Tag Archives: Money

And yet one wonders why so many leave

Posted on by Brad Heap

Last night TV3 reported on Don Brash leading a new taskforce to decrease the income gap between New Zealand and Australia. http://www.3news.co.nz/News/NationalNews/Don-Brashs-new-taskforce-to-tackle-the-trans-Tasman-income-gap/tabid/423/articleID/113412/cat/64/Default.aspx

Now I knew the gap was large, but not this large:

Last year the average Kiwi wage after tax was $32,000 a year, while in Australia, the average wage was NZ$49,000 – around 38 percent higher.

$17k per year in NZ Dollars difference, or $326.92 per week more, or $46.70 per day more. That is not a gap that is a gulf. How did it ever get that far apart in the first place?

Last year, over 48,000 Kiwis left New Zealand for Australia to experience its brighter beaches and bigger pay packets.

And I can’t blame them, the cost of living may be more (I may do a post investigating this if I can find the data) but increase in pay surely justifies it.

Hickey wails against working for families

Posted on by Brad Heap

http://www.interest.co.nz/ratesblog/index.php/2009/07/17/economic-weather-report-dependency-ratio-worsens-in-new-zealand/

This is an interesting video becuase the stats for beneficiaries include pensioners and Working for Families. Now I have no issue with the pension it is nice to be guaranteed some of your hard earned tax back when you retire. But Working for Families is crippling the rest of New Zealand. It as John Key put middle class welfare and the sooner a more fairer system that treats everyone as equals is introduced the better.

Do your own own bloody tax return

Posted on by Brad Heap

Okay, this is one of those rants that I have been planning for a while but have only now decided to piece it all together and type it out.

Firstly, check out this nonsense that appeared in the Sunday Star Times a week ago: http://www.stuff.co.nz/business/2585853/Tax-windfall-awaits-thousands

It is blatant advertising for a tax agency not a real news story.

The tax refund season has begun and thousands of Kiwi workers could find themselves with a nice big present.

Now workers can check to see if they are owed any of the estimated $100 million in overpaid tax for the 2009 tax year. And it could be more likely than you’d think.

At this point the story is reading like a nice ad for ird.govt.nz, okay good.

TaxRefunds.co.nz, a business that helps people file refund applications online, has calculated the chance of getting money back from Inland Revenue (IRD). For example, the table shows a worker on the average wage of $48,000 has a 20 percent chance of getting a payout with the average payment close to $245.

What! Advertising some dodgy company… hmm…

The probability climbs or falls depending on how much was earned. TaxRefund director Geoff Matthews said those hovering around the different tax brackets scored highly with those on $38,000 having a 55 percent chance of getting money back from IRD.

This is probably true.

“It’s like having a lottery ticket at the bottom of your drawer of course you’re going to check it,” he said.

Since when did filing a tax return turn into playing lotto? Unless you spend all your refund on lotto tickets.

… (5 more paragraphs of dribble, go read it on the link above if you have to)
If someone decides to go ahead and file the claim with the IRD, the company charges 12.5 percent of the rebate amount, up to a maximum of $500. The minimum fee is $12.50 per return.

Is there any news at all in this story? I don’t see any. All I see is advertising for some dodgy company and lotto. And lets make one thing very clear. Go to www.ird.govt.nz and do your own tax return there. You will get it all back and not give up 12.5% to some dodgy internet site.

Speaking of dodgy sites taxrefunds.co.nz seems to be getting dozens of complaints as highlighted here: http://tvnz.co.nz/business-news/ird-warns-online-tax-return-services-2706304

The Inland Revenue Department is warning people to be wary of online companies offering free tax return services.

This follows a number of complaints from people who say they didn’t realise what they were getting themselves into.

It’s ads like the current tax refund ones that Donna DeCleene thinking she was in for a windfall.

“I thought I may as well register and see if I have any money owed,” DeCleene says.

She went to taxrefunds.co.nz and typed in her IRD number to find out more about claiming back taxes.

