Speaker by Various Artists

86

Why we can’t just fix secondary tax

by Deborah Russell

“What are you going to do about secondary tax?” people ask me.  “It’s not fair to charge people more tax just because they’ve got a couple of part time jobs.”

It’s a common mistake.  And it’s easy to understand why people think they’re paying more tax.  If you have two jobs, each paying $250 a week before tax, then in the first job, you will end up with about $220 in your pocket, and in your second job, you will end up with $202 after tax and ACC has been deducted.

Here’s the problem.  If you didn’t pay secondary tax, and just paid the same amount of tax on each job, then at the end of the tax year, you would end up a big tax bill.

Here’s how it works.  NB: for the purposes of this example, I’m just using tax rates, so I’m ignoring the ACC levy.

First up, you need to remember that the tax you are paying is income tax.  You pay income tax on all the income you earn during a year.  If you are a wage or salary earner, then in order to make paying tax easy, it gets deducted out of your wages as you earn it.  The PAYE (Pay As You Earn) tax you see deducted is not actually a tax: it’s a down payment on your tax bill for the year.

If you have one job earning $50,000 before tax, then over the year, you should have a$8,020 PAYE deducted, leaving you with $41,980 in your back pocket.

(You can check the actual tax rates and calculate tax for yourself, if you like.  Or you could just trust me on this.)

At the end of the tax year on 31 March, you should end up with no extra tax to pay, because the correct amount will have been deducted throughout the year.

Income                                                           $50,000

Tax on income                                               $8,020

Less Tax already paid as PAYE                    $8020

Balance for you to pay                                  $0

But what say you have two jobs, each earning $25,000?  Each of your employers will deduct the right amount for someone earning $25,000 a year.  That’s $3,395 per job, and during the course of the year, you will have $6,790 deducted from your wages.

The problem is, you still have to pay tax on $50,000 of income.

Income                                                           $50,000

Tax on income                                               $8,020

Less Tax already paid as PAYE                    $6,790

Balance for you to pay                                  $1,230

If you don’t pay secondary tax, and only pay ordinary old PAYE, you end up with a stonking great tax bill at the end of the year.

The secondary tax rates fix this problem, more or less.  Your main job gets taxed at ordinary rates, but then you pay a higher rate on your second job, so you don’t get caught out with a big amount of tax to pay at the end of the year.

On the first main job where you earn $25,000, you have $3,395 PAYE deducted.  On your second job, where you also earn $25,000, PAYE is calculated using the secondary tax rates, so you have $7,500 deducted.

(You could look up the secondary tax rates and calculate this for yourself if you like, or you could just trust me, again.)

At the end of the year, your tax calculation would look like this.

Income                                                           $50,000

Tax on income                                               $8,020

Less Tax already paid as PAYE                    $10,893

Refund!                                                          $2,873

So much nicer to get a refund than to end up with more tax to pay.

Of course, you might well have had quite a big cashflow problem during the year.  You might have preferred to have that $50 or so per week to spend when you needed it, instead of getting it all as one big lump sum in a refund.  But at least you don’t owe money.

You can apply to IRD to get a special rate to use for your second job if you’re going to end up in that kind of situation.  But most people don’t know about that, and they find dealing with IRD a bit worrying.

Even getting the refund can be daunting.  You have to get tax records and fill out a tax return.  The IRD’s website has plenty of information about how to do that, which is fine if you’re internet-savvy and comfortable with numbers.  But most people glaze over a little when confronted with tax.

There’s almost certainly a technological fix for all this but it will require a new IRD computer system.  In the meantime, we’re stuck with secondary tax rates and filing tax returns at the end of the year.  And the big problem with just cutting secondary tax rates remains: if you do that, then all that happens is that you have to pay more tax at the end of the year.

Deborah Russell is a lecturer in taxation at Massey University.  She is the Labour candidate for Rangitīkei in the 2014 General Election.

52

The secret Christchurch conversation ... about leaving

by Greg Jackson

One flood ago now, a group of we dog walkers had a shifty chat down in Hansen's Park. It's a lovely Christchurch riverside park that doubles as an epicentre for quakes, the last a magnitude four about ten days back. The talk was with two of the older regulars, who confessed they were off to Nelson, sold up, cashed up and ready to go.

