Charitable tax refunds will extend social and economic gaps


A seemingly positive and uncontroversial proposal to change taxation arrangements for charitable donations will return to parliament this week.

The change means wage and salary earners can have charitable donations made by automatic payment from their pay each week with the government arranging a quick tax refund of a third of the donation.

Legislation to do this was introduced last year and is being reported back to parliament this week from the Finance and Expenditure Select Committee.

It follows from Labour’s decision to increase the limit for tax subsidies for charitable donations and National’s follow-up announcement early this year to lift the limit much further so that a person can now donate up to the full value of their annual income and receive a third back as a tax refund.

For every $300 donated the government refunds $100 to the donor.

New charitable organisations are registering rapidly to take advantage of the policy. There are over 22,000 groups now qualifying, astonishing for a country of just four million.

So where is the downside? Isn’t this just a welcome explosion of kiwi support for charities? We like to think we are generous people and isn’t this just an example of the government encouraging that kiwi spirit of giving? And surely it will help reduce poverty?

Philanthropy New Zealand director Robyn Scott is reported as saying “It’s starting to feel to some of us that maybe we are starting to move into a new age. There seems to be an increased awareness of the needs of others at this time”.

However the implications of all this taxpayer subsidised giving has serious downsides. We are increasingly shifting the responsibility for funding social services from the government and onto voluntary organisations. This has two important effects. Firstly those groups which receive funding from well-off philanthropists are only ones of which the prosperous approve. So instead of what can be argued is a community decision to fund services via taxation without fear or favour we are left with funding based on the impulses and prejudices of donors. Secondly the government’s forgone taxation will effectively shift the tax burden further onto those on the lowest incomes.

Put another way these tax refund changes amount to increased social engineering with those with the ability to make large donations using their economic resources to steer society in a direction they approve at the expense of taxpayers.

So there is plenty to worry about here and yet there’s been no sign of a public debate.

John Key has made no secret of his desire to see New Zealand develop this American model of philanthropy but as we know from the US it does not help to reduce poverty. That country of great abundance has more than 30 million (and rapidly growing) of its citizens living below the poverty line.

Donations to religious organisations and to state and integrated schools also attract the tax rebate. We can expect to see fringe religious groups receiving a boost from the taxpayer with renewed ability to promote all kinds of socially destructive policies as they do in the US.

The effects on schools will also be profound.

Schools in higher income areas will benefit substantially because large donations can now be provided by parents with the government giving a third back to the donor. Auckland Grammar for example, a state school, has an Academic Endowment Fund which will qualify for rebates. The school says this fund is designed to “…attract, reward and retain quality teaching staff” and is a mechanism to “…address the gap between state and private school salaries”. How many public schools will be able to compete with the salary top-ups Auckland Grammar can deliver?

To date the Fund has distributed more than $500,000 to the school staff. Where is the fund for the hard working teachers at our neediest schools? Parents in these communities already struggle to pay the voluntary donations the schools seek. At one school in Otara the annual donations taken over the whole school amounted to an average of $1.30 per student. At Auckland Grammar the voluntary donation, paid by almost all parents, is $700. With families in low-income areas now bearing the brunt of the recession with growing unemployment there will be fewer donations than before. The same benefit from the tax policy will be absent.

So over time the policy will extend the social, racial and economic gaps across New Zealand just as the same policy has added to American woes.

New Zealand is already a sharply divided country and in a multitude of ways this tax rebate policy will exacerbate the divisions as the affluent indulge their whims and fancies at taxpayer expense.

ENDS

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Pita Sharples frustration misplaced

It’s easy to understand Maori Party co-leader Pita Sharples’s frustration last week when he called for Maori to have open entry to university. Maori educational statistics have been poor for a long time and have worsened since the 1970s. As a group they are more likely to leave school without qualifications; less likely to gain entry to university; less likely to go if they do gain entry and more likely to drop out before completing a degree.

There have been numerous studies, several pilot programmes, some extra money here and there and much talking but the problem persists. The only significant relief recently has come with the development of NCEA assessment which has quite rightly valued skills and knowledge not formerly recognised in single high-stakes written exams. Students from low-income communities have benefited and the achievement has been real despite the sometimes justified claims of poor quality assessments.

The reasons for the problem of Maori underachievement have been hotly debated. On the one hand are claims of racism and cultural insensitivity in higher educational institutions dominated by Pakeha. Even the most liberal Pakeha can be patronisingly racist unintentionally but in a way which damages and denigrates.