But she was surprised when she received a letter from the Inland Revenue informing her that taxrefunds.co.nz would act on her behalf on all future returns.

“They were telling you to apply for old refunds not saying that they would then act for you in future years for any tax refunds,” she says.

The IRD says its received dozens of similar complaints about tax refund companies

“Read the fine print so you know what you are committing to before you do it. Or alternatively come to our website directly and you can do it for yourself anyway,” says Charles Ronaldson, Inland revenue.

When logging onto taxrefunds.co.nz you can see in the fine print that the company takes 12.5% on any refund, a commission that is also paid on things like family assistance credits and they will continue acting as your tax agent until you tell the IRD otherwise.

“It tells you on the site and you have to tick a box that accepts the conditions that we will be your tax agent like any chartered accountancy,” says Geoff Matthews, taxrefunds.co.nz.

Taxrefunds.co.nz was set up seven months ago and has already processed $62 million worth of returns

“I know I get a tax return through family assistance si i know i didn’t need them helping me because it’s all automated through IRD,” says DeCleene.

However Matthews says, “if we weren’t in the market nobody would know that they were due tax refunds”.

Mr Matthews people have been getting tax returns for much longer than the nine months you have been in the market. All it appears is that you are a very cunning scam artist giving people a service that they already had access to for free. It isn’t very impressive.

Finally be aware that IRD do seem to be on a go slow at the moment as highlighted here: http://www.nbr.co.nz/article/ird-go-slow-tax-refunds-angers-firms-102459 and http://www.gpforums.co.nz/showthread.php?s=&postid=6194020

I filed my tax return for 08/09 on May 12 and it took 9 weeks for them to process it, however, eventually I did get a refund and a nice big one too. So go and do your own. You will get more money and not get into bed with a dodgy company trying to take your money for doing nothing.

Savings would last month for many

Posted on by Brad Heap

This story was published in the herald a few days ago (again a victim of the sever move)

http://www.nzherald.co.nz/surviving-the-recession/news/article.cfm?c_id=1502812&objectid=10584518

Almost half of working New Zealanders would only last a month on their savings if they lost their job, a new survey shows.

More than a quarter say they will need to use their credit cards to pay bills in the coming quarter.

People in the 18 to 34 age bracket were particularly vulnerable, according to Dun and Bradstreet’s survey of consumer credit expectations released yesterday, with 55 per cent only able to survive for four weeks if they weren’t working.

It would be interesting to break out the people who are still living at home and see this figure without them, I think it would be even higher.

This compares to 46 per cent for Kiwis aged 35 to 49 and 32 per cent of those aged 50 and over.

Well this actually makes a lot of sense because of course as you move through life you earn more, and can save more, and pay off that student loan and other debts that you start you adult life with.

The survey, which interviewed 905 New Zealanders online, focused on expectations for savings, credit usage and spending between July and September.

The younger age groups were also more likely to spend money they didn’t have, with 34 per cent using credit for purchases.

This is a concern because if people are using credit they don’t have when they don’t need to when the tough times hit and you do need it you won’t have it to use. However credit for younger people is often offered because you can offset it against your future earnings so it can work well to get you though tough times.

Of those over the age of 50, 19 per cent said they would use credit.

Again this comes down to the stage of life at your at.

The younger age brackets were also more likely to apply for new credit or a credit limit increase.

BNZ spokesman Tony Alexander said New Zealanders’ household saving rate was one of the worst in the OECD.

“We are definitely a nation of household borrowers rather than savers.

“We don’t save much so if we get made unemployed we don’t have much to live on for very long. If we get sick we have to rely on the state rather than funding our own healthcare.”

The unemployed statement makes sense. The healthcare statement does not. We have universal healthcare in NZ and that is a good thing, and if you don’t believe that go and watch the movie Sicko.

He said saving should not just be about preparing for retirement.

“There’s more than just whacking your money into Kiwisaver. We should, all of us in some way, have these precautionary savings that are built up in case we get unhealthy or become unemployed.”

