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.
Cabinet minister Phil Twyford’s revelation that the government has no limit on the amount of debt it might run up makes a mockery of Grant Robertson’s fiscal responsibility rules, National’s finance spokesperson Amy Adams says.
“Twyford’s confession that the Government won’t control ‘off-balance sheet’ debt shows how poorly Labour budgeted for their promises before the election. They’ve already raised $6 billion in debt that doesn’t register in the Core Crown accounts since the election.
“We warned the Government before the election that their numbers didn’t add up. Since then we’ve seen them needing to substantially increase debt levels.
“Now Twyford is indicating debt could increase even further. Off-the-balance-sheet debt is like having a separate credit card your partner doesn’t know about. But whether the debt is Core Crown or hidden away in Crown Entities, taxpayers will still ultimately foot the bill.
“If the Government’s pledge was designed to reassure the public that they intended to be fiscally responsible rather than reckless it hasn’t worked. The strategy has been shown up as duplicitous. Meanwhile, uncertainty reigns.
“On top of the $6 billion in off-balance-sheet debt, the Government needed to increase its operating and capital allowances by more than $5 billion in Budget 2018. So far, that’s over $11 billion more money than allowed for in Labour’s pre-election fiscal plan.
“All this is against a backdrop of a Government that has made downplaying negative economic indicators a full-time job as they continue to pile up. The ASB Investor Confidence Survey today shows confidence at its lowest level in almost two years.
“The Government is realising too late that the New Zealand economy requires responsible leadership and both business and ordinary Kiwis need certainty, not theories exhumed from Labour administrations of yesteryear.”
Today’s revelations that the Government has been secretly inviting bids for a fire sale of Lincoln University which would see it folded into a larger institution are deeply concerning Selwyn MP Amy Adams says.
“I’m calling on the Government to guarantee it will not shut down the 140 year heritage of Lincoln as a proudly autonomous institution providing high quality, specialist training in areas of critical importance to New Zealand’s future.
“For 140 years Lincoln University has been a specialist, land based tertiary provider working in the disciplines of primary production, agricultural food and fibre, natural resources management, conservation and tourism.
“It has fought its way back from the challenges of the Canterbury earthquakes and is now operating in surplus, has stable student numbers and has had recent confirmation of its high academic quality.
“It will be the academic beating heart of the Lincoln Hub which is an industry wide collaboration focused on solving the most critical issues for our economy - the interface between our natural resource economy and our environmental sustainability.
“No matter how the Government might dress it up, if Lincoln was forced into a larger institution that practical, specialist focus would be lost and there is no justification for that. New Zealand’s land based sector would be worse off as a result and this would rip the guts out of the small Canterbury town of Lincoln.
“Today’s revelations that the Government has been secretly designing a process that could be death knell for Lincoln University’s autonomous state show just how little this Government cares about our land based sector and small town New Zealand."
Infrastructure Minister Shane Jones has proved how conflicted and confused the Coalition Government is with his appearance on Newshub Nation this morning, National Finance spokeswomen Amy Adams says.
“The Minister talked about his frustration around getting projects off the ground. He’s being pressured for more capital to fund infrastructure but Labour’s ideological resistance to PPPs means a number of important projects are failing to get off the ground.
“Without being open-minded and innovative around ways to fund new schools, hospitals and prisons, taxpayers will either end up footing more of the bill or we simply won’t get the vital infrastructure we need.
“Mr Jones also talked about the need for more foreign investment – just days after the Government severely restricted foreign investment through the Overseas Investment Amendment Bill.
“Then he said he was bringing in more Pacific workers to help plant his billion trees, despite saying immigration is too high and he instead wants to get his ‘nephews’ off the benefit and into work.
“It’s becoming increasingly clear that the coalition Government’s ideologies don’t line up with the reality of running the country. Mr Jones basically admitted this morning that what they’ve been doing is wrong.
“Mr Jones said several times this morning that he’s not a ‘tag and release’ politician, what we now know is that he’s been tagged as Minister, but ideology means he can’t be released to get on and do his job properly.”
BusinessNZ chief Kirk Hope is exactly right in saying Government policy must maximise economic growth and generate jobs that lead to higher incomes and make Kiwis better off, National’s finance spokesperson Amy Adams says.
“The Government has downplayed the significance of slumping business confidence, but as BusinessNZ observes, there is now ‘indisputable evidence’ falling confidence is impacting actual activity.
“It is naïve for the Government to say companies are profitable enough to cope with policies that are slowing the economy and driving up costs. In the real world, employers must juggle priorities and make difficult decisions that affect workers and investment.
“The Producer Price Index figures today show firms’ input costs are rising faster than they can raise prices. Faced with a squeeze, businesses have to raise their own prices, hire fewer workers or cut investment.
The impact on business activity can be seen in the performance of services index (PSI) for July which showed employment shrank for the first time since early 2013 - yet more evidence that jobs growth is stalling. The PMI manufacturing index showed production contracted, which Bank of New Zealand called ‘the most disturbing finding.’
“Business needs the certainty of sensible, consistent economic policies that encourage them to grow. They have to manage risk and right now one of their biggest risks is the lack of policy certainty from the Beehive.
“National wants New Zealand to be a place where everyone has the opportunity to get ahead. Gains tend to be hard won and easily lost.
“I welcome BusinessNZ’s balanced assessment of the challenges we face. These aren’t issues for petty political point-scoring. New Zealand is a small, open economy and policy must be optimised to ensure that we, as a nation, can thrive and grow.
“National believes that a growing economy means more jobs, higher incomes and more revenue to pay for things the country needs. Without it the argument just becomes how we split our current ‘pie’ amongst ever growing demands. We have to grow the pie.”
The Government has its head in the sand on the economy and the effect its policies are having on business confidence, National’s Finance Spokesperson Amy Adams says.
“The Government’s anti-growth policies are starting to do real harm to real New Zealand families. It’s time they acknowledge they are doing harm and listen to the concerns of New Zealand businesses.
“Since the Government has taken office GDP per capita has slowed down considerably, growth forecasts have been downgraded by all the major banks and economic agencies, job growth has fallen by 60 per cent, and in the last three months unemployment increased by 4000 people.
“These figures represent an extremely worrying trend, driven by anti-growth policies such as union-friendly industrial relations reforms, higher taxes, shutting down the oil and gas industry and banning foreign investment.
“And yet the Prime Minister refuses to acknowledge the Government’s role, instead dismissing business confidence as just ‘perception’. It just shows how disconnected this Government is from the realities facing hard-working Kiwis.
“On the back of plummeting business confidence the Treasury has taken the unusual step of talking down GDP growth.
“With real economic indicators now showing the economy is beginning to stall and opportunities for New Zealanders beginning to dry up, the Government needs to accept responsibility for the slowdown and drop its anti-growth policies that are damaging the New Zealand economy.
“When businesses are uncertain and not willing to invest or hire new workers, then GDP growth slows down. And when GDP growth slows down, Kiwis miss out on higher wages and better living standards.”