With New Zealanders bombarded with negative economic indicators this week, it’s time for the Government to get its head out of the sand, recognise the damage it’s doing and focus on turning things around, National’s Finance spokesperson Amy Adams says.
“In one of the worst weeks of economic news in a decade we’re seeing unemployment rising, firms going bust, job creation going down, vast chunks of the workforce striking and business confidence plummeting to levels not seen in 10 years.
“Economists are now predicting New Zealand’s economic growth could drop to as low as 1.5 per cent at the same time the world economy is forecast to grow at around 3.9 per cent in the coming year.
“This matters to New Zealanders. Every lost 1 per cent of GDP means $800 million less revenue for government.
“When the economy is growing wages and jobs increase, we can build infrastructure like schools and hospitals and invest more in better public services. When it’s not we can’t without borrowing more or raising taxes.
“Yet still the Government refuses to acknowledge the real impact it is having through negative and anti-growth policies like raising taxes, restricting foreign investment and making bad decisions like axing oil and gas exploration without consultation.
“With a chorus of experts calling for a correction it’s time for the Government to face the facts, recognise it’s got things wrong and change course.
“Finance Minister Grant Robertson must explain what his plan is and how he will fund his billions of dollars in extra spending without borrowing more. Will he stick to his promise not to lift borrowing even more than he already has or will he start further ramping up costs on New Zealanders?
“New Zealanders deserve better than a Government with its head in the sand and no idea how to right its course.”
The Government’s anti-growth policies are hitting home, with the latest figures from Statistics New Zealand showing the number of people unemployed has increased by 4000 in the last three months, says National’s Finance Spokesperson Amy Adams.
“While unemployment remains low, it shouldn’t be increasing at all when there are such large capacity constraints in the labour market and businesses have previously been crying out for new workers. The only explanation is poor Government policies.
“Even more concerning is the fact that wages haven’t kept up with cost of living increases. According to the latest figures from Statistics New Zealand, the average wage grew 0.27 per cent in the June quarter, compared to inflation of 0.4 per cent.
“Wages are stagnating at a time when the Government’s policies are pushing up costs on New Zealand families through higher fuel taxes, higher rents and cancelling National’s tax cuts.
“The Government’s policies such as 1970’s style labour laws, shutting the oil and gas industry down and higher taxes are clearly starting to flow through to the labour market. They’re having a real impact on Kiwi families and stopping them from getting ahead.
“The reality is that this Government inherited a very strong economy with a buoyant labour market. But since coming to office the Coalition has only made it harder for people to get a new job or a pay increase.
“The effects of the Government’s poor economic management are only starting to be felt. It needs to stop making it harder for New Zealanders to get into work and start listening to businesses who want to invest in Kiwi workers. It must recognise it is having a real negative effect and act to turn it around.”
New Zealand has tumbled from top to bottom of the OECD business confidence rankings with the most recent data revealing New Zealand has the second lowest level of business confidence in the developed world, National’s Finance Spokesperson Amy Adams says.
“Given the high level of political uncertainty around the world it is a shocking revelation that New Zealand – typically a haven of political and economic stability – has the second lowest level of business confidence in the OECD.
“In 2016 New Zealand was the second highest in the OECD with 33 of the 35 countries beneath us. Now everyone except South Korea is ahead of us. To have fallen so far in such a short space of time is a damning reflection of this Government’s economic management.
“It is clear the Government’s low-growth policies are having a major impact, and are driving New Zealand’s appallingly low business confidence – though the Government is still refusing to acknowledge that.
“Policies such as industrial relations reforms, increased costs on small businesses via minimum wage increases and higher fuel taxes as well as the banning of oil and gas exploration, have all been bad for business sentiment and the economy.
“We want businesses confident so they can invest for growth, hire more people, and increase wages. That is how Kiwi families get ahead.
“With this Government’s dismissive and reckless approach to the economy, it’s no wonder we are again beginning to see more Kiwis heading overseas to greener pastures as opportunities here in New Zealand dry up.”
EDITOR’S NOTE: Please find the link to the OECD data here.
The Infometrics analysis released last night is far from a glowing endorsement of this Government’s economic management and shows that it must act to improve declining economic forecasts and plummeting business confidence, National’s Finance spokesperson Amy Adams says.
“Infometrics is now predicting GDP growth of only 2 per cent per year between now and 2021, well below the 3 per cent forecast by Treasury in Budget 2018. Lower GDP growth means fewer opportunities, lower wage growth and a lower standard of living for New Zealanders.
“This pessimistic forecast from Infometrics follows the recent below forecast GDP numbers as well as downgrades in expectations from most of the major bank economists.
“The worryingly low levels of business confidence and own activity highlighted by Infometrics show that the global economy is currently the only thing propping up growth, with both plummeting under this Government.