And this is a flaw with Kiwisaver, the fact that no matter what it is impossible to get your money out until you reach 65. And is yet another reason why I have not opted in.

Now I know if I lost my job I could last longer than a month… Just. If I lost all my sources of income (one off jobs and the like) I would be in a reasonably dire situation pretty quickly. However, this is the life of a student.

NBR labels bloggers “amateur, untrained, unqualified”

Posted on by Brad Heap

Okay being offline for the last two days has been a pain as there has been some good news. And this probably the best and funniest piece of news out. However, because of the delay now lots of other blogs are covering this story so I will keep my blog on this short and let the links do the talking. In summary the head of the National Business Review (NBR) has decided to change their news site to a pay per view model rather than free with ads supporting the costs. So far big deal, who cares, I can get my news from other sites.

What has annoyed me and many others though is in announcing the decision he had this to say about bloggers:

And to add to the madness it has been the aggregators that have profited the most from the supply of that free news copy. Worse still the model has spawned a huge band of amateur, untrained, unqualified bloggers who have swarmed over the internet pouring out columns of unsubstantiated “facts” and hysterical opinion.

Most of these “citizen journalists” don’t have access to decision makers and are infamous for their biased and inaccurate reporting on almost any subject under the sun (while invariably criticising professional news coverage whose original material they depend on to base their diatribes).

Say what? David Farrar at Kiwiblog has the best to say about this:

Of course there are many many blogs that are rubbish. But they accordingly have littler readership and little influence.

And that is exactly the point.

This blog has been running for four years and in terms of its global reach it is very small. And I would actually agree that most of the stuff I post on here is probably rubbish, and has little influence. But that is no reason for me to stop posting it. This is my soap box not yours.

And as far as being upset about people linking back and commenting on stories, well that is interesting because by linking back and commenting you are in fact increasing readership not decreasing it. I actually believe that the move to pay is to keep profits up not keep the bloggers out. Anyway rant over, here are some more good comments (interesting enough all from blog sites, at least two of which are more popular than the NBR website):

Follow up to leave NZ blog

Posted on by Brad Heap

Around a week ago I blogged about the good article in the herald by Bernard Hickey on why Generation X and Y should leave NZ. (http://www.brad.net.nz/blog/2009/06/bernard-hickey-tells-young-people-to-get-out-of-nz/)

Hickey followed this up earlier this week with a second blog on how to turn the tide and get people to stay: http://blogs.nzherald.co.nz/blog/show-me-money/2009/6/30/ten-ways-baby-boomers-redeem-themselves/?c_id=3

A summary of the key points:

I got quite a few comments from baby boomers (and younger readers) throwing their hands in the air and wondering what could possibly be done to solve the problem. They also pointed out it was no different anywhere else so what was the point of leaving. House prices have collapsed 20-30 per cent in America and Britain, effectively reducing the scale of the problem, while prices here have only fallen around 9 per cent here. Australian prices are more affordable in many cities because incomes are higher, although inner Sydney and Melbourne are pretty unaffordable.

But there is much our baby boomer leaders and their voter-enablers could do to fix the problem if they wanted. We all need to agree on a variety of things to lift our productivity and therefore our real per capita incomes at the same time as reducing house prices. Here’s 10 ideas:

1. Impose a land tax. It works in Hong Kong and is much cleaner, fairer and more efficient way to take some of the air of the land price bubble than a capital gains tax.

Agreed, but as pointed out last week would it ever be voted through?

2. Introduce a flatter, simpler system for income tax to encourage productive work rather than tax avoiding rental property investing and consumption. Here’s more detail here.

Hickey’s ideas for a flat tax system make a lot of sense, and is one thing I agree with, as far as income tax goes there should be a flat rate, why should someone who earns more be taxed at a greater proportion of their income, their tax take is greater than someone who earns less anyway because tax is based on a percentage of income not a fixed amount, and it is also likely that they will pay more in GST because they probably spend more as well.

