It is good news for the New Zealand economy that Moody’s Investors’ Service has affirmed our Aaa rating but we shouldn’t let the Government now waste it, National’s Finance spokesperson Amy Adams says.
“The recent international credit rating agency report praises the strength of an economy built up under nine years of a National Government.
“In Moody’s own words: it notes how New Zealand’s fiscal metrics ‘improved swiftly in the aftermath of the 2008 recession and the 2011 Canterbury earthquake; they continued to improve through the downturn in commodity prices from 2014-2016 and the Kaikoura earthquake in late 2016.’
“That New Zealand survived both economic and natural challenges and was still able to emerge stronger is testament to National’s stable hand in Government
“Moody’s also praised National’s debt reduction, pointing out that ‘the central government's gross debt fell to 26.5 per cent of GDP in 2017 from a recent peak at 31.3 per cent in 2012.’
“Economists have already cut their forecasts for Government surpluses in coming years because of the likelihood the Government will need more revenue than it expects to fund its wasteful and largely unquantified spending plans.
“National built up strong economic foundations for New Zealand which are now at risk of being torn down, undoing all the good words Moody’s have today praised.
“The Government’s employment policy will undermine the strength of New Zealand’s labour force and make it less flexible at a time when great change is being demanded of employers in a global market.
“It has already dampened enthusiasm for New Zealand as an export destination, turning away the vast investment appetite of global capital right now.
“It also decided to impose a fuel tax just as global crude prices were rising, hitting Kiwis at the petrol pump and its ban on oil and gas exploration ensures New Zealand will be a net importer of fossil fuels products, with all the cost that implies, for the foreseeable future.
“It is far easier to spend wealth than create it. National wants all New Zealanders to have the opportunity to accumulate wealth.
“Low-quality spending such as we’ve seen from this Government with its working groups, slush funds and massive but unsuccessful student bribe shows how quickly gains can be eroded.”
Today’s GDP figures illustrate the fallacy of the Government’s claim they won’t rely on population growth to underpin economic growth as GDP per capita came in well below headline GDP growth, National Finance Spokesperson Amy Adams says.
“GDP per capita was just 0.7 per cent for the year. This is significantly below the 1.6 per cent per capita New Zealand has averaged since 2012.
“In order to close the after wage gap with Australia - as we had been doing since 2008 - we need to be growing faster on a per person basis. Instead, New Zealand is now falling further behind.
“The Government inherited an economy that was growing strongly. Every one per cent lower growth means fewer opportunities for New Zealanders and around $800 million a year less revenue to pay for public services.
“With strong terms of trade and international growth rates, the Government has nobody to blame for the lower GDP growth but itself.
“Despite the quarterly results exceeding the Reserve Bank forecasts, these forecasts were already significantly lower than what was expected of the economy before the Government came into office last year.
“As the June quarter numbers released today don’t pick up the recent sharp drop in consumer confidence and business own activity indicators, GDP results for the second half of the year will be a better indication of just how much this Government is constraining our economy.”
“Economic growth needs stable, sound and pro-growth economic policies. The current Government doesn’t seem to realise that. Instead, it has implemented a range of growth-limiting policies such as increasing costs, banning oil and gas, banning foreign investment, introducing union-friendly labour reforms and not ruling out a higher tax burden for New Zealanders.
“A strong and growing the economy is the critical first step in improving the wellbeing and living standards of New Zealanders. Without solid growth we will fall further behind other countries such as Australia.”
Today’s report from the Tax Working Group will do little to reduce fears that more taxes are going to be imposed on New Zealand households and businesses, National’s Finance spokesperson Amy Adams says.
“Despite being given the opportunity to do so, the Government has refused to confirm its tax plans will be fiscally neutral. But this supposed review of the tax system shouldn’t be used as a stalking horse for higher taxes.
“Costs of living are already going up through higher petrol prices and rents, and outstripped wage growth in the last quarter. New Zealand families and small businesses deserve to know if this Government is softening us up for more taxes like a Capital Gains Tax.
“National welcomes the TWG ruling out a land tax or a wealth tax and not tampering with GST but is deeply concerned that the group clearly plans to bring in a Capital Gains Tax.
“The report is a missed opportunity to consider better ways to have the tax system incentivise savings and investment, lift productivity and help small businesses to grow.
“It isn’t good enough for the Government to say any recommendations it takes up won’t come into force until 2021. Taxes already take more of our income than in almost any country outside of Europe, amounting to $50,000 a year on average per household. And the tax take is already set to double by 2032 even before new taxes are added.
“Rather than working out ways to take more money from New Zealanders, the better approach would be to stop the low-quality and untargeted spending we are seeing all too often.
“National believes New Zealanders should be able to keep more of what they earn. The tax system should encourage productive investment and savings, not penalise those who try to get ahead.
“In typical Labour style, this is a Government that clearly thinks it knows how to spend your money better than you do.”
The Government’s anti-growth policies are not only hurting business confidence but are also affecting business decisions such as hiring fewer workers, National’s Finance spokesperson Amy Adams says.
