Declaration of Interdependence by a Community

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The following is a Declaration of Interdependence that could be made by every community of, say between 5000 and 25,000 people. Since there are over 4 million people in New Zealand, it could be made by hundreds of different communities.

We as a community believe we have rights and responsibilities.

We find ourselves tired of growing inequality where the wealth of 62 individuals is now equal to the wealth of the bottom half of the the planet’s population. We are frustrated by the growing power of the corporates and the super wealthy. We are alarmed by decades of inaction on climate change because economics is fundamentally odds with the climate. We grieve for our steadily growing loss of sovereignty with so-called Free Trade Agreements like TPP ceding power to the corporates.

Recognising the power of nature to bat last and the social dangers posed by economic collapse or major climate events, we wholeheartedly believe it is time our economic system was at peace with the planet.

We, the people of …………, now desire to share the values of the land and gifts of Nature and of our inheritance with our whole community, for that is all we have within our power.

Given the power of the corporates to influence governments and therefore the relative futility of national action to bring our economic system in line with nature, we recognise that this fundamental change can only happen at the local level.

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We therefore agree among us to:
• Gradually own all our own land collectively so that no one will profit or lose from owning land. We will gradually bring more and more land into a Community Land Trust while compensating the owners fairly. We will thus take land out of the marketplace.
• Create a new currency, acceptable for our public revenue. This currency will be designed to circulate smoothly. It will not be created as interest-bearing debt because that creates more debt, but be spent into existence.
• Organise ourselves as a governance unit, electing our own people, making our own rules and being responsible for enforcing them. This includes keeping the value of the new currency stable. The rules will include rules for businesses using the currency and rules for imposing appropriate resource rents from water, minerals or any other part of the commons.
• Gather revenue from land and other resource rents and use it for public purposes including for regular distribution of a dividend for all our citizens resident here for a year or more.
• Collectively budget together at least twice a year.
• Create and maintain a register of citizens eligible for dividends.

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We further agree to:
• Co-operate with neighbouring communities to build and maintain such infrastructure as needed by a larger community and perform other governance functions that are better organised and financed on a larger scale.
• Co-operate with district and regional councils as above.
• Co-operate with central government as above.
• Co-operate with district, regional and central government for any revenue sharing in the new currency as we believe mutually beneficial.
• Co-operate with all other communities to keep the value of the new shared currency stable. We envisage a network of inflation control teams based in every community working together for this purpose.

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We do not agree that central government will impose their tax laws on trades in our currency or interfere with the formation or operation of our Community Land Trust. We do not agree to any interference from the Reserve Bank of NZ regarding the legitimacy of our new currency or the way we control its stability.

The Land Dollar – how we came to offer this as an option

The combination of allowing banks to create money interest bearing debt, together with a land tenure system that allows people to profit from rising land values have led to growing debt, a built-in growth imperative, inequality and a never ending series of boom-busts. Both the issues of land and money need to be addressed, especially in the light of the climate emergency and the growing inequality we live with.

In our search to design an economy that isn't at war with the planet – one that doesn't write in forced economic growth or widen the gap between rich and poor – we have opted to combine basic income, monetary reform, governance reform and tax reform (the latter closely related to land tenure reform). We want a world where everyone has a fair share of our common wealth. We want to replace the extractive model that is killing our habitat with one that is life-friendly.

While addressing these reforms together is a huge challenge, we know for our climate's sake we must succeed. In reforming the system we know we can't afford to shock the economy. So we need incremental change of some sort and must look to nature for guidance about design.

We realised early on that imposing a land tax alone was politically well nigh impossible, even at half a percent. Raising it to the a full land rental level would be just as hard. That sort of incremental change would not be possible.

Objections for instance to charging a full rent for monopoly use of land include:-

a. The banks would block it. They hold the power because they issue mortgages backed by land.
b. The public wouldn’t like it because the market value of their property would decline. This is unacceptable especially to those with big mortgages.
c. Property owners would argue they already pay rates and a mortgage so why should they have to pay a third time?