“There is simply nothing this Government has done that is pro-growth or good for business investment. Its low-growth policies hamper the economy’s ability to create opportunities, grow jobs and lift wages which will have a big effect on whether a business invests in that new piece of machinery or hires that extra staff member.
“The Government inherited a buoyant economy and seem to just expect that growth is inevitable and will continue to increase no matter what policies they implement. This is not the case.
“We have already seen GDP forecasts and actual GDP growth drop significantly. Growth was in the 3 to 4 per cent range under National but this has already dropped below 3 per cent. GDP per capita actually declined in the last quarter.
“The Government needs to stop taking the strong economy that they inherited for granted and start backing businesses and help to ensure growth continues. It is only by having a strong economy that we can grow wages and create opportunities for all New Zealanders.”
The services sector of the economy is now performing at its worst level since 2012 – raising concerns about the economy’s ability to continue to create opportunities, grow jobs and lift wages, National Finance Spokesperson Amy Adams says.
"BNZ and Business New Zealand reported today that their Performance of Services Index had fallen to the lowest level since 2012 - when New Zealand was still emerging from the effects of the Global Financial Crisis and Canterbury earthquakes,” Ms Adams says.
“The Government has been dismissing plummeting business confidence as ‘junk’, but measure after measure is now coming out showing that their policies are having a detrimental impact on businesses.
“Policies like higher fuel taxes, union-friendly 1970’s style industrial relations settings and the shut-down of oil and gas are all adding extra costs on businesses and increasing uncertainty. And when businesses are under pressure, they’re not investing for growth, hiring new staff or lifting wages.
“Services make up two-thirds of the economy – so this poor performance is a worrying sign for hard-working New Zealanders wanting to get ahead.
“Under this Government the number of businesses pessimistic about the year ahead is at its lowest level since the Global Financial Crisis. Whereas in Australia it is at its highest level in decades. We don’t want our kids growing up thinking opportunities only exist overseas.
“The Government needs to stop taking pot-shots at our businesses and making it harder for them to grow. It is only by having a strong economy that we can grow wages and create opportunities for all New Zealanders.”
The Government needs to answer questions about how it came about that a single area of high-end residential property was chosen for a carve out from the Overseas Investment Amendment Bill, National’s Finance spokesperson Amy Adams says.
“Serious concerns about have been raised about how the coalition does deals and the public deserves answers.
“Why did the Government not seek proper information about who the potential beneficiaries were of the Bill’s only carve out? Which Ministers and MPs met or communicated with iwi and other potential beneficiaries of the Te Arai exemption?
“And exactly what role was played by the lobbying firm part-owned by the Prime Minister’s former Chief of Staff?
“All these questions need answers; and that’s before we come to what appears to be a clear breach of the Cabinet Manual by the Acting Prime Minister, Winston Peters.
“Paragraph 2.65 of the Cabinet Manual makes no distinction about how distantly a Minister might be related to the potential beneficiary of a decision when identifying a conflict of interest, but Mr Peters clearly thinks he is too distant a cousin of Ngati Manuhiri Settlement Trust chairman John Paki for it to matter.
“The Cabinet matter makes it clear that when it comes to family and close associates it does matter.
“A clear conflict arose for Mr Peters when it became clear a member of his whanau might derive or be perceived as deriving some personal benefit from a government decision.
“One of the two iwi that would have benefited from the exemption was Ngati Manuhiri, chaired by Mr Paki, who is also listed on land title documents as one of three proprietors of the 283 hectares in Lot 1 of the Te Arai South Precinct covered by the exemption.
“Treasury advised Mr Parker the exemption may positively impact the commercial value of Ngati Manuhiri’s land, transferred as part of the iwi’s Treaty settlement.
“The exemption would have given Ngati Manuhiri and its co-investors 15 years to commercially develop and sell properties on the land – an opportunity given to no other New Zealand landowners under the provisions of the Bill.
“We know from statements in Parliament that NZ First Ministers were staunch advocates for the Te Arai exemption, following meetings with iwi representatives and their co-investors in Te Arai.
“This was a murky deal and the public deserves answers.”
KiwiBuild could see a small number of wealthy New Zealanders become even wealthier at the expense of New Zealanders on the average wage through being allowed to buy Government subsidised KiwBuild houses that probably would have been built by the private sector anyway, National’s Finance spokesperson Amy Adams says.
“Phil Twyford’s KiwiBuild promises have become such a noose around his neck he’s given up trying to target low and middle income families and thrown it all up to chance.
“As a result, KiwiBuild is likely to see some of the wealthier New Zealanders become even wealthier and those who need more support miss out completely just so Phil Twyford can ensure he gets buyers for the few homes KiwiBuild might turn out.
“Take the case of a couple of lawyers earning $180,000 today who are eligible to enter the KiwiBuild ballot. If they’re successful they’re going to amass significant wealth by living in a subsidised KiwiBuild house, seeing their incomes grow and then selling the house for a capital gain.
