The Dominion Post throws National a freebie by misrepresenting Labour's new tax policy, and by doing some scaremongering to boot.

The media in New Zealand are, in my view, pretty fair. All political parties, often with good justification, point to episodes where the media treated their ideas and leaders unfairly. In previous years, both Helen Clark and Don Brash have had their substance ignored by a media more interested in poking fun at their style. And major policies from both large parties have been subjected to concerted media campaigns of opposition, for example the Herald’s overwrought “Democracy Under Attack” campaign in 2008 and the feeding frenzy around fallout from National’s profit-making social services in the late 1990s. When everyone is complaining about you, you're usually playing tough with all of them.

Having said that, today’s Dominion Post article is one of the clearer instances of anti-Labour bias in news reporting in recent memory. Vernon Small and Tracy Watkins, who are usually fine journalists, should be pretty ashamed this morning. Here is a subset of the untruths and misinterpretations from their article, which add up to a gross distortion of Phil Goff’s policy announcement.

  1. The article says at the outset that Phil Goff proposes to “sock the rich.” First of all, the phrase is “soak the rich” (if you’re going to do literary references, get them right), and second Goff was careful to say that he thought a large part of the funding for his proposal would come from soaking tax avoiders, and the remaining amount would come from those on higher incomes. A better characterization would have at least included “soaking the tax avoiders.”
  2. The article says Goff was making “a fresh appeal to beneficiaries, the lowest paid and superannuitants with a promise of a $10 a week sweetener.” In fact, the $10/week goes to everybody, regardless of their income level or its source.
  3. The article says Goff “is yet to spell out where all the money will come from, leading to claims from National of a $1billion plus shortfall.” In fact Goff spelled out two areas where the money would come from, and gave preliminary estimates of how much could come from closing particular loopholes. Even taking the pricetag of the tax free zone policy ($1.2b) and the savings that could be expected from closing just one of the many remaining loopholes (Treasury estimate of $260m on offsetting rental losses) gives remaining shortfall of $940m, already less than National’s “$1billion plus” claim that the article repeated, twice, without criticism or comment.
  4. The article says that a new top tax rate “could cut in from as low as $120,000” and “could go as high as 45c in the dollar.” In fact Goff and his crew have made no determination at all on this and were very public in saying that those parameters were still up in the air, nor to my knowledge made any public hints about the numbers. But those are the numbers that the Dominion Post chose to highlight for its readers, with no evidence to support them. The Dominion Post writers and editorial staff are no dummies, and will have known that those particular numbers - lowest plausible threshold, highest plausible rate - would have the biggest possible scaremongering effect among voters. They will also have known that the figures speak much more loudly to readers than do the “could” qualifiers. That was the worst piece of bias in the article, carefully crafted to gain maximum anti-Labour effect.
  5. The second half of the article reports National’s response to Goff’s announcement, but does so without critiquing Key or English in any way, even as their hyperbole spiraled into talk of ratings downgrades. This deference is very different to the critical attitude towards Goff earlier in the article, and the amount of rebuttal space afforded to National in this article goes far beyond the normal line or two accorded to Goff in stories about government policy announcements.

As I said at the outset, I think our media is pretty fair on average. But it does not follow that each individual article is fair. This article was not. This article stank.

Comments (27)

by Pete Turangi on January 26, 2011
Pete Turangi

And then there's the 'Phil Goff's job to dye for' article on the front page of the Dom.  Also by Tracy Watkins (with Martin Kay - because for some reason you need two journalists to create something of such substance).

While masquerading as an article about image and electability, it's really just stoking the fires of anti-Goff resentment, and arming those who oppose him.

Really silly stuff.

The two articles combined show how low our Capital's daily paper has sunk.

by Claire Browning on January 26, 2011
Claire Browning

I can't believe he takes electability advice from Michelle Boag, and FWIW, his hair was fine the way it was, I thought. If true, it's as sad on Goff's part, as silly on the journalists'.

(Not that that's the matter of substance here. Sorry. As you were ... )

by Pat on January 26, 2011
Pat

You can forgive the Dompost for trying to work out where the money is going to come from.  The likes of I/S can't work it either

http://norightturn.blogspot.com/2011/01/good-policy-ruined-by-magical-thinking.html

The problem is that Goff's numbers on how to do it don't add up.

According to Treasury's 2010 tax model data, a $5,000 tax-free bracket would cost $1.58 billion (10.5% of all income in the zero - $5,000 range). Reintroducing a 39% top tax-bracket on "incomes comfortably into six figures" would claw back only $290 million if the threshold is $150,000, or $558 million if it is $100,000. Which means that 60 - 80% of the threshold will be paid for by reducing avoidance.