Looking about us, the other two of us admitted we had started to nurture similar thoughts.

Rufus's owner has young kids, I have older kids doing NCEA plus two geriatric delinquent parents just hanging on in their own home. And Nina, last winter's pup.

What we older ones realise is that a functioning metropolitan city will arise again too late for us.We and what was are over. 

We live five doors up from the river, out of the flood zone by two doors but close enough for very little comfort as our low profile Heathcote turns feral.Not as flashy and florid as Flockton but scary nonetheless.

After the big February 22 quake I lost my words for years. I did manage one big spit on Stuff before I went mute, a piece headed up “We are not ruined, here”.

At the time I meant it.

Now I'm not too sure, and the fact I and mine have long deep roots in Canterbury no longer has the same hold.

It's not the ceaseless quakes, rumours of quakes, loss of city centre, or the endless cultural imperialism of “experts” jetting in to tell us how to fix things. Nor the institutionalised brutality of the EQC/Fletchers repair process that crushes and shortchanges far too many blameless people.

The dreadful collapse of the Chistchurch City Council into a spineless soundbite looking for a photo opportunity until very recently did not help. Our city has CERA because it failed not only to pick up the ball and run with it but indeed to even get in the game. That's got better since the local body elections saw off the soundbiters almost as a seamless job lot of discarded “media personalities”. 

Outside of our shattered and split city, we hear the perplexity that it is still not fixed.

If you don't see 80 per cent of your city centre fucked, it is hard to understand just how stuffed lots of Christchurch is.

Or that below decks even more unglamorous devastation lies, which means you can go looking for pipe and find it a metre above, below or beside where it is meant to be.

Even in Christchurch people had very little idea of how close the city came to a major infrastructure collapse of water and sewerage systems.

The math of the quakes is numbing; 14,000-plus and still rocking at times.

I have a PTSD specialist shrink friend in the States who is adamant there is no benchmark for the level of psychic hits and trauma Christchurch people have  had. 

He says that a year after the last big one will be when we start to emerge from what has been a collective state of clinical shock.

To that I can add both my agreement and my own own weary testimony.

There's something inside us as people that generally means we can hit the skids , dig deep, skid, dig deep again and repeat. Until we can't.

We got there as a family over a year ago when a hell virus came and stayed for nearly six immobilising months. We became very ill indeed, and soon ate through a redundancy pay-out and our savings. Over the last year we have glided glumly out of the middle classes, farewelling bit by bit our long-time trappings of middle New Zealand life.

I am stunned to be nearly 60, in an unfixed house and cash poor. It is simply not the way my life trajectory has gone for a very long time.

We grow food, which helps, but now with nearly half the annual rainfall already we can't. The ground is sodden, wet and cold. The floods this year are finishing off hope amongst the wounded of our city.

As the election year bullshit builds up into a chorus of blandishments and blame, the reality is we trust nobody past the neighbours and friends who have stepped up after each disaster.

I know the PR/politics game inside out, having worked both sides of the fence.

That said, as the rain starts and the river rises I know we and any others need lots more than photo ops and faux empathy.

If there is still a social contract intact in Christchurch it is, to invoke the Rolling Stones, torn and frayed. We feel not only abandoned  and lied to but beyond weary, beyond worn and just plain scared.

The land has sunk, the rivers have risen. People have not heard the truth, that land keeps moving for years after a major hammering like we have had.

If we had a “one in a hundred year flood” in March, a hundred years just rushes past so fast now that two more centuries have come and gone.

Yesterday (Tuesday) I stood by the Heathcote River near our street corner and watched not just the usual silt and shit-laden waters flood, but rubbish bins floatimg and garbage spilling from them. Last night, for the first time, I and Sharon both felt beat, defeated and ready to go.

I don't think we are alone. The dog walkers will bear me out once the waters recede enough to walk in the park again.