3. Remove middle class welfare payments such as Working for Families and non-means tested interest free student loans. They create work for bureaucrats and create ruinously high marginal tax rates.

Working for Families is something that I do not agree with, and then introduce an independent workers allowance to counter it is just as dumb, reduce the bureaucracy, reduce the costs, overall everyone pays less tax and therefore has more in their back pocket.

Interest Free Student Loans is interesting. I believe they should have interest at CPI on them, this way the government does not lose out on any money that it loans out, and in return having a small interest rate would encourage people to pay it back faster as with zero interest there is zero incentive to pay it back. But using this as a means for the government to make money is not a good idea.

4. Extend the retirement age to 70 from 65 by 2020. Reduce the universal superannuation payment to 60 per cent of average wages from 66 per cent. We just can’t afford it and it will give us time to restructure our economy.

Meh, I am at a minimum 45 years away from retirement so by then I don’t think there will be any hand outs for me.

5. Open up monopolistic industries to competition wherever possible and regulate hard to restrain inflation wherever competition is not possible. The electricity and telecommunications industries come to mind. I’d love to see the power generators forced to sell their retailing operations and I’d love to see the Commerce Commission force mobile termination fees much lower to encourage a third mobile competitor.

Yup, and how about selling Kiwibank and Air NZ while we are at it, it makes no sense to be in a competitive market with State Owned Enterprises competing against others. There is a need for SOE in areas where they are the only providers but where they are not what is the need for them?

6. Crack down on handouts for politically neat but economically dumb ideas such as sports stadiums, NZ$40 million wharves and railway operators. Be ruthless on public sector spending.

Yup. The White Elephant on the waterfront comes to mind. We are in the worst recession in 80 years or whatever and spending is being slashed left right and centre but we can suddenly have a whole lot of money to buy a wharf and place a giant rugby ball on it for a two week period in 2011.

7. Open up the immigration taps. Population growth, particularly of young skilled migrants, will do an awful lot to kick-start our economy and skew the population imbalance to something more sustainable. Welcome everyone in, regardless of whether they are from China, India, Brazil or Timbuktu. As long as they have some English and are bright, we should open the door.

The last line of this is vital. They must be able to communicate effectively otherwise this policy does to achieve its aims.

8. Convert the NZ Superannuation Fund into individualised accounts that could be transferred to KiwiSaver accounts with other fund managers. This would effectively make KiwiSaver almost compulsory and encourage many New Zealanders to become more financially literate.

Yes. This is one of the things that has kept me out of Kiwisaver, the fact that I will still get superannuation regardless of if I save or not, and also the fact that once you are in you cannot get out. Make everyone in or everyone the ability to come or leave as they can.

9. Set a target size for the government sector (both local and central) in some sort of taxpayers’ rights bill as a proportion of GDP and manage the sector down to that level, which could be, say, 30 per cent of GDP.

I don’t necessarily agree with this, the government needs to spend on what it is committed to and targets for the sake of targets is actually quite a dumb idea, but cut the spending on things that they don’t need to makes a lot of sense.

10. Allocate every adult New Zealander a certain pot of ‘free’ money to spend on fees for tertiary education, particularly for retraining.

Yes. This is better than losing money on interest free loans. Reduce the cost of the course and you reduce the amount of money that needs to be borrowed.

You know something is big when the Hearld reports it.

Posted on by Brad Heap

A few days ago I blogged on the TV battle in the United States between Jim Cramer and Jon Stewart. Well now the aftermath appears to be even bigger than the event itself with a wikipedia edit war started on the battle, the press secretary of President Obama being asked for comment, and it being reported in the little local newspaper, the New Zealand Herald. (yes little (when compared on a global scale)).

The full story is here:
http://www.nzherald.co.nz/entertainment/news/article.cfm?c_id=1501119&objectid=10562013

First came the imperial marching music and a fiery explosion.

“You’ve watched snippets of them for days, or meant to after your friends sent you the link,” a voice boomed with mock gravity. “Tonight, the week-long feud of the century comes to a head.”