 

 

 

by Claire Browning on January 26, 2011
Claire Browning

He didn't say it was going to be 39%. Which incidentally, might be how Small and Watkins ended up at 45 ...

by Rob Salmond on January 26, 2011
Rob Salmond

Claire - Surely it can't follow that when a politician fails to say "the tax rate will be exactly X" that gives the news media carte blanche to speculate that it might be Y instead, especially when Y hasn't been floated by anybody. The evidence has to be stronger than that to legitimate journalistic comment. Otherwise my failure to declare "I will not rob a bank today" could lead journalists to speculate over which bank I am most likely to rob.

by Graeme Edgeler on January 26, 2011
Graeme Edgeler

Small and Watkins mentioned 45% because that's the top rate in Australia.

by Claire Browning on January 26, 2011
Claire Browning

And in addition to Graeme's point -- which might indeed be as far as it goes -- I guess I'm saying that perhaps they did have some foundation for their speculation, based on doing the numbers, for themselves. Why does the 'evidence', however flimsy, for the speculation have to come from an external source?

I'm not actually disagreeing with the thrust of the rest of your post. It's just that whereas you accuse the journalists of having blinkers on, both you and I/S, to my mind, do too on this point -- whereas I'm just giving them the benefit of the doubt, in raising another possible motive than your conspiracy:

The Dominion Post writers and editorial staff are no dummies, and will have known that those particular numbers - lowest plausible threshold, highest plausible rate - would have the biggest possible scaremongering effect among voters. ... That was the worst piece of bias in the article, carefully crafted to gain maximum anti-Labour effect.

by Claire Browning on January 26, 2011
Claire Browning

An external source, sort of. External to Small and Watkins, anyway.

Not really any sort of a response to your scaremongering point, however.

by Rob Salmond on January 26, 2011
Rob Salmond

Claire - Certainly I am blinkered. I am a Labour supporter, and have never made any secret of that. But being blinkered is not the same as being wrong.

In speculating about what the new top tax rate might be, I think  the responsible thing to do would be to give more than one example, esepcially when there was no good reason to prefer a particular set of figures. Giving just one gives it the feel of a prediction. Here is their original section:

<quote>Labour says some of the money will come from introducing a new top tax rate which could cut in from as low as $120,000. Mr Goff refused to say yesterday at what level the new rate would be set but it could go as high as 45c in the dollar if Labour chose to align the rate with Australia.</quote>

Here is how I would have done it instead, given that there was a dssire to throw some speculative numbers around:

<quote>Labour says some of the money will come from intriducing a new top tax rate, the details of which they are still working on. Labour MPs have singaled the new rate would likely kick in "substantially above" $100,000 and "well south" of $200,000. New top tax rates Labour might consider include 35% (the top US tax rate); 39% (the old New Zealand rate); or 45% (the top Australian rate).</quote>

The quotes are from Goff's spech, and from Trevor Mallard's blog post yesterday. My formulation is better, and fairer, than the DomPost's because it does not raise the prospect of one set of politically inflammatory numbers at the expense of other live options.

I am familiar with some of the thinking in the Labour camp on this stuff, and I would be very surprised if anybody steered Vernon and Tracy towards 45%. It could well be that they did their own research to get the 45% figure, and good for them for doing some primary research. But then, having found that number, they chose to use it to the exclusion of all other possibilities. And that is where, conscious or subconsious, I think bias entered the picture.

 

by Rob Salmond on January 26, 2011
Rob Salmond

That is an interesting back-of-the-envelope analysis from Peter Dunne you have uncovered. It assumes that Labour will have to fund the entire policy from top rate hikes, ang get absolutely nothing out of closing existing tax loopholes, which is inconsistent with both Goff's stated intentions and all the official advice that Dunne and others received prior to the last Budget.

Meanwhile Key's prognostications yesterday about debt levels and ratings downgrades were based on an assumption of Labour not actually raising the top tax rate at all, which they are clearly preparing to do.

They cannot both be right.

It looks to me like the government is pulling a Malcolm Tucker strategy of throwing out all kinds of wildly divergent, inconsistent, and most importantly scary numbers with the hope of confusing everybody into opposition. And Vernon and Tracy seem to have fallen for it.

by Claire Browning on January 26, 2011
Claire Browning

Relevant information, though, eh. Since it's free and frank discussion of all the options, that you were wanting ...

by Rob Salmond on January 26, 2011
Rob Salmond

These two particular bits of information are not actually all that relevant, because they calculate the consequence of policies that are not the policy Labour announced:

  • Key's debt/credit calculation is about the impact of a policy funding the tax free zone 90% through borrowing and 10% through closing one tax loophole. That is, of course, not Labour's policy at all.
  • Dunne's tax rate calculation is about the impact of a policy funding the tax free zone 100% through the new top tax rate. As you know, that is not Labour's policy either.

