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ROB MacCULLOCH: TVNZ asked academics to "fact check" the leaders debate & the academics got it wrong


TVNZ asked academics at the Public Policy Institute at the University of Auckland to "fact check" statements made by the Leaders of Labour and National during the debates. The article does not say who are these academics. They found that Hipkins was right to say inflation is coming down. That's news to me - I thought the Governor of the Reserve Bank and Finance Minister had repeatedly blamed Putin and the weather for our high inflation - do the academics know both will be behaving themselves the next year?

The academics labelled 6 statements by Luxon as either "mostly untrue" or "false" compared to 0 by Hipkins. The "mostly untrue" statement they refer to is as follows:

• Foreign home buyers tax would bring in $750 million (Luxon) - in reality, it is estimated to be about $210 million.

I disagree with the academics understanding of "reality" - the reality they refer to is a non peer-reviewed, non published opinion by a bunch of three folks who asserted the number was more like $210 million - one of authors doesn't have an economics degree and another has been retired for seven years. How on earth can one label National's figures as "mostly untrue" when none of us has much idea where the truth lies on this matter, since it is very difficult to estimate and there is huge margin of error in any measurement?

Of the 5 "false" statements they list, one is about economics, my subject:

• No fruit and veg GST savings will be passed on to customers (Luxon) - Grocery Commissioner will monitor pricing to prevent this.

However the academics are themselves wrong - since the Grocery Commissioner's legal powers to enforce passing on the GST cut only apply when anti-competitive behavior is being practiced. If the elasticity of demand of fruit & veges is very high (that is, even a tiny drop in prices would lead to a large increase in demand) then barely any of the GST cut would be passed on to customers. Hence it is legitimate for Luxon to hold that view, unless the academics can produce evidence of their own elasticity-of-demand estimates across a range of such products that support their view (which they haven't done).

I suggest TVNZ be more careful when it "fact checks" our party Leaders and labels things as "mostly untrue" or "false". The only patently false statement I have heard these past days was the PM stating that the whole 100% tax cut on fruit and veges would be passed onto consumers, because he had appointed a "grocery commissioner". What a porker.


ROB MacCULLOCH: Madness at TVNZ - is a formal apology owing to Chris Luxon?


Our State-owned broadcaster, TVNZ, engaged academics at the Public Policy Institute at one of our State Universities to "fact check" the party leaders during the debate, which was watched by much of the country - the academics declared National Party Leader Luxon's claim that taking GST off fruit and veges would not lower their prices to be down-right, flat-out "false". Amazingly, Radio NZ are running the story below today, hot on the heels of DownToEarth Kiwi querying TVNZ's "fact checking":

Ministers advised taking GST off fruit, veggies would not lower prices

Documents obtained under the Official Information Act by Radio NZ [revealed] Ministry of Health documents [that] there is growing evidence .. taking GST off food might not work in NZ .. "International evidence about fiscal measures has to be carefully interpreted when considering application to NZ, since the NZ tax system has no pass through mechanism from a change in tax to a change in the price of specific goods," the advice says. "GST is based on a business’s total revenue not on the revenue associated with a particular product. So removing GST off vegetables and fruits would not result in a direct decrease in price."

I mean you couldn't make it up if you tried.

One day TVNZ run a headline saying Chris Luxon makes things up and peddles untruths - concocting a false claim about how we shouldn't expect to see a drop in fruit and vegetables prices if GST is removed, and the next day Radio NZ receives an OIA response that the government itself was advised along the exact same lines that Luxon advised.


These posts were first published at Down to Earth Kiwi. Author Robert MacCulloch worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford University. He pursued research interests at London School of Economics and Princeton University, before joining Imperial College London Business School. Robert subsequently returned to his alma mater in NZ.

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