“Grant Robertson has tried to brush aside negative economic indicators or downplay them as a side-effect of an economy ‘in transition’. Insulated in the Beehive, he prefers to ignore the impact this Government’s policies are having in the real world.
“In the services sector, hiring intentions have now contracted for three straight months. Or to put it another way, employment in a sector that accounts for two-thirds of the economy is stalling. That’s the longest run of contractions since January 2011.
“Falling business confidence will be a factor but business owners are also coping with rising labour costs such as a higher minimum wage and the uncertainty created by this Government’s plans to meddle with employment law that doesn’t need fixing.
“The services PSI series comes just days after the PMI showed employment in manufacturing shrank for the third month in four in August. Businesses aren’t just gloomy, they’re acting on that sentiment by creating fewer new jobs and holding off on investment. That, in turn, makes it harder for ordinary New Zealanders to get ahead.
“This Government built its fiscal plans around optimistic growth forecasts that will be thwarted by its own anti-growth policies. That’s a symptom of a naïve administration that lacks the real-world experience to prudently oversee the New Zealand economy.”
NZIER’s latest consensus forecasts show yet another decline in New Zealand’s economic outlook, National’s Finance Spokesperson Amy Adams says.
“Economists and analysts have cut their forecasts for economic growth and wages for the next two years, and slashed their estimates for Government surpluses for the next three years. The only things rising are the cost of living and unemployment. It is an ugly combination.
“This is deeply concerning for the New Zealand economy at a time when most of our comparator countries, like the US and Australia, are speeding up.
The Government may quibble about business confidence surveys that don’t suit its spin but the NZIER’s consensus forecasts compile the views of the Reserve Bank, the Treasury, ANZ, ASB, BNZ, Kiwibank, the NZIER and Westpac.
“Given Grant Robertson is so keen to use the consensus forecasts as evidence of the economy running along smoothly, hopefully these results will be a wake-up call that the Government’s anti-growth policies are hurting the economy.
“The latest manufacturing numbers out this morning have added further downside risk to the next set of GDP figures.
“When growth is lower than it otherwise would be, that means New Zealanders are less prosperous because wages are lower and jobs are fewer.
“The Government can’t ban oil and gas exploration, reduce labour market flexibility, increase union powers, ban foreign investment, and create high levels of uncertainty with more than 150 working groups, including the prospect of more taxes via the tax working group, without there being a significant downward effect on the economy.
“We need pro-growth policies that continue to close the gap in after-tax wages with New Zealand and Australia. Growing the economy is the best way to improve the living standards and wellbeing of New Zealanders, not redistributing what we already have.
“Growth doesn’t happen by itself. It needs good economic policy that encourages businesses to grow, hire new staff and invest in new machinery and equipment. It is time the Coalition Government stopped putting ideology ahead of the economic wellbeing of New Zealanders.
Indications today that the Tax Working Group may be set to reject a Capital Gains Tax shows even a handpicked working group won’t go along with the ideology of this Government, National’s Finance Spokesperson Amy Adams says.
“Before the election the Government talked a big game about a Capital Gains Tax, which is essentially a tax on Mums and Dads who have worked hard all their lives to set aside enough to put into a house or a retirement fund.
“It now seems the Tax Working Group may be going to say what we’ve been saying all along. This tax is unnecessary and harmful. If you want more houses then you get the settings right so that more houses are built, you don’t impose further taxes on property ownership and investment.
“Tax settings are a huge factor in deciding whether businesses invest, or hire new workers. Once again businesses have been left in the dark and that’s one of the reasons business confidence has fallen so low.
“Today’s revelation still leaves considerable uncertainty as the Government is still able to implement a Capital Gains Tax, despite any recommendation by the Tax Working Group.
“Families and businesses are facing years of uncertainty with a working group whose sole purpose was to give Grant Robertson the cover to introduce a Capital Gains Tax. It’s looking like it won’t even do that – but the uncertainty of future tax settings remains.”
Finance Minister Grant Robertson is desperate to downplay signs this Government is hurting the economy but he’s been shown up by Australia, where per-capita growth is running three times faster, National’s Finance spokesperson Amy Adams says.
“Mr Robertson has poured scorn on any economic indicators that don’t suit the Government’s narrative. If business confidence was booming he would be claiming the credit rather than trying to discredit the surveys and what they do tell us.
“Australia’s per-capita GDP grew 1.8 per cent in the past year compared with just 0.6 per cent in New Zealand based on the most recent figures.
“Kiwis proudly hold their own on the sports field against our trans-Tasman rivals but when it comes to economic management, this Government is clearly not match-fit. It has dropped the ball and eroded many of the gains made under National.
“From 2012 until National left office last year, GDP per capita outgrew Australia’s every single quarter. That has ended under this Government. Real after-tax wages grew by 18 per cent under National compared to just 8 per cent in Australia.
“These are the sorts of indicators that drive decisions by many New Zealanders on where they want to live. Under National, migration across the Tasman turned around from a net outflow of 30,000 in 2008 to a net inflow in 2017.