So while this is a discussion of some options, it is a discussion of two options Labour has already rejected. Which makes it not so relevant.

by Rob Salmond on January 26, 2011
Rob Salmond

By the by, I think Martin Kay did a much better job spelling out the nuts and bolts and pros and cons of this policy on the stuff blog.

http://www.stuff.co.nz/national/blogs/martin-kay-on-politics/4582125/Gof...

by Rob Salmond on January 26, 2011
Rob Salmond

I am also pleased to see Vernon has removed the speculative $120,000 and 45% figures from this afternoon's story on Key's speech. Kudos to Vernon for going out of the way to make that change.

http://www.stuff.co.nz/national/politics/4582922/Key-reveals-plan-for-as...

by Claire Browning on January 26, 2011
Claire Browning

Regarding Dunne's, I disagree. Yes, self-evidently, he is discussing 100% funding of the policy. Yes, this is inconsistent with what Goff outlined.

It does, however, put the alleged implausibility (or otherwise) of the 45% analysis into context.

The likely scope of a clawback from tax avoidance, while unknown, also needs to be realistically assessed. So no, it won't be 47% on 100k, or 52% on 120 -- Dunne's bogeys. But to speculate about a new rate "as high as 45%" on a threshold of "as low as 120k" is actually, in my view, within the bounds of a realistic analysis.

by Rob Salmond on January 26, 2011
Rob Salmond

Yeah, I see your point on that one, Claire. I agree with you that the 45% figure is not implausible (in my original post I called it the "highest plausible rate") but I still think Vernon and Tracy should not have elevated it above the other options. And I'm glad Vernon has stepped back from that this afternoon.

My guess about the eventual funding strategy (and I stress this is just me guessing here) is that once Goff's new taskforce gets into ways that other countries limit the ability of people to hide income in trusts, they will find very significant additional revenue for the government. This will bring the required revenue from the new rate down substantially.

by Claire Browning on January 26, 2011
Claire Browning

I am also pleased to see Vernon has removed the speculative $120,000 and 45% figures from this afternoon's story on Key's speech. Kudos to Vernon for going out of the way to make that change.

Enjoy that. But next time you're getting heavied, you are on your own!

by Rob Salmond on January 26, 2011
Rob Salmond

Hahaha! I'm very sorry to lose you from by Blog Comment Republican Guard, Claire. If I manage to annoy Elanour, then I'll be totally exposed out here!

by Graeme Edgeler on January 26, 2011
Graeme Edgeler

If my calculations are correct (I suspect they're out by a bit because I've used historical (recent) income data, rather than projections), National will need to introduce a new tax rate of 64.5% on income over $120,000 to cover this year's operating deficit.

by Rob Salmond on January 26, 2011
Rob Salmond

Haha! Nice calculation, Graeme!

Even more apt (given Key's announcement today), my quick calculations suggest that the government will have to sell 100% of all three of its power generating firms, and sell one of them twice over, to cover the $14b cost of their 2010 income tax package. Sell it twice! How irresponsible - I smell a ratings downgrade.

Wait, what's that you say? They are funding that package somehow else? Oh.

But nonetheless...

by Andrew R on January 26, 2011
Andrew R

National went even further. On Morning Report this morning Bill English was representing the Labour tax proposal as resultig in th low and middle income tax rates also going up.  This ficton wasn't challenged by the interviewer.

by Claire Browning on January 27, 2011
Claire Browning

I'm afraid Brian Fallow's not backing you, either, Rob:

Suppose they settled for getting a third of the cost from the top end of the income scale. It would still push the top marginal rate to 41 per cent - and more if the threshold was, as Goff says, "comfortably" above $100,000 ...

He goes on to analyse the two other 'tax avoidance' funding options Goff mentioned.

[PS. He fisks Key, too, by the way.]

by DeepRed on January 29, 2011
DeepRed

And no-one's questioned the BCR for the Holiday Highway and other so-called Roads of National Significance. Now that would be a very, very good starting point for Goff.

by peasantpete on February 02, 2011
peasantpete

So what is new?

The Wellington paper, like the Auckland newspaper has ALWAYS tried to kneecap Labour on anything.

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