We realised early on that reforming the money system by spending money into existence to build infrastructure would result in rising land values for those with properties served by that infrastructure – be it rail, schools or ports. It would be difficult to control land inflation and therefore to halt the march to further inequality. The rich would also buy up patents and any natural monopoly they could get their hands on.

Funding a full Basic Income is also a considerable challenge. An extremely large sum is needed, even when the net public expenditure is calculated.

During the summer of 2001-12 Deirdre had had a series of Skype calls with a Cambridge academic, the late Dr Adrian Wrigley. His solution was for the Treasury to pay off the mortgage and for a full land rental to be paid. The property would then have a covenant on it requiring owners to pay a full land rental to Treasury. No rates would then be payable. If the property was sold, the next owner would still have to pay that rental.

We only wanted the land to be bought/paid for, not the whole mortgage, so we changed it to that.

We soon learnt that using the preferred "covenant" idea was hard to explain to the public so we reluctantly dropped it in favour of publicly owned leasehold land. However we started with a centralised model of public ownership and remained with that for almost 2 years. All the time we were a uneasy about land being owned by any agency of central government.

Adrian never talked of a parallel currency. It was our idea to have one. We thought the current system is so badly messed up we had to start again, and believe that this was also the way not to shock the economy.

We knew a lot of land is overvalued and although we recommended buying land at market value, we know this isn't the total solution.

So we recommended designing a second parallel (and competing) national currency, and link it from the start to completely new tax laws. After all no public budget would ever stretch to paying for such a large quantity of land, no matter how slowly it was acquired. Treasury, not the Reserve Bank, would issue Treasury Notes to buy up land. We happily adopted Adrian’s excellent idea of having a Land Rental Index for each area and adjusting the rental each year accordingly. Only the land value needs assessing not the improvements, so that is easy. And you only need a sample of properties in each general area. Land rentals are valued each year and the index suitably adjusted.

Parity with the land dollar with NZ dollar became a hot topic of debate. After discussion we eventually said “issue it at par, redeem it at par and let it float in between.” The new currency would be valued by those who wanted to employ labour without tax or buy goods without sales tax.

The name of new currency changed many times – Tradeable Tax Credit, Treasury Note, Zeal and finally the Land Dollar. (We also went through a short stage of recommending Rates Vouchers for both Auckland and Christchurch.)

Then, in mid year 2014 we suddenly realised it didn’t have to be issued by Treasury at all. Eureka! It could be issued by Community Boards and the revenue could be shared by other levels of government and eventually flow to central Government. We said ‘turn the funding model upside down, replace centralisation with a model where decisions are made across the whole economy. Restore local democracy'. We gave a great deal of power to the local level of government – currency creation power, land buying power (compulsory where applicable), and revenue gathering power.

In this model the Community Board or its elected equivalent “owned” more and more land – a more politically acceptable solution. The local committee must have on it, by right, one or two representative from the local iwi or hapu grouping, who would have veto power over any decision to buy land, thus avoiding potentially sensitive land. Land would effectively go into a Community Land Trust. In this way land could be gradually taken out of the market place and the people who decide which land to choose would be answerable to the locals. (Adrian had hoped the land buying could all be done voluntarily to avoid legislation. Some will no doubt come in voluntarily)

A whole raft of tax laws applying to transactions using the new currency (the Land Dollar) would have to be passed right at the beginning. These would include all taxes on the rights to the use of natural monopolies. Natural monopolies are the rights to land, water, airwaves, minerals, fisheries, patents, domain names, hydro-electric power generation and supply, any public utility such as a port, airport or the monopolistic rights to reticulate wires, pipes, rails, roads and the like: the right to use water, air, land or the biosphere to absorb waste.

So what does the policy say now?

Our party wants to restore the concept of sharing the values of the commons, have a money system that doesn't build in increasing debt and the need for competitive behaviour. We want to distribute the rent from use of the commons to all NZ citizens over one year old as a regular Citizens Dividend.

