The politicians have spoken on Ohariu-Belmont

It is clear that one of two people will win Ohariu-Belmont (my electorate) in 2011- Labour’s Charles Chauvel or United Future leader Peter Dunne, just like in 2008. But it always was clear.

While a competent MP, Gareth Hughes from the Greens will not win, and is campaigning for the party vote. Many National Party supporters prefer Peter Dunne over Katrina Shanks, so Shanks has no option but to campaign for the party vote.

So, if you are a Green supporter, you have been advised to vote for Chauvel, if you are a National supporter, Peter Dunne. Katrina Shanks, who is currently 55 on the party list, was so out of touch that she did not even realise a deal was done by National to have their supporters vote for Dunne.

The thing is, Hughes is quite happy to ask his supporters to vote for fellow list MP Chauvel, but Shanks is not so happy that her supporters are being told to vote for Dunne. She think’s Dunne is desperate. Chauvel, meanwhile says that he doesn’t particularly like such deals saying that voters don’t like being told what to do. He is saying that because he knows that the National-Dunne deal is indeed a Dunne deal and he will not be the local MP.

Chauvel said he will be running a "time for a change" campaign – apparently in April. So far we’ve heard nothing in the electorate about that,( he's too busy focusing on the important issues). However he did say I`ll be satisfied with having my voice heard on the things that matter to me”.

Those in Ohariu-Belmont want to have candidates voices heard on things that matter to them.

John Pagani writes that any voters who wanted to be represented by Mr Dunne would have supported him in 2008. Goff says Dunne is irrelevant. Chauvel calls Dunne a faceless party boss, but it is Dunne who goes to the school fairs, and sticks around to talk to people, while Chauvel just pops his head in and takes off after spinning the raffle wheel. Shanks on the other hand, pops in to a school fair and can’t remember the name of the school when she leaves.

Yet the word on the ground is that lots of people deserted Dunne because of his support of the Labour Government. Many didn’t like Dunne’s support or Labour or his position on the anti-smacking legislation and voted Shanks, who also supported it.

This time around those on the right have got no reason to vote for Shanks, and no reason not to vote against Dunne.

Finally, anyone visited http://charles2011.co.nz here?

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Dunne plays his hand

This has been a pretty good week so far for United Future’s Peter Dunne.

On Monday he addressed his Ohariu electorate committee with a speech warning against the extremities of Act, declaring that anyone who stands with Hone Harawira is “is someone asking to be burnt”, and referred to Labour as a cot-case and “not a viable, functioning alternative” (to the present government). He also said that parliament has been more honourable for Winston Peters’ departure at the last election.

While his views will have support from both the left and the right of politics, it is clear Dunne sees himself aligned to National in 2011 after he retains his seat.

On Tuesday Phil Goff’s response to the speech was, “I think Mr Dunne will be irrelevant at the next election, I don't think he'll be in Parliament."

Dunne has more chance of being in Parliament after the election than Goff has of being Labour’s leader during National’s second term.

Goff believes Charles Chauvel will become the MP for Ohariu after the election. Chauvel has tried to be elected by the people, Labour has stood him in several elections since 1990, but voters wanted someone else. This year Chauvel is going to run a time for a change campaign. He says “I`ll be satisfied with having my voice heard on the things that matter to me”.

Those in Ohariu want to have candidates voices heard on things that matter to them.

Chauvel has got a campaign caravan emblazoned with his website, www.charles2011.co.nz, a website that is not publicly available, but merely a diversion to his Facebook page that has grammatical and spelling mistakes. Time for some changes, indeed. Not a particularly good start.

Today Dunne put out a media release that will have support from both the left and the right. He called on John Key to assure New Zealanders at he would not allow Maori activist Titewhai Harawira to be his escort at next year's Waitangi Day celebrations due to her unruly behaviour at past hui.

Dunne has called the election for National and says voters need to decide which party should support National after the election. I still think Dunne will win his seat with an increased majority – the question is will he bring anyone else in with him.

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Ohariu – why Peter Dunne will increase his majority

I have consistently said since I have moved into the Ohariu electorate that Peter Dunne will retain his seat at elections. I'm not about to change now, in fact I think he'll increase his majority in 2011.

National, as it did in 2008, will be telling its voters in Ohariu to vote for Peter Dunne instead of Katrina Shanks for the candidate vote in this year’s election. For the second time, Shanks will be concentrating on the party vote with a half-hearted attempt at campaigning for the electorate vote. Some National supporters will vote for Dunne, others won’t, but Dunne will win Ohariu in 2011 and the National vote won’t split between Dunne and Shanks in the way some are predicting.