“That has reversed in 2018. So far this year, a net 2000 people have headed for Australia in search of a better life. They haven’t waited for the Government to deliver on feel-good promises we can’t afford and policies that hurt growth and employment, and drive up costs.
“This Government lacks the real-world experience to fully understand how its beltway theories hurt businesses and ordinary Kiwis. By contrast, National believes in sensible, consistent economic policies that encourage growth and give everyone an opportunity to get ahead.”
After months and months of insisting the Government’s core debt target was inviolable, a pledge repeated by the Prime Minister just last week, Grant Robertson has now admitted it’s more of a hope than a promise, says National’s Finance spokesperson Amy Adams.
“It is a key admission from Mr Robertson – not because of how much they may miss the debt target by but because this Government made getting core Crown debt down to 20 per cent of GDP by 2022 a key measure of their credibility as economic managers.
“On Q+A yesterday Mr Robertson claimed that even if the Government doesn’t meet the debt target he would consider that ‘we would have still done a good job’.
“No Mr Robertson, you would not have. The fact is that for the Government to have any credibility as economic managers then at the very minimum they must stick to the targets they set for themselves and insisted they would adhere to.
“His comments are directly at odds with the message the Prime Minister gave business leaders in a much-hyped speech last week aimed at easing deep concern and uncertainty about the direction of this Government and the ensuing slump in business confidence.
“The Prime Minister said the budget rules are ‘not a nice to have’ but were ‘a firm guide’ for managing the economy. And in her own ‘read my lips’ moment, she said while there had been calls to borrow or spend more, ‘We won’t’.
“But Mr Robertson is saying ‘We will’ by making it clear that missing the target would still be OK by him.
Just today Mr Robertson also confirmed that Government borrowing costs will be higher as a result of hiding some debt within Housing NZ.
“Conflicting messages are symptomatic of this coalition and part of the reason why business uncertainty is rife. It also speaks to this Government’s lack of credentials as economic managers, which has seen growth and job creation slow, and the cost of living rise.
“New Zealand needs to reduce debt in economic good times so that we’re able to cope when a shock happens. Instead we’ve seen some $6 billion of debt hidden off the Crown’s core balance sheet, a move the Treasury says could harm our reputation as a borrower, and increasingly clear messages that the core Crown debt target is likely to be missed.
“National believes a growing economy helps all Kiwis – creating more jobs, higher incomes and more revenue to pay for the things this country needs. Instead we have a Government intent of eroding the strong economic buffer inherited from National.”
An independent report released today by TDB Advisory shows that the Mixed Ownership Model introduced under the previous National Government has been an overwhelming success, National’s Finance spokesperson Amy Adams says.
“The Mixed Ownership process successfully generated $4.7 billion for public infrastructure such as schools, hospitals and broadband and TDB’s findings highlight the wider issue with the Government’s ideological opposition to private sector involvement in funding new assets.
“The partial sell-down of Genesis, Meridian and Mercury began in 2013 and had three simple objectives: to lower Government debt; to increase investment opportunities for ‘mum and dad’ investors and to improve the financial performance of each company.
“TDB’s study shows all of these objectives have been achieved.
“The most striking finding is that despite electricity prices being flat-to-falling over the period of the Mixed Ownership Model, shareholder returns have increased by 69 per cent and the Government has received higher dividends despite owning a lower share of each company.
“The report also shows that opposition to the Mixed Ownership Model was misplaced. It didn’t lead to higher electricity prices. And it didn’t result in a drop-off in renewable energy generation, which has increased over the period.
“The current Government has an irrational opposition to the private sector. Labour’s ideological resistance to Private-Public Partnerships to build public assets means a number of important projects are failing to get off the ground.
“The Government shouldn’t shut itself off from ideas such as Private-Public Partnerships or Mixed Ownership purely on ideological grounds. Evidence, not ideology, should drive good policy.
The latest migration figures show Kiwis are voting with their feet with more people leaving for Australia in the past year than arrived in the previous three, says National Finance spokeswomen Amy Adams says.
“So far in 2018 there has been a net outflow of more than 2,300 people to Australia, which more than unwinds the net inflow of 1,600 people achieved in the last term of the previous National Government.
“When National came into office in 2008 there were more than 30,000 people leaving for Australia every year. We worked hard to turn this around by closing the after-tax wage gap by $50 a week and achieving six years of consecutively superior GDP per capita growth.
“A pretty simple measure of a country’s attractiveness is how many people choose to live and work there. Unfortunately it seems the tide is now turning.
“It shows how quickly bad economic policies and uncertainty can undo years of hard work. People go where they have the best opportunity to get ahead. Clearly, more people now see that those opportunities lie in Australia not New Zealand.
“And what is worse, the most agile and free to move are often the best and brightest.
“The Government should be concerned that more people are now packing their bags and heading over the Tasman. We need to continue to try to close the wage gap with Australia. Unfortunately nothing this Government is doing is aimed at growing the pie.