A new national currency the Land Dollar is to be slowly spent into existence at Community Board level to buy up land. No rates would be payable for those whose land is community owned. A local land committee would give local hapu/iwi veto power over decisions as some land may be sensitive even after Treaty settlements. The rent from the land would be shared with other levels of Government and as a Citizens Dividend – using participatory budgeting as there would be many simultaneous claims. Inflation would be controlled by a network of committees at different levels working with Treasury and Reserve Bank.

Transactions using the land dollar would attract no income tax, GST or corporate tax. But a whole set of different taxes is needed. This is because it must not be spent to plunder the earth, deplete resources, subtract from the social or cultural capital or pollute the water, air or biosphere. That means a full carbon tax for example.

For any currency to be effective as a means of exchange there has to be a circulation incentive built in. Adrian Wrigley suggested that rather than having a financial penalty built in for hoarding as recommended by Silvio Gesell, to make it easier each note should be issued with an expiry date.

The electronic version when received by Treasury would be refreshed and redated before issuing it as a Citizens Dividend. All citizens would receive it. Where there were dependents, the designated carer would receive it, thus changing the economic status of carers. In time this dividend would rise to a basic income, allowing a huge range of inventions and options for people who have been in unsatisfying jobs but have a passion or a hobby they want to pursue. Entrpreneurism would flourish – much needed in a post carbon age.

There are many unresolved issues. The property owner that has land bought with the new currency will have $100,000 plus to spend. Trades with the land dollar will not attract GST, income tax or company tax. We need actual examples, but believe a lot of it will be spent on labour to upgrade their homes or on the development of their small business.

We invite alternative solutions
This policy has been derived by discussing with a range of people at and between meetings and it has been largely driven by Deirdre, who has received feedback from meetings in Christchurch, Otaki, Wellington, Motueka, and two at huis held by the Living Economies Educational Trust hui. We are also aware there are some big issues we have not yet tackled, like the issue of Maori land. Our solution, we emphasise, is one solution. If you have another, please let us know!!
April 2015

Submission to the Local Government Commission on Reorganisation of Wellington Local Government

You will be aware that there is a push for a Wellington supercity. Here is our submission to the Local Government Commission:

3796322_origSubmission to the Local Government Commission on Reorganisation of Local Government in New Zealand

1 March 2015

1. Who we are

We are a political party that was started in 2011. Our goal is to have a just and sustainable economy that mimics nature in its organisation. We want a tax system that taxes what you hold or take not what you do or make. We want a money system where money is created without interest by the people not by commercial banks. We want a welfare system that encourages sharing, honesty and intimacy. We want open government and participatory democracy, including participatory budgeting.

2. We do not favour the proposal in its current form but would recommend an entirely different form of cooperation and sharing. While we are in favour of the organisation of a larger unit, not all power and control should go to the central body. Your model does this. All revenue is collected centrally and it does not appear to be shared fairly. All major decisions appear to be made centrally or by unaccountable Council Controlled Organisations. This is not nature’s model. Although we understand that ‘finance
follows function’ it is the central organisation that does all the deciding in your model and this is unacceptable.

We like both big and small and so we commend working on the organisational model from scratch. We believe that each small community have its own unique nature and be in a state of constant negotiation with the nearest big centre and with the centre. As far as possible it should recycle within its own community. When there is a major financial decision to be made there should be participatory budgeting.

3. Organisation of government should resemble nature. Nature has complexity, continuous recycling of energy and matter. There are managed boundaries. In nature there are systems within systems and wholes within wholes. There are well designed feedback loops for constant readjusting towards equilibrium. There is continuous self-organisation and response to stress or change. In nature there is no conflict between the needs of the larger whole and the needs of individual cells or organs. n nature decision making is spread. Cooperation supplements competition. There is diversity and coordination of parts and an awareness of the whole. Since for any whole part the energy and resources in must equal the energy and resources out, it is critical not to deplete resources from the periphery or it withers and that is not good for the whole. CCO’s must be managed on this principle.