“That’s a great deal for them but it’s a poor one for taxpayers and those who need more support, including those who miss out completely.
“And the Housing Minister also confirmed today that even those who already own a home through a family trust will still be eligible for a first home buyer KiwiBuild house. Even from a Government which continues to put out bad and ill-thought through policies KiwiBuild stands out as one of their most poorly conceived.
“In the meantime the residential construction sector is stalling, the Government is imposing more costs on New Zealanders through more taxes and it is costing jobs by slowing our economy.
“All this is going to make it even harder for New Zealanders to get ahead, increase inequality and see billions more taxpayer dollars spent in areas where it won’t make the biggest difference.
“KiwiBuild is increasingly looking like a house of cards and support for New Zealanders who need it is getting further and further out of reach.”
Associate Finance Minister David Parker has been misleading New Zealanders for weeks by insisting that the exemption for the Te Arai Development from the Overseas Investment Amendment Bill was to prevent claims of a Treaty breach, National’s Finance spokesperson Amy Adams says.
“We now know that’s just wrong. Before Mr Parker took an exemption for the Te Arai Development to Cabinet, he had received clear advice from Treasury that ‘the Government had no legal obligation to exempt Te Uri o Hau or Ngati Manuhiri from the Bill’.
“Treasury advised that Treaty settlements are generally final at the time of agreement with the understanding that the Government will still pass laws of general application, and that the specific treaty settlements in question contain no specific obligations that require an exemption.
“When asked on what legal basis he decided there was a need to grant the exemption Mr Parker stated in Parliament that his decision ‘was informed both by my conversations with ministerial colleagues and the advice that I had from Treasury, which was in itself informed by legal advice’.
“But Treasury went as far as to say Mr Parker should not state Te Arai was exempted due to the need to honour a Treaty of Waitangi settlement.
“And to further muddy the issue, Mr Parker attempted to exempt residential development land from the Overseas Investment Amendment Bill that had no iwi ownership whatsoever and has now confirmed he did not verify the exact ownership details of the land before proceeding
“Given we now know that Treasury advised there was no legal issue and recommended against the exemption, it must be asked just what was said between Shane Jones, Kelvin Davis and David Parker to justify this rushed decision which is so at odds with the intent of the Bill.
“Mr Parker’s contradictions and lack of information on Te Arai continue to raise serious questions as to the real reason that Cabinet granted Te Arai an exemption which the Government must explain.”
The Government is admitting that its ‘affordable’ KiwiBuild houses are out of reach for many lower and middle income families by having to lift the eligibility criteria to $180,000, National’s Finance spokesperson Amy Adams says.
“Housing Minister Phil Twyford has set the eligibility criteria for KiwiBuild so wide that 92 per cent of first home buyers are eligible. That’s because he knows he will fail to deliver houses that are affordable to lower and middle income earners.
“This is the Government running up the white flag.
“Having such a wide criteria and a ballot system to determine the lucky few to get a subsidy is unfair and will mean struggling families could miss out in favour of higher income families and people with significant cash assets.
“There are 24,000 first home buyers a year and the Government is now only planning to deliver 1,000 homes in its first 20 months in office – so they should be targeted to lower and middle income families.
“It is ironic that Labour doesn’t think that someone on the average wage deserves a tax cut, but believes families earning $180,000 deserve a subsidy to help them buy their first home.
“The best thing we can do to help first home buyers is to build more houses – and that’s where this Government is failing already. Under KiwiBuild, it is yet to deliver a single home, and it has lowered its target for the first year from 10,000 homes to just 1,000.
“National had a plan to target support to low and medium income first home buyers through our KiwiSaver KickStart programme, while cutting through the red tape and building the infrastructure to speed up house building.”
The net number of firms expecting economic conditions to deteriorate in the second half of 2018 has doubled according to the latest business opinion survey from NZIER, National’s Finance spokesperson Amy Adams says.
“NZIER has found that pessimism remains across all regions in New Zealand, with Taranaki, Otago and Blenheim particularly downbeat.
“This isn’t surprising. The Government has introduced a range of anti-growth measures, from industrial relations reforms and hiking fuel taxes to shutting down oil and gas and lower investment in our State Highway network, and that’s reflected in plummeting business confidence.
“Those changes are hitting businesses hard, but the real losers here are Kiwi workers – because when businesses aren’t confident they’re not hiring more staff and lifting wage.
“The survey also shows cost pressures have increased sharply for business – particularly those in the retail sector. Unsurprisingly, they’ve responded by raising prices and more plan to do so in the next three months, hitting Kiwi families in the back pocket.
“This is worrying, because changes such as higher fuel taxes, rent increases and higher income taxes are already costing Kiwi families over $100 a week more – and this will just add to that pressure.
“The Government needs to stop dismissing these very real concerns, and start showing it understands. It needs to back businesses and help grow the economy. When businesses are strong we all benefit through greater investment, more jobs and higher incomes.”