CIS - Contemptible, Incompetent Shysters

Farrar lovingly cites a ‘study’ by the Australian far-right Centre for Independent Studies, which identifies the large gap in GDP per capita (adjusted for purchasing power) between the two countries and blames tax (the Dompost and Herald also print its findings unquestioned).  Here are a few major distortions (lies) the CIS included the study that I spotted straight off:

1)comparing GDP does not tell you about the wealth of inhabitants, for that you want GNI or better yet a sub-national income figure.  Median individual income will give you a picture for the typical person in each country, making it median household income will give you a typical family’s situation on each side of the ditch – fortunately, we have just such a comparison here.

2)The CIS study provides a graph that shows clearly the gap is not a result of recent policy, but rather the stalling of New Zealand’s economy from the second oil crisis through to the end of the neo-liberal reforms.  It does not acknowledge the simple fact that the gap is the result of historic differences, not current ones.

 

 

(This graph also shows the last times GDP fell and stalled was under National. Also, CIS, when doing graphs in black and white use different patterning to differentiate lines)

3)All the CIS’s graphs end in the early 2000s.  The figures beyond that are available, I know because I’ve made graphs based upon them myself.  Why isn’t the CIS revealing the picture for the bulk of the period under the Labour Government if it’s the Labour Government’s policies that are supposed to be the problem?  Answer, because the numbers don’t agree with the premise.

 

4)The crux of the paper, where it explains why taxation policy differences in the last few years are supposedly stopping New Zealand closing with Australia, is a one page (of 20) rant against taxation in general.  All it can say is that taxation as a percentage of GDP has fallen in Australia while rising in New Zealand – it doesn’t even mention by how much (the changes are small, only a few percent) – and it provides no evidence that this is the causative effect in the difference in incomes between the two countries.  This isn’t surprising.  There’s no way to really blame current tax policies for a gap that opened up between 1985 and 1995 and has been holding steady since.  The real answer must be higher real wages in New Zealand, and that can only come about from a combination of stronger unions, better labour laws, and more capital investment to boost productivity - the Government has already moved on capital investment by encouraging saving and reducing business tax, and has gone some way on work rights but it could go further and almost certainly will in the next term.

Here’s a tip, Davey.  The CIS’s statistical analyses are no more reliable than your own, don’t use them if you value what remains of your reputation.