4. This requires the reinstatement of paid community boards and the right of local communities to elect their own community board. Democracy costs money and we should not sacrifice democracy to starve the periphery of representation. There needs to be a balance between efficiency and resilience. Nature manages quite a lot of replication. It saves energy and resources by its superb organisational principles. Although under this model Local Boards (formerly councils) have the choice to have local
committees (previously Community Boards), it must be remembered that Kapiti Coast District Council in 2008 was one vote away from disestablishing Community Boards.

5. As a second best alternative please at least recommend legislation to require local representatives to call public meetings to discuss major budget decisions at local level and give them the money to do this.

6. CCOs must be answerable to elected representatives and the LGC must make it clear how this is to happen. These have largely been responsible for the fact that both Rodney and Waiheke are now working to escape from the Auckland supercity. We need more information on CCOs and their powers.

7. We endorse the submission of the “Land” Rent for Revenue and Justice Association of New Zealand where it recommends that in Local Government reform a larger entity should reinstate a rating system based on land value alone rather than capital value.

We believe in the principle “location, location, location”. Where there is a location that gives access to more services like infrastructure, commerce or nature, it is the land that goes up in value. Because we should pay for what we hold, we should pay for our continuing use of the land.

a. It is a progressive tax. Rating on land value alone means rates are lower for more ratepayers. Hence where a poll has been taken –

a situation that existed for decades – the public has has always chosen land value rating.

b. It discourages sprawl and saves public money. Since sprawl leads to a demand for building infrastructure it is essential financially to have a rating system based on land values. When this happens, landowners will either sell underused sites or use them appropriately. Capital value rating results in cities with holes in as development often “leapfrogs” outwards in search of cheap land.
Wellington should remain compact and we should encourage compact development in each town within the region.

c. There should be public ownership of infrastructure. The larger council should own and coordinate the infrastructure – the natural monopolies of water, main roads, rails, pipes, wires, ports and airports. Where possible the operation should be leased to private operators at market rentals.

d. It discourages speculation because those who do not use valuable land properly are penalised.

e. Land value rating encourages building and improvement of properties, whereas capital value rating discourages it by penalising it.

This is good for business. It is no good arguing that Wellington economy is not flourishing and then putting in a rating system that discourages economic activity.

Why not create a national currency at local level?

upmapOver a period of two years or more we have proposed:

1. A second national currency. The currency to be issued by Treasury, spent into existence to buy land. The new currency will have no other taxes than land rents, natural resource rents and taxes on bads. We aim to move to a tax system that taxes the monopoly use of the commons rather than labour and sales. Some revenue will be distributed as a Citizens Dividend to all citizens who have lived there for a year or more, the rest will be shared by all levels of government. We advocate a Land Rental Index to be set up in each area, with land rents being adjusted annually according to the index. Land rentals are relatively very stable over time. It is only when there is a major event like and earthquake that they decline or when a railway is put in or a labour intensive business arrives that they rise more than just a tiny bit. The new money would be good for the payment of rates and taxes. No further rates would be payable.

2. We have occasionally advocated a Christchurch currency and an Auckland currency created by spending it into existence to buy land. This would require complete cooperation from the central government as legislation would be needed to make it free of income tax, GST and company tax as before. Rents would be shared as a small Citizens Dividend. The rest would be shared with central government. So a similar design but a city currency as well as a national one.

3. Then very recently we went a step further and suggested that Local Boards (the Auckland supercity calls them this and there are 21 Local Boards as shown on graphic) create the currency, spend it into existence to buy land. A monetary authority will have to be set up to ensure there is no inflation. Revenue from land rents and some natural resource rents can be gathered by Local Boards and first distributed to the local citizens then the rest used at local board level and then sent up the line to supercity and to central government. Supercities would have power to impose taxes on water pollution e.g. leaching of nitrates that uses the commons of the aquifers and rivers. (and to tax the use of water for commercial purposes.)

This option 3 would require several currencies to co-exist. The usual NZ dollar, the new NZ dollar, the supercity dollar and the Local Board dollar. We had considerable difficulties and confusion when discussing exchangeability of currencies.