As David Farrar says , if the National vote splits between Dunne and Shanks, Chauvel may come through the middle. Dunne voters may vote Shanks, or Shanks voters vote Dunne for the same reasons – to keep Chauvel out. What Chauvel will want is for Shanks and Dunne to almost tie, and he comes through the middle.

It won’t happen.

Many are comparing this battle to Epsom, where, John Key is happy or National voters to vote Hide to keep Act in Parliament. However the Ohariu electorate is different as Dunne is an effective constituent MP. Even some who party vote Green in Ohariu vote Dunne and may do so again in 2011 in increasing numbers. In 2008 Dunne’s vote dropped as many former Dunne voters voted for Shanks and Chauvel. Some voted Shanks because of Dunne’s support for the anti-smacking legislation, and also because they didn’t like Dunne being part of a Labour Government. Some did not like his position on the Electoral Finance Act, supporting it right up to the final vote, when he then abruptly switched sides. Those who voted Chauvel did so because of his increasingly senior role in Labour, because they got sick of Dunne,and they thought Shanks wasn't worth voting for.

This year, Dunne hasn't given Ohariu voters too much reason to be sick of him, and Shanks hasn't given voters too much reason to vote for her. Chauvel has done neither as he is too busy criticising Dunne and Shanks instead of working in the electorate and promoting Labour's plan for economic recovery.

I’m predicting that Dunne’s majority of 1200 will increase in 2011. Many of those who voted for Shanks in 2008 due to Dunne’s role in the Labour Government will return to Dunne, whereas not so many Dunne voters will vote for Shanks because she hasn’t given then much reason to – and she is now less likely to be a Dunne protest vote.

That’s why more 2008 Shanks voters will vote Dunne in 2011 compared with Dunne voters who will now vote for Shanks. The focus will not only be keeping Chauvel out; the only way to keep Chauvel out will be to retain Dunne so that Chauvel does not come up through the middle due to a split Dunne/Shanks vote.

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Income splitting II

Peter Dunne has said that income splitting for tax purposes would give about 310,000 families tax relief. However it appears that this group of people include those who have more than one job, and thus get taxed on secondary income. A one income family on $80k will get $5280 in tax relief from income splitting. But they wont if a partner was home, and 25 percent of his income was taxed as secondary tax. If that couple had two jobs - one on $50,000 the other on $30,000 - that will get them $250 tax relief. This means that both couples pay the same amount of tax, even though one couple pays more transport costs in getting to and from work.

The bill does not seem clear as to how family income will be equalised through income splitting with secondary tax, meaning that partner not only pays a higher proportion of their income in tax, they cant split their income for tax purposes the same way as other couples either. This impacts lower income families - who are likely to have several part time jobs - more as a family who earns $60k between them - one on $40k, the other on $20k - gets no relief from income splitting. They won't get any tax relief if one of these partners works two jobs. For example, the higher earner may have 40 percent of his income taxed at secondary tax, and although that couple earn exactly the same amount, as other families on $60k - they'll pay more tax if it is not equalised. They'll also have more transport costs to and from their various places of work.

And these days there are more and more people in this situation. And a parent doing three jobs at a 35/30/40 percentage income split will be paying most of their tax on the secondary rate, with no clawback on income splitting.

Having bills that go to select committee on the basis of pre-arranged agreements is political reality under MMP. At least the public can have their say on matters as raised above and in my earlier post on the issue.

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Income splitting for tax purposes

Peter Dunne's Taxation (Income-sharing Tax Credit) Bill that aims to split a family income equally between two partners for tax purposes was tabled in parliament today. It is hardly a fair bill and I`d be surprised if it passes the second reading. It will go to select committee as it is part of National's confidence and supply agreement with United Future. The agreement says that National will support "appropriate legislation to First Reading in Parliament". But National could then oppose it at select committee, before the second reading.

The bill means the more one partner's income is in relation to the other, the more tax relief they`ll get - provided they parent at least one child. A one income family on $40,000 has the second partner go to work, getting $30,000 - a combined income of $70,000. Another family on $50,000 has their partner go to work for $20,000, getting exactly the same combined income. Trouble is, although they get the same amount of Working for Families payments if they have the same number of kids, they don't pay the same amount of tax. So Peter Dunne thinks that if the main breadwinner of the family has a a higher income than the main breadwinner of another, thus paying more tax, that family should get more tax relief from splitting their income for tax purposes. Particularly if that earner got a much bigger salary than his or her partner. Of course if there was no gap - say both were earning $35,000 - they'd get nothing as the other two couples would be paying the same amount of tax as them after income splitting.