The counter to Sharples’s call has been predictable and based on ethnocentrism – seeing the world from one’s own ethnic perspective to the exclusion of other views. The thoughtless whinging on talk-back radio claims everyone has the same chance at school and if Maori kids want to go to university they should just front up, do the work and be accepted or rejected alongside everyone else. This view contains the assumption that everyone begins the steeplechase to university from the same start line. However most Maori begin well behind the bunch and are forced to overcome many more obstacles. Their track is longer, the water jump is deeper and the fences are so high they must be scaled rather than hurdled. Their lane lacks the smooth running surface of most other competitors.

Some criticism of Sharples has been much more valuable. There is compelling evidence that the main reason Maori are underrepresented at university is because most come from low-income communities and this factor has a much greater impact than race.

Consider women for example. For most of the last century they were largely absent from university through direct barriers and what we now see as archaic social attitudes. Women now are frequently the majority in university courses so can the same change in social attitudes towards Maori participation make the same gains here? Unfortunately no. It is young women from the middle and upper classes who dominate women’s participation at university while young females from low-income communities remain as badly represented as do other groups which predominate in poorer communities.

Similarly Maori who do enter and succeed at university for the most part come from middle class backgrounds. The overt racism of the past is much diminished as are the attitudes which formerly prevented women attaining higher education.

Others in the Maori Party such as Te Ururoa Flavell have suggested pushing for the re-organisation of Maori colleges such as Hawkes Bay’s Te Aute College which produced so many parliamentary Maori leaders 100 years ago. The argument goes that this would provide a fillip for a Maori educational renaissance. These schools have lost their “elite” status because they have taken a broader range of Maori students which means that the single minded focus on narrow academic achievement has been lost. But this rehashes the same problem. Excluding working class Maori from such schools will improve the schools’ academic results but won’t improve the overall results for Maori. It will simply reinforce the argument that socio-economic status rather than race is the key to understanding Maori achievement levels in education.

So the question “why are Maori not entering university at the same rate as Pakeha?” has a simple answer. It’s because Maori predominate in the low-income communities where the educational success rate for everyone, Maori, Pacific, Pakeha and Asian, is much lower than for middle class communities or the children of our political and business elites.

So it’s very disappointing to see Pita Sharples blaming schools. This is unfair and based on sloppy thinking. Most schools agonise over Maori achievement and have put in place numerous policies and programmes to try to ensure Maori kids don’t fall through the cracks.

Making the situation worse was a decision last year by Auckland University to restrict entry even to students who meet the criteria to enrol. This will impact harder on the very students Pits Sharples is talking about. Often they work hard to scrape through the entry criteria only to now face yet another hurdle from the gatekeepers to higher education.

But most importantly the way forward in education is to redirect the frustration over race into determination to reduce income inequality across New Zealand.

ENDS

Labour sleepswalks to win Mt Albert

I live in the Mt Albert electorate and being at the centre of a parliamentary election outside the three yearly cycle has been interesting because the intensity of campaigning has been much greater than usual.

We have been bombarded with the usual electoral material from all parties these past six weeks and there seems to have been more election hoardings than usual. But there’s been much more in-your-face campaigning than at last year’s general election. We’ve had automated phone calls from ACT candidate John Boscowan; numerous phone calls from pollsters and political parties; door-knocking visits from all and sundry (including former Labour cabinet minister Pete Hodgson); party stalls in the local mall and mini cavalcades through the streets with blaring megaphones.

Labour campaigned hard but not on any issue. Their candidate David Shearer played it safe and said nothing of significance. He spoke about listening to constituents and representing the electorate but avoided policy debate on the big issues.

The more mistakes National’s Melissa Lee made the more bland Shearer became so that by the end of the campaign his comments were an indistinguishable mush, like pureed infant food. This was understandable because the big issues for the residents are all Labour’s legacies from 10 years in government.

He was most waffly on the supercity issue and he needed to be. Aucklanders in every part of the city don’t like it. They are mistrustful of the proposal itself and the process being used to get there. Shearer resorted to implying he doesn’t agree with it when it was Labour which established the Royal Commission into Auckland Governance which led to an entirely predictable outcome.

Melissa Lee’s disastrous campaign has received much comment. I was at the Unite Union meeting for the candidates when she was asked how she would live if she was paid just the minimum wage of $12.50 per hour. She proceeded to tell 200 low-paid, mainly young Pacific audience she only earned $2 an hour. She was presumably referring to what she thought were her long hours of work but it went down like the proverbial cup of cold sick.

She also told the meeting how her grandmother had a recipe which guaranteed they were never hungry even in the hardest of times. I’m pleased no-one thought to ask her for it even though many families need real advice along these lines. Her answer would undoubtedly have increased the distance between her audience and the other planet she inhabits as an MP on $131,000 plus expenses.