Our street corner yesterday. For the third time this year. (Photo: Sharon Murphy)

56

Facing the floods

by James Dann

As you will be well aware if you live in Christchurch and have tried to leave the house within the last 24 hours, we are in the midst of our third serious flooding incident this year.

The natural risk for Christchurch has always been flooding - we are a low lying urban area in the middle of a flood plain. However, the quakes have obviously overshadowed the flood risks in the last few years. Now, the terrible repeat incidents, especially in the Flockton Cluster (which has, like liquefaction, EQC and TC3, quickly slotted into the post-quake vocabulary of the city) have brought the issues to the surface.

It is not only in Flockton, but also the low-lying areas of the Avon and the Heathcote rivers. My parents have lived at the same property in Hoon Hay / Halswell since the mid 70's, and they have never seen flooding like the one they had last year. While they haven't had the same surface water as in St Albans, their property is damper than I can ever remember it being.

The quakes have compounded the issues; they have changed the ground levels, lower in some places, higher in others, as well as raising the river beds and filling the waterways up with silt. This has meant that the drainage network across wider Christchurch is as broken as our CBD is. The council needs to address this issue, but it is a complex one, and seems to be beyond their capacity at this point. Labour's Earthquake Recovery spokesperson has acknowledged this yesterday:

It has to be a priority for the Council to now act over some of the suggestions that ratepayers and citizens have made over the past month in public meetings. So far the Council has not come back with any feedback on these suggestions.

There is also an interesting suggestion from Green MP Eugenie Sage, who would like to see a "blue zone". This is probably a more long-term solution that would require intervention from the government. Before taking this step, it would be worth ensuring that all efforts to fixed the drainage of the area have be pursued.

Trying to resolve the situation in Flockton by improving the drainage would be a better option, as it would allow people to stay in their own homes. It may also be a cheaper option for the council or the government than having to extend the residential buy out programme. These two response show that what Christchurch needs are both short-term and long-term fixes.

Last night, Paul Henry went on an extraordinary rant, placing all of the blame squarely at the sodden gumboots of Lianne Dalziel. Paul Henry knows about as much about the flooding situation in Christchurch as he does about race relations in India - i.e. nothing.  I've never watched his show before, but was prompted by this rant. It's as though he thinks he is a "man of the people" like stablemate John Campbell, except instead of standing up for the little guy, he's pushing the line for the big guy - his mate, the Prime Minister. It is Danyl McLauchlan's description of how the PM's office feeds the bottom-feeder blogs, except on a grand scale.

He judiciously cuts together footage to serve his narrative, rather than the truth. When Lianne says that she is dividing the task force into two, he screams "what does that even mean?" Well, Paul, as the presenter on what is theoretically a news show, maybe you could have done some research. But in lieu of that, I'll explain it.

The task force has been divided into two teams, one to look at the short term solution, and one to look at the long term resolution. We need both. We can't have people going through this again, so we have to find a short term solution. But we also need to know whether this situation can be mitigated, by improving the drainage, raising the houses, or partial red-zoning. This takes more investigation, and has more serious implications for people's primary asset, their homes. It makes sense to take some time with this.

When Campbell Live caught the PM, he was at the Court Theatre, where he had been attending the announcement of the final allocation of funds from the Christchurch Earthquake Recovery Trust. This was the fund that got almost $100m of donations from around the country in the wake of the the quakes. The biggest of the final payouts was to the Christchurch Symphony Orchestra - worthy, perhaps, but certainly not doing much to help the people with 20cm of water in their living room - if they even have a living room. 

Of course the real reason Key was in Canterbury was to deal with the most pressing water issue facing the community. No, not the flooding in the city, but turning the first sod on the controversial Central Plains Water Scheme.

This is the scheme that the National Party have removed a council*, amended the law, and given a taxpayer handout to ensure that dairy farmers could stand on their own two feet. If only the residents of the Flockton Basin were bovine, rather than human, then maybe the government would be turning sods to build a drainage scheme instead of an irrigation scheme.