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4. Option 4 arrived a couple of days after I spoke to a meeting at a Motueka ecovillage in response to the questions and problems. This one is simpler and is like the formation of a river from the small streams to the river to the sea. Create the new national currency at Local Board level and pass it up the line. Local Boards would set up a Land Committee to decide which land should be bought first. Each local board might decide differently in consultation with its community. Every decision has the right to be vetoed by the local hapu or iwi and where applicable the Maori Land Court should be involved. You would also need a local committee (perhaps the same one) to administer a Land Rental Index or where appropriate because of different desirabilities of sites e.g. Wellington hill suburbs for sun. You would also need a local Monetary Authority to monitor inflation. It would work closely with the Supercity Monetary Authority and the Treasury Monetary Authority to ensure there is no inflation and that no local board would issue too much or too little new money. These are such important entities that they would have to be voted in.

There are so many issues to comment on here, it would be really good to have a general discussion. Then we can perhaps divide up the discussions. Option 4 finally gives real powers to the local economy, which is in line with our policy. The land board may, after consultation with the local community, choose a local business which needs capital, or choose undeveloped land owned by absentee speculators or the local iwi may have very strong preferences.

For instance, if the local committee chose five sections each valued at $200,000 it would create $1m of national currency. If the committee chose to purchase the land of a speculator, that speculator, seeing no future, might sell the lease and thus release the land for genuine use. Many with mortgages will want their mortgage reduced and, because the new currency is legal tender, the bank would have to accept it for paying off a mortgage. Or the committee may be persuaded that a local business needed capital to employ local labour and grow. A community land trust might ask for their land to be bought so they can take land out of the market. This would enable them to sell houses to younger people to join their village, as otherwise the cost would be unaffordable. They could then use the considerable injection of capital to develop their labour intensive businesses and the ones that use local materials.

Then the monetary authority, in conjunction with the monetary authorities of the supercities and the government would make sure the local board did not issue more money than it was allowed, as inflation must be kept strictly under control.images-1There could be problems with certain rogue local boards. Either they issued too much money and wouldn’t cooperate with the monetary authorities elsewhere, or their leadership was questionable. In that case there should be provision in law to instal a Commissioner until the Board's administration improved.

In models 1-3 we have designed in a circulation incentive in the form of a dated currency. However perhaps in model 4, since all money flows downstream from local to central, there may be no need of this.

My questions are (and you will raise plenty too):
  1. Exchangeability with the national currency NZ dollar? We had it as they are issued at par and redeemed at par and in between the value changes according to the market. Some have argued there should be no exchangeability with the old national currency.


  2. Will the creation of a second national currency at local board level stimulate the local economy?


  3. How does this all line up with the Maori Land Trust boards and Incorporations situation?


  4. How would the public be protected from local board that go rogue and how would the wider public ensure that local boards representatives can deal with this level of responsibility?


Now there is one more thing that comes before any of this. Councils and Government should never sell land. The idea of the government buying up the land in the Green Frame and then selling it off into private hands is unacceptable. They should keep it and auction the leases to the highest bidder, then share that revenue with the public (via a Citizens Dividend) and the central government. This should be entrenched in law somehow. Meanwhile a private bidder Auckland City Council has been offered $75,000,000 for a council car park. What a dreadful thing that would be if the council sold off this prime city land for cars to park and for a private enterprise to gain, both in car parking, and in capital gain. As they said in a The Nation programme on TV3, they are developing around traffic hubs. Of course. That means the public pays for the transport infrastructure and private land "owners" benefit from rising land values. Not fair, all wrong. Let logic prevail!

Reservations about Crown Leasehold Land. There are many who will have reservations about the government or the local board buying up their land. The alternative we used to have was that the Government pays you for your land, and the title of your property then bears a covenant, an obligation to pay a ground rent from then on, whoever owns the land. While it is more difficult to explain to the public, a covenant of this nature would give much more peace of mind when it comes to secure tenure of the land. "Leasehold title" has such a bad reputation that it is difficult to explain there are no sudden rent rises if the rent is linked to an index and that the tenure is for a lifetime, with rights that your descendants can get the next lease. No matter how much this is explained it may be better to have a covenant.