The union meeting produced a definitive difference between the parties when they were each asked to sign the Unite Union petition for a citizens initiated referendum for a $15 an hour minimum wage. The Greens and Labour signed while National and ACT refused. When it was placed in front of her Melissa Lee said “I don’t sign petitions…”

The only significant local policy difference between National and Labour relates to the construction of a motorway through the electorate. National’s cheaper option is a mainly overland motorway while Labour would tunnel through at much greater expense and which they would most likely have funded as a toll road. Shearer was wisely silent on this despite repeated taunts asking where the money would come from.

Public transport remains the critical issue for Auckland. It will never progress beyond clogged motorways without decent rail and bus networks. This is accepted now in all quarters and even Rodney Hide feels obliged occasionally to utter these words which are heresy to his supporters.

Shearer claimed strong support for public transport but was neatly undone when Green Party candidate Russel Norman pointed out that the last Labour government spent $5 on roads for every $1 spent on public transport. Aucklanders pay in traffic jams every day for this lost decade.

Labour’s win was predictable and John Key, having disowned two MPs in a week, Richard Worth and Melissa Lee, has had his worst week as Prime Minister.

It will be left to community groups to fight the battles over the supercity and the proposed motorway. Labour will merely milk them for political value rather than organise to fight them. David Shearer after all told his new electorate the day after his election that he intends to go to parliament and breathe through his nose.

He epitomises politics based on not making mistakes rather than politics based on exciting ideas, stimulating debate and visionary policies.

Sorry David – the people of this electorate expect more for our $131,000 than listening to you breathe.

Educational vandalism – night-school funding slashed

Have you ever done a night school class at a local secondary school? If the answer’s yes then you’re in good company. Hundreds of thousands of New Zealanders have expanded their interests, tried new things or built up skills for a new job via night classes at their local high school.

 The classes, called Adult and Community Education or ACE by the government, include such things as car maintenance, healthy cooking, quilting, budgeting, ballroom dancing, computing skills, yoga and a hundred and one others. What makes these courses so popular and accessible are government subsidies which keep the costs low.

 But night school is now under a death sentence from an 80% cut in government funding in the budget. In one slash-and-burn move the government has ended its commitment to life-long learning and displayed its contempt for what the Minister derides as just “hobby” classes.

 It was a neat cover-up on budget night. The government painted education as a winner because overall education funding increased by 2.9 percent from $10.5 billion to $10.8 billion. Not bad in the teeth of a developing recession. However most of the extra spending was for capital development for new schools and what was hidden from view was a wide range of savage cuts in all areas of public education.

 The funding cuts for ACE are particularly harsh and it is here that the greatest community impact will be felt. Funding for these programmes in the tertiary sector has been almost halved while the subsidies high school night classes have been slashed by four fifths.

 The sector is rightly angry and determined to fight the cuts. Community Learning Association in Schools (CLASS) President, Maryke Fordyce, says over 200,000 adults enrol in Adult and Community Education (ACE) courses every year and these funding cuts “will change the landscape of community learning as we know it”. She says the association is devastated by the likely impact of the cuts on communities.

 The 212 high schools involved employ a part-time co-ordinator each and between them the schools employ some 15,000 tutors. All this is now under threat and its not just hobby courses which will be affected. For example Maryke points out that schools are required to use at least 9.5 percent of their ACE funding to fund programmes provided by community groups and this includes assistance for refugees and migrants, preparing healthy food, anti-violence courses and courses for Maori and Pacifica communities.

 Moana Papa is the ACE co-ordinator at Tangaroa College in the Auckland suburb of Otara. She says “we are devastated as National want to go to a user pays system. Any hobby courses will no longer be subsidised by the government. e.g. $45 sewing course will be $135 in 2010. Communities like Otara will suffer – no one will be able to afford to come to ACE courses”

 ACE co-ordinator at Napier’s Colenso High School, Maxine Boag, says in Hawkes Bay this year some $50,000 is being spent on classes run by Women’s Refuge, the Napier Family Centre, Napier Parents’ Centre, Pukemokimoki Marae and a Drivers Licence course in Samoan.

 When he was in opposition National’s Finance Minister Bill English was strongly supportive of night school: “For more than 50 years, night classes have provided a leg-up for people wanting to return to the education system. National supports these low-cost courses. The current system of night classes through schools works well and should not be tampered with”. This political cant comes from the man who is now cutting the $16 million government subsidy to just $3 million.