For Key to stare down the barrel of a camera and give his best "my hands are tied" speech beggars belief. His government has passed legislation giving Brownlee extraordinary powers to get things done in the city. They have removed the regional council so they can expedite the extraction of water in a rural setting. They have undermined the city council time after time on the rebuild of the CBD, and then intervened over building consents. No central government has intervened in the day-to-day running of a region more than this National government. For Key to pretend that he can't do anything is one of the most laughable lies he has ever uttered.

At a water protest we held when the PM opened Nicky Wagner's office on Bealey Ave back in 2010, I remember a conversation we had with Wagner's husband, David. He insisted that irrigation was needed, as there was plenty of water but "it was just in the wrong place". Apart from ignoring the anthropocentric view that there is a "right" place for water to fall, it is a somewhat ironic comment given that most of that water has now fallen on the electorate that his wife represents.

* Tomorrow marks four - yes, four - years since the Government appointed commissioners started at ECan. If you are in Christchurch, we will be holding a memorial service to mourn our lack of democracy, at the Cairn in Cathedral Square. More details here.

Note: James Dann is the Labour Party candidate in the Ilam electorate for this year's general election. The seat is currently held by Gerry Brownlee.

36

The purpose of science and its limits

by Nicola Gaston

Does anyone remember the Great New Zealand Science Project?

The year before last, you may have noticed some ads on tv.  Ads involving scientists and small children – and with an associated Facebook page that got 16885 likes.  Oh, and the small matter of $60 million for investment in science, in the form of the National Science Challenges.

The National Science Challenges, despite having been announced in May last year, are still a long way from being reality.  Meanwhile, one of the most significant outcomes of the process is the 'Science and Society' Project now being developed by our Ministry of Business, Innovation, and Employment.

Last weekend, scientists and non-scientists got together in Auckland to talk about what this 'Science and Society' Challenge is all about.  The occasion was the annual conference of the New Zealand Association of Scientists and the people in attendance came from a range of geographic and disciplinary places.  I wrote a blow-by-blow report of the day which can be found on the Association’s website.

You might well wonder why such a meeting should matter to anyone other than scientists.  On the other hand, if you were inclined to be cynical about the motivations of scientists, you might wonder why so many of them are willing to sit in a room for ten hours on a Saturday to be lectured about their privilege and their responsibilities to society.

One answer is that we have an increasing number of scientists passionate about communicating their research to a broad audience: Michelle Dickinson, Siouxsie Wiles, Rebecca Priestley and Shaun Hendy and others.  This is a relatively recent phenomenon, although its current practitioners owe the late Paul Callaghan a certain something.

There is something more to it than just this, though.  A clue is provided by the way we started the day: with a thorough education in the responsibilities of an academic under the Education Act, ranging from the definition of academic freedom, to the requirement laid upon universities that they accept a role as critic and conscience of society.  In the context of the current controversial proposal to change the governance structure of Universities in the name of business-like efficiency, this all struck a chord.

However, the current situation is more complex than that.  There have been extensive changes in the science sector over the last 3 years: the closure of a Crown Research Institute (CRI), the creation of a new government agency to fund science, the closure of a Ministry, the establishment and closure of a second, and the subsequent establishment of a third (with significant loss of institutional knowledge at each step).

Current changes include the proposed closure of a major campus at another CRI and the establishment of a new funding mechanism (the National Science Challenges), at the same time as funding for our Centres of Research Excellence is up for grabs – all while we wait for a promised funding strategy, a National Statement of Science Investment.

So it was fascinating to hear an audience of scientists debate their "critic and conscience" responsibilities in this context, and to ask questions about the extent to which these provisions extend to the role of scientists at our CRIs.  The commercial context that the CRIs operate in – being required to return a profit to the taxpayer – is at odds with such a role, but then again: one of the science award winners this year, Graham Nugent of Landcare Research, gave a wonderful demonstration of how he and his team perform research for the benefit of New Zealand.  Their work on the scientific validation of methods of pest control is a wonderful example of public good research, which doesn’t necessarily fit a commercial return-on-investment model, either.