The rationale behind this bill is that if a household was running a business it could get these tax breaks. Additionally it could encourage more parents to stay at home full time with kids, apparently. Lets take a look at how that can work.

If your partner was earning $60,000 and you earned $20,000, tax splitting would encourage you to stay home and look after the kids, so the theory goes. Staying at work, you'd be better off by $1500 with income splitting. Quitting work would mean you are only better off by $980 (thats $18 a week) less the forgone $20,000. Even halving your hours, getting $10,000 means you'd pay just $490 less tax - and be a total of $9510 worse off, due to loss of income.

That's hardly an incentive to quit work or reduce your hours to stay home with the kids , you may think. Furthermore if your family income did drop from $80,000 to $70,000 your three kids will get you a whopping $34 extra a week in Working for Families Payments. You'll wont save much on childcare costs staying at home, either because, with three kids you would have been getting the maximum $11.10 an hour child care subsidy anyway, - which means you were only paying a couple of bucks per hour per child .

But a family on $130,000 - one on $120,000 the other on $10,000 working one day a week will get $6830 in tax relief - and thats even when one partner does look after the kids four days a week. That`ll pay for your childcare, and your mortgage for three months..

While I`m no expert on tax, income splitting, to me, appears a little like a policy that is in essence an alternative policy to altering tax thresholds for those who earn more than $38,000 as compensation for paying a higher proportion of their income on tax, and getting a little less Working for Families - provided they have kids. Tax cuts for the rich - although not the childless rich - without altering the tax thresholds. The amount of kids doesn't matter, its the same amount of tax relief whether one has one or ten children. As it is an opt in policy, this means that if you don't apply to the IRD at the end of the tax year, you`ll miss out.

That said, low income families do get some relief. A family on $40,000 - one partner on $10,000 the other on $30,000 will get $280. But that's exactly what a family on $50,000 will get if one partner earned $10,000. But both couples will get $980 if the lower earning partner quits work, even though one breadwinner earns $10,000 more. Yep, the lower the income, the more unfair it gets, according to this chart.

The chart shows that many low income families will get nothing from income splitting - but a childless couple on $120,000 could get up to $8480 tax free just by having a child. That's more than nearly all couples - including the very poorest who get nothing from income splitting - get in Working for Families payments for having their first child.

Next post: What if you get paid in secondary tax because you have more than one job.

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Well Dunne?

I read this speech from Peter Dunne earlier today. He says:

Last year, UnitedFuture learned a powerful lesson – via the medium of the Electoral Finance Bill - about listening to the community.
Let me say this as I clearly as I can: we were wrong to support that legislation for as long as we did, and while I am pleased we eventually came to our senses and opposed the Bill, it remains one of my greatest regrets in politics that we misread the situation for so long.

But we have learned our lesson as a consequence – we will listen to the voice of New Zealanders far more closely in future, and then we will act accordingly.

We will undoubtedly disagree from time to time – I am not suggesting we should become a blank piece of paper to be written all over as the mood suits – but as best we can, we will redouble our commitment to put the public interest ahead of that of party or government.

Peter wants to listen to the voice of New Zealanders and act accordingly. David Farrar believes it is a genuine expression of Peter’s views on the issue. But as I said there is a subtle difference between listening to the voice of New Zealanders and acting accordingly, as opposed to listening to the voice of New Zealanders and voting accordingly with public opinion.

So I thought I`d ask Peter with reference to legislation in general, not just the Electoral Finance Act. His reponse was that votes will be a judgement call, obviously dependent on the nature of the issue, but the intention is clear, in so far as the taking of party positions is concerned. Matters that are being treated as conscience votes will remain for the individual to resolve.

I believe Peter is genuinely putting the public interest first. I really do. It's just that the public don't often agree with his perspective of what is in the public interest - and that does not really appear to be a concern to Peter. With party votes, he`ll listen and act accordingly. If the public don't agree with what he thinks is in the public interest, he`ll vote accordingly, like he did with the smacking legislation. In other words he`ll exercise his vote - and while "acting accordingly", it may not necessarily be "voting accordingly", notwithstanding his U-Turn on the Electoral Finance Bill.

Meaning that if 74 percent of the electorate want to support the upcoming referendum on child discipline and the government decides to legislate, Dunne may not necessarily change his vote in support of the referendum if he believes the public is wrong.

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