 The value for money of these courses isn’t in question. A report prepared in 2007 by Price Waterhouse Coopers for the Adult Community Education organization in New Zealand concluded the estimated national economic gain of this type of adult education is in the range of $4.8 billion to $6.3 billion. Not bad for a government investment of just $16 million per year.

 Remember this is a government which found $35 million extra to increase the subsidy for the privileged who attend private schools but can’t maintain just half that amount for night schools to benefit the entire community.

 Budget documents spell out bluntly the effects of the cuts: “It is likely that there will be only a small number of schools receiving ACE funding for 2010 and beyond”

 If enough people are angry and let their local MPs know then the government will reinstate this funding. If you don’t do it for yourself, make a call to your MP or send a letter on behalf of your friends, family and neighbours who may be learning Moroccan cooking or how to manage the family budget in a recession.

 Do your bit to stop Bill English’s irresponsible act of community vandalism.

 ENDS

 

 

A rich prick’s budget

In a budget dominated by threats to downgrade New Zealand’s credit rating and projected budget deficits for the next decade it was expected National would produce a predictable, conventional budget.

Finance Minister Bill English abolished promised tax cuts and halted contributions to the Cullen Superannuation Fund for the next 10 years.

These measures were sensible and largely uncontroversial. The only criticism I’ve seen of the tax cut decision is from the right-wing fringe in the Mt Albert by-election where a Libertarian billboard bleats “Where are our tax cuts you bastards?”

Halting contributions to the national superannuation fund is also a sensible move because national superannuation can and should be paid from taxation rather than relying on borrowing to invest in erratic markets to fund retirement incomes.

So how did social sectors such as education fair in the budget?

There are a couple of good decisions. Education Minister Anne Tolley has extended the funding for 20 free hours of early childhood education to Kohanga Reo and Playcentres. These are usually not “teacher-led” centres and so missed out under Labour policy. However they provide a quality alternative for children and parents so this decision is welcomed.

Also to be welcomed is the $51 million for children with special education needs who are approved for ORRS (Ongoing and Reviewable Resourcing Scheme) funding. This will alleviate pressure on the SEG (Special Education Grant) and give a bit more breathing space for schools which accept children with special needs. However the big problems with the funding mechanisms for kids with special needs remain unaddressed.

But the big educational winners in the budget were private schools. These schools educate less than 4% of our kids but gained $35 million in additional funding whereas the other 96% of our kids received just $320 million extra. A simple bit of maths shows the budget delivered around three times the amount of additional funding to private schools compared to public schools. This is a disgrace especially when one considers the biggest problem facing education is the long tail of underachievement at schools in our low-income areas.

New Zealand’s children in middle class and high income areas compete with the best anywhere in the world but we have very poor outcomes where economic deprivation is greatest. The long tail of underachievement is the long tail of poverty where Maori and Pacific kids are over-represented. This relates directly to the dramatic increase in inequality in New Zealand these past 25 years.

National’s adding icing to the educational cake at our wealthiest private schools should be no surprise. They did the same in the 1990s so that by 1999 when Labour took over, private school subsidies had reached $40 million. Labour maintained this high level of subsidy so that Auckland’s Kings College for example, where Prime Minister John Key is a parent, has received approx $2 million per year for the last ten years. Not happy with this Key says he wants to increase these subsidies to $70 million per year so that the annual Kings College payout will rise to $3.5 million.

On this basis one might think our highest education priority was the state of the cricket pitch at Kings rather than the educational opportunities for Maori and Pacific students on the other side of the wire mesh fence which separates Kings College from Otahuhu College, the largest decile one school in the country where educational needs are much greater and which could do wonders with any extra funding.

The government’s claim that this increase will make private schools “more affordable” to New Zealand parents is a joke because private schools exist precisely because they want the “right” to select the students they want and keep out the likes of the brown proletariat while state schools must accept all students eligible to enrol. Maintaining high fees is another way to keep the riff-raff away.

Parents of children at state schools must now pay twice for education. Firstly through their taxes to maintain high quality public schools and secondly to pay subsidies for Michael Cullen’s “rich pricks” to send their children to socially-cleansed educational environments.

Elsewhere in the Budget the government signalled a $50 million cut to teacher staffing budgets for public schools (equivalent to 700 teachers) from 2010 and will slash 80% from the funding for community education classes. These are outrageous cutbacks. Tens of thousands of New Zealanders every year take part in community education classes described disdainfully by the Minister as “hobby” classes.

So while ordinary kiwis will struggle with extra costs for school and community education the government has given more taxpayer largesse to an already privileged minority.