There have been other reports on the extent to which commercial imperatives are colonising science: a recent article in North and South by Donna Chisholm looked in depth at our culture of "science for sale".  Does this matter to you?  Scientific research in New Zealand is predominantly funded by the taxpayer – so should you care what sort of research the money is spent on?  How do you feel about public money being used for private good?  

Whatever your reasons for caring (or not) about science, if I needed to summarise the meeting last weekend in a single statement, I’d go with this: scientists care about society too.

The ways in which science can impact on society are not all positive, and the answers to questions that are raised through scientific investigation cannot always be found in science.  We discussed the manifold implications of neuroscientific and genetic studies of criminal behaviour: should an enhanced propensity to violence (assuming that such a thing can be as clearly stated as the writers of some popular nonfiction would have it) reduce personal responsibility, and therefore sentencing, or serve as a reason for longer incarceration?  The answer to such a question is not found in the science alone.

A persistent theme of the meeting was the social response – or lack thereof - to climate change, prompted by the opening function at which Thin Ice was shown.  The science communication award winner and film director, Simon Lamb, described his own motivations simply, mirroring statements made by the scientists he interviewed in the film: "I wanted to be able to tell my daughter that I had done what I could".

It seems to be becoming increasingly well understood that simply telling people that they are wrong about climate change is no way to change behaviour.  How then do we make progress as a society, if the simple precepts of the deficit model are so wrong?  How do we scientists contribute effectively to society, if the knowledge we produce is not, in itself, enough?

There are many things about last weekend’s meeting that deserve to generate some optimism.  Scientists, grappling with questions about the public understanding of uncertainty.  Discussions of Mātauranga Māori, extended well beyond consideration of a box to be ticked on a funding application. Deliberation over the privilege inherent in the scientific world view!  And also, the rare apparition of a politician in defence of science, when Russel Norman, who joined us as a panelist, pointed out that science has little privilege in a country where the Prime Minister can claim that scientific opinions can be provided to order.

I don’t want to move too far into the territory of cynicism here: I worry that one of the most insidious effects of the constant changes in our funding of science is that it leads to the survival of the most cynical.

What I’m talking about, is not about privileging science. Not at all.  I’ve been known to have a rant about companies that claim their products are chemical-free, or the poor reporting of issues such as the dangers of wifi in schools.  But I do so not because I am angry that people don’t understand the science.  I get angry because I know that people don’t understand the science – and I think, actually, that’s got to be okay.  Scientific knowledge is increasing rapidly, and none of us can be experts on everything.  So we need resources to support accurate reporting of scientific issues, and we need to find ways to communicate the value, if not the infallibility, of scientific opinion based on scientific fact.

I have mixed emotions when I see the kind of cardboard mounted science fair project depicted on the Great New Zealand Science Fair Project. I judged a science fair once, and despite all the great projects in evidence, I left feeling a little sick at the huge divide between the kids who had obvious parental engagement and support, and those who didn’t.  That’s without making any sort of judgement about the scientific understanding of the parents.  At primary school, I entered the science fair once – with the topic of my investigation: biodynamics.  Yes, I am talking about cow horns filled with dung buried under a full moon.  As I recall, the secret is something to do with how you alternate between clockwise and anti-clockwise stirring.

A lack of knowledge needn’t be a barrier to learning.  But if we don’t understand what matters to people, what motivates them, and what they care about – we’re only paying the barest lip service to communication.  That is the real challenge of science in society.

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Dr Nicola Gaston is President of the New Zealand Association of Scientists.

Her day job is Principal Investigator, The MacDiarmid Institute for Advanced Materials and Nanotechnology at the School of Chemical and Physical Sciences, Victoria University of Wellington.

10

The changing world of drug policy

by Ross Bell, executive director, New Zealand Drug Foundation

What in the world is happening with global drug policy? For something that usually moves slower than a glacier we’ve seen some significant forward progress in the past year.

Colorado and Washington have signed off on the legal sale of cannabis with a slew of other states set to follow. Uruguay has become the first country to legalise cannabis, a charge lead by President Muijca. The UK public is calling loudly for reform and Poland is looking for alternatives for policing drugs. Portugal remains a shining beacon for others looking for effective health-focussed drug law. In a recent interview with Matters of Substance, UN Secretary General Kofi Annan joined in the chorus of international leaders calling for an end to the War on Drugs. Exciting times.

