that the ministerial eye is kept on the ball. Problems like the Te Wananga o Aotearoa or the short-fall in carbon credits of $1 billion, (see this page towards the bottom) are like gold bullets to right-wing politicians and businessmen, people who can make every such issue a hot political potato, yet who mostly forget the equally egregious excesses of private commerce and industry (Air New Zealand, NZ Rail, Feltex etc. and the abuse of monopoly position, such as Telecom.) And if you do read my tax proposals below, please remember they are nothing but ideas for a future. The actual regimes are not in themselves important, just the overall strategy for a modest increase in tax, a more progressive tax system, and urgently needed infrastructural investment.

GST

I would like to see a more progressive GST regime. There is nothing inherently complicated or difficult in this. Modern electronic accounting and pricing would be able to deal with this. If small businesses found this more onerous, they should be able to claim reasonable time to fill in returns as a business expense. I would have three rates of GST


The idea of this change is to reduce the unavoidable tax burden on the lower income group, as these consumption taxes impinge quite unfairly on these income groups. - GST becomes a higher proportion of taxation as compared with the wealthy or better-off. Zero rating essential goods and services mitigates the regressive nature of GST considerably. The rates would be adjusted to allow for a 5% increase in revenue, amounting to about $500 million, depending on the exact figures chosen.

Income tax

Seven bands of taxation


This follows the same progressive principle, and is designed to return this country to the sort of accord that we had in the fifties, sixties and seventies, when our society was much more egalitarian. Please note that I have no access to any program that would calculate the revenue effects of this particular tax regime. The rates would be adjusted to enable an overall increase in income tax of about 5%, providing an extra revenue of a $1 billion. Perhaps a rate of 60% is unduly punitive, but I would say that anyone earning over five times the average wage in New Zealand can afford this. Some will say that talented people will go overseas but I don't believe this, entirely. Yes, some will. But what I want to promise is a functioning, harmonious society, wealthy enough, and with a standard of life second to none. If that doesn't interest some high-flyers, so be it, but I would consider that their loss, not ours. However these rates are not set in concrete. The general idea is to make the tax more progressive, the poorer will pay less and the better-off more, and to provide for a modest 5% increase in revenue.

Duty

Petrol and diesel duty to be raised by 50 cents per litre. Acohol and tobacco duties also raised . This will provide the government with a good taxation revenue.


Death duties and wealth tax

A possible extra source of revenue, but to detail this would need more economic and taxation nous than I am comfortable suggesting presently, but a fair and progressive level of death duties would be helpful in evening out wealth in the country. I understand that wealth taxes are very expensive to administer. An inheritance tax or death duty would be easier and fairer. If you legally gain a lot of wealth as an individual, fine, but redistributive regimes apply when you die, when it won't bother you.

Capital gains tax.

This is a hardy perennial, it raises less revenue than most people think it might, and is quite complicated to work out. However almost all other advanced nations make use of this tax, it does provide significant revenue, and closes a loophole in the universality of taxation where speculative gain is not taxed, but physical or mental labour is. I think the introduction of this tax is essential as a social instrument as much as a taxation one. The rate of the gains tax could be proportional to the rate of income tax, so making a more progressive tax.

Tobin Tax

This will need explanation. A Tobin tax is a tax on international currency transactions. As originally envisaged it was set at a rate of about 0.5% and the money raised used to finance devopment and aid to third world and needy countries. It was also set at a high enough rate to actually put a damper on international currency trading and speculation. James Tobin was a Nobel prizewinning economist from the USA, and he proposed the tax some thirty years ago. At that time, the value of transactions in the world was about US$20 billion. They value of daily financial transaction is now about US$2 trillion. The idea is now to set a very low taxation rate, so as not to impede currency movements (though I am not sure if this wouldn't be a good thing) say 0.005%. The tax, or stamp duty, would be levied on every transaction of the currency wherever it takes place, and could not be avoided by going offshore. Hefty fines to non-compliant institutions and banks would ensure observance. This is being seriously proposed for sterling, adoption already started in some European countries, and I imagine something similar could be considered here. The original tax envisaged by Tobin required a high degree of international cooperation, this was its main drawback, but as now envisaged single nations can tax their own currency. Whilst international business cooperation would still be required, at some time all local currency transactions do have to return to their country of origin. Obviously the Reserve Bank would not have to pay this duty. The money raised would be used to provide overseas aid and help, and would improve our very poor performance in this regard. It would of course be additional to money already spent or earmarked for such a purpose (See elsewhere on my site) For more information see here or here.. But again, if experts can prove to me that such an idea is unworkable, so be it, there are other ways of achieving similar ends.

Summary

My tax regime would add about 5% total to our tax revenue or about $2 billion. This is probably a minimum. Added to our present surpluses, though we must remember these surpluses will all be very vulnerable to any economic downturn related to rising oil prices, this extra money will enable a crash programme of infrastructural investment. Figures which I downloaded from the NZ statistics site (see here and download the Excel spreadsheet) shows a present GDP of $134 billion and a total tax revenue of $43.6 billion, which works out at a ratio of 32.5%, rather less than the 35% I have used elsewhere. In this case an extra $2 billion in revenue would bring our total tax/GDP ratio to 35%, but even 37% would still be a very reasonable proportion by international standards. The extra money raised will make all the difference in getting our economy ship-shape to deal with the problems facing us.

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So what will future generations think of us? Will they look back, like we do, and admire and take pride in the sacrifice of previous generations, including ours? Or will they curse us to hell and back as they swelter because we took the money and ran? No-one likes paying tax, but tax is basically a payment we make for a socially contracted service, no modern society can function without it. It is not tax or the level of tax per se that is issue, it is the type of society we live in or wish to live in and how we endeavour to best ensure that we allow our citizens Life, Liberty and the Pursuit of Happiness. Many consistently successful societies do run a more collective and inclusive society. We used to too. A modest increase in taxation will ensure that we can organise such an inclusive society again, and will allow us better to deal with the imminent and revolutionary changes that are already here or just around the corner. The choice is ours, and I firmly believe that this election is the last chance to get this right. Sacrifice or selfishness.