It was a comically absurd drum roll for what, on the surface, was merely a squabble between TV presenters.

In one corner, Jim Cramer, the closest thing to a celebrity in US financial journalism. In the opposite corner, Jon Stewart, satirist and host of the fake news programme The Daily Show. But unlike many a big fight, this one surpassed the hype. Nothing less than financial reporting itself was put on trial – and found wanting.

Cramer, who dispenses raucous advice to investors on the Mad Money show on the business channel CNBC, was eviscerated by a serious and genuinely angry Stewart.

Meek and contrite, Cramer was pummelled like a rope-a-dope over his profession’s failure to be an effective watchdog of Wall Street.

The interview was one of those classic television moments that crystallised the public mood. Stewart articulated the anger and bewilderment of millions of Americans who now feel ripped off and afraid. He framed the question that everyone wanted asked: how were the financial masters of the universe allowed to pursue their ruinous behaviour unchallenged for so long?

It caught the attention of the White House, prompted a frenzy among bloggers, and soul-searching in the media, who failed to spot the biggest story of a lifetime or warn the public.

CNBC and other supposedly objective journalists stood accused of complicity with big business, belonging to a cosy coterie that egged on chief executives and fanned the flames of excess.

The interview has also burnished Stewart’s reputation as the last best hope in the media when it comes to, in the earnest phrase of news network CNN, “keeping them honest”.

James Moore, a former TV news correspondent, blogged on the Huffington Post: “Jon Stewart has set new standards for both comedy and journalism. Oddly, he was originally supposed to just make us laugh on Comedy Central. He’s done that, but Stewart has also figured out that some jokes are sad as well as too important not to tell. But he’s not supposed to be doing the job of reporters.”

For years Stewart has been building a reputation as the one-man antidote to what many regard as bland and talk-heavy US news channels. During last year’s presidential election as Barack Obama, John McCain and other politicians queued up to appear on The Daily Show, a headline in the New York Times asked: “Is Jon Stewart the Most Trusted Man in America?”

His assault on Wall Street began in earnest with a classic Daily Show technique: a series of juxtaposed clips revealing incompetence and hypocrisy.

Stewart dissected the channel’s mistakes, in which it made bullish statements about the market and investment banks before they collapsed. He added: “If I only followed CNBC’s advice. I’d have a million dollars today – provided I’d started with $100 million.”

Such is his influence, in the next days ratings for Mad Money went down 10 per cent in the 25-to-54 demographic. But Cramer, a former hedge fund manager, is not one to take barbs lying down. Known for his hyperactive style, he declared war with the sarcastic riposte: “Oh, oh, a comedian is attacking me! Wow! He runs a variety show!”

As the media stoked up the row, a showdown was set for last Saturday.

Stewart showed the instincts of a journalistic veteran. He charged that CNBC knew what was going on behind the scenes on Wall Street but failed to tell the public. He accused CNBC hosts of abandoning their journalistic duties.

Cramer proffered feeble mea culpas and acknowledged they could do better. But Stewart produced footage of a 2006 interview with TheStreet.com, in which Cramer described certain barely legal things a hedge fund manager might do to work the market to his advantage.

He launched an eloquent assault that struck at the very foundations of the American financial press and television.

“Listen, you knew what the banks were doing, yet were touting it for months and months – the entire network was.”

“For now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami is disingenuous at best, and criminal at worst.”

Thoughts on McDonalds

Posted on by Brad Heap

Does anyone else find it ironic that McDonalds can see a global increase of 7% in customers over the last twelve months but at the same time cannot afford to increase their workers wages by 50c keeping them on the minimum poverty wage?

Is anyone else able see through the PR spin and spot the irony and the hypocracy in their statements. Just proof that poverty wage are paid in New Zealand by a profit loving multinational.

I doubt they will cease to build new Restuarants and if they did it is a good thing, the less fat making fast food places the better. Bring on more Subways and Burger Fuels.