But where does New Zealand lie in the changing drug policy landscape?

While the Alcohol Reform Bill was a mixed bag, we have made a few steps forward in the area of evidence-based drug policy. We now have a pilot drug court, the government has its boot firmly on the neck of Big Tobacco, and we’ve just launched a big push for drug-free driving. More on the drug-free driving later.

The jewel in our drug policy crown, however, is the Psychoactive Substances Act which came into force last year. We have called the bluff of the legal highs industry and told them to prove their wares are low-risk before sale, through tight regulations. The cover story in the latest Matters of Substance shows why international eyes are on New Zealand regarding New Psychoactive Substances (NPS).

Indeed those eyes will come into even sharper focus next week in Vienna when the United Nations Commission on Narcotic Drugs (CND) meets. The CND is the forum where diplomats meet to self-congratulate and chart a new direction for drug policy (sadly, a single direction has been locked in place for over 60 years). Senior New Zealand health and law enforcement officials will be there, accompanying our very own drug policy minister Peter Dunne. And the Drug Foundation is leading a delegation of four NGO representatives to observe and keep our diplomats on notice.

This year the CND includes a high level segment. This is United Nationsese for a really important meeting during which the eventual fate of international drug policy will be decided.

There are resolutions about things like international cooperation on identifying and sharing information on NPS, and this whacky one from Russia about cracking down on the biggest of all problems for Russia at the moment: poppy seeds used in food.

There are also a number of ‘side events’ happening around the CND. These are short presentations on topics like “Harm Reduction in Prisons” and “Protecting Youth with Drug Policy: Criminalization has Failed”. We are co-hosting a side event with the Canadian Centre on Substance Abuse about meeting the challenges of drug-impaired driving. This will focus on our work over the past three years on drug free driving and our new Steer Clear campaign.

All this talk is going towards setting the groundwork for a special session of the UN General Assembly in 2016 which will hopefully enshrine the changing landscape into a more health-first approach.

Already some interesting things have emerged in the lead-up to CND with the United Nations Office of Drugs and Crime Executive Director Yury Fedatov saying

A health-centred approach to addressing illicit drug use and drug dependence is still not sufficiently implemented in all countries, even though significant progress in this direction has been made in several parts of the world over the last few decades. Some national drug control systems still rely too much on sanctions and imprisonment, instead of health care. (emphasis mine)

This extra attention means extra scrutiny. While we may well have taken a novel approach to reduce the sanctions and imprisonment with new psychoactive substances, what about the old ones?

New Zealand’s Misuse of Drugs Act is celebrating (commiserating?) its 40th birthday next year. It was passed in response to international treaty obligations after the first conventions on drugs were passed through the UN. It’s patchwork of amendments do not fix the underlying problem that it is a sanctions and imprisonment focussed system. As the Law Commission pointed out in its recent review the law isn’t even consistent with the Government’s policy,

If the Law Commission isn’t cool enough for you, Obama is on board with ditching the faltering status quo. In a recent interview with the New Yorker he said about cannabis:

"Middle-class kids don’t get locked up for smoking pot, and poor kids do… and African-American kids and Latino kids are more likely to be poor and less likely to have the resources and the support to avoid unduly harsh penalties… we should not be locking up kids or individual users for long stretches of jail time when some of the folks who are writing those laws have probably done the same thing.”

New Zealand has an opportunity to make our own drug policies health-focussed and evidence-based and play a role on the world stage in doing the same. You know, lead the way on change that could positively affect hundreds of thousands of lives here in New Zealand alone. We’ve seen the glacier lurch forward, let’s keep moving it along.

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The New Zealand NGO delegation will be keeping you informed of proceedings. The Drug Foundation’s Jackson Wood will be blogging for the IDPC’s CND blog for the duration of the meetings and side events. We’ll be tweeting and (if you happen to suffer from insomnia) you can follow the #CND2014 hashtag. Early Follow Friday to other drug policy people who will be tweeting from Vienna.