The New Zealand Government has achieved its third fiscal surplus in a row with the Crown accounts for the year ended 30 June 2017 showing an OBEGAL surplus of $4.1 billion, $2.2 billion stronger than last year, Finance Minister Steven Joyce says.
“The 2016/17 Crown accounts are a direct demonstration of the hard work of New Zealanders since the Global Financial Crisis and the benefit of a strong economic plan that is delivering consistent growth,” Mr Joyce says.
Core Crown tax revenue was $75.6 billion for the 2016/17 year, up 7.4 per cent from the previous year with all major tax types increasing.
“The 12.3 per cent growth over last year in company tax, a 7.1 per cent growth in GST, and a 7.4 per cent growth in personal income tax, are a direct consequence of the confidence and growth of Kiwi companies and the growth in jobs.”
Core Crown tax revenue growth of $5.2 billion outpaced core Crown expenditure growth of $2.4 billion.
The final OBEGAL result for the year is $363 million better than predicted by Treasury at the time of the Pre-election Fiscal Update, largely due to core Crown expenditure being $502 million less than forecast.
“This better result should be seen as a one-off. Treasury advises that much of this expenditure reduction reflects timing differences and is likely to reverse out in the years ahead,” Mr Joyce says.
The country’s net debt has reduced in nominal terms by $2.4 billion from last year, to $59.5 billion. Net debt has dropped to 22.2 per cent of GDP.
“This is the first time net debt has reduced in actual dollar terms since the GFC and the Christchurch earthquakes,” Mr Joyce says. “It’s a significant milestone in the country’s economic recovery from those twin shocks.”
Mr Joyce says that the 2016/17 full year result should be interpreted with caution, and not seen as automatically flowing through into higher surpluses than forecast in the years ahead.
“Treasury has based its forecasts on current economic settings and some reasonably solid growth predictions for the years ahead. A number of commentators have noted a softening of growth indicators in recent days.
“The Government’s future surpluses will be needed to meet the cost of the significant investments we have committed to as part of the next four Budgets including the Government’s $32.5 billion infrastructure programme.
“We also need to keep reducing debt over time to prepare for the next rainy day event.”
The New Zealand economy continued to grow solidly in the June quarter, posting a 0.8 per cent increase in GDP, taking New Zealand's growth rate for the year to 2.7 per cent, Finance Minister Steven Joyce says.
“Our economy continues to outperform many developed nations, underpinned by strong export and domestic demand,” Mr Joyce says. “It is still a challenging international environment, which is why we need to continue with an economic plan that is working for New Zealand.”
New Zealand’s growth over the last year has exceeded that of Australia, the United Kingdom, the USA, the Euro area, Japan, and the average across the whole OECD.
Growth in the quarter was across 11 of 16 industries, including:
- Retail, trade and accommodation (up 2.8 per cent)
- Manufacturing activity (up 1.8 per cent)
- Business services (up 1.1 per cent)
- Transport, postal and warehousing activity (up 3.5 per cent)
Exports rose 5.2 per cent, with exports of goods posting its biggest quarterly increase in 20 years. Overall growth in the quarter was partially offset by the construction sector, which contracted 1.1 per cent in the quarter but up 6.4 per cent from June 2016.
Today’s GDP figures followed on from the release of New Zealand's external accounts yesterday, which showed a current account deficit of 2.8 per cent for the June year.
"This week’s economic growth statistics show that the Government’s consistent economic plan is encouraging businesses to invest and grow more jobs for New Zealanders. It is important to maintain and support business confidence if we are to continue our progress in the years ahead."
Better than expected balance of payments figures out this morning underscore the strength of both the services and goods sectors of the New Zealand economy, Finance Minister Steven Joyce says.
New Zealand's current account deficit narrowed to $1.6 billion in the June 2017 quarter, $1.2 billion lower than in the previous quarter. This is mainly driven by the services sector, with a surplus of $1.3 billion, the highest surplus on record.
New Zealand’s current account deficit is 2.8 per cent of GDP in the June year, down from 2.9 per cent in the last quarter, ahead of market forecasts for a deficit of 3.1 per cent.
"Today’s result is one of the dividends of an increasingly diversified economy, with both services and goods exports performing well in the quarter,” Mr Joyce says. “The services sector in particular, had a strong run in the quarter driven by $3.7 billion of spending by overseas travellers.”
Key highlights included:
- Services surplus increased $295 million to $1.3 billion
- The goods deficit decreased $677 million to $446 million
- New Zealand’s net international liability position is equivalent to 57.5 per cent of GDP, down from 57.8 per cent in the previous quarter, the lowest since records began.
"The days of New Zealand as a one-trick economy are behind us, but this does not mean we can rest on our laurels. We need to continue the government's strong economic plan so we can further diversify and grow our economy.”
The average Kiwi worker will be $1060 worse off a year if Labour is elected to government, National Party Finance spokesperson Steven Joyce says.
"Labour would legislate to overturn the currently legislated tax threshold changes so they no longer come in on 1 April," Mr Joyce says.
"That means workers on the average wage would be $1060 a year worse off.
"In anyone's language workers on the average wage would be paying more tax under Labour than under National.
Mr Joyce says Labour are telling porkies about where the money would go.
"They say it would be spent in health and education, but in fact it would be put towards their very expensive free tertiary education policy. Taxpayers already meet about 80 per cent of the cost of tertiary education.
"Labour claim to be concerned for family incomes but they simply want to make hard-working kiwis pay more tax.
"National has released a new ad today highlighting how a Labour government would directly cost working New Zealanders and superannuitants.
"Labour's tax surprise' makes it very clear what's personally at stake in this election.
"All hard-working kiwis who want to get a better return for their work should give their party vote to National."
Labour’s ‘Tax Surprise’ ad is available here: https://www.facebook.com/NZNATS/videos/1933118260037093/
New Zealanders looking for a strong government that can get on with the job should give their Party Vote to National, Campaign Chairman Steven Joyce says.
“Our new broadcast ads released today underline the very clear choice voters have in this election between a proven team that is delivering for New Zealanders, or a confused set of promises that are completely lacking in detail.
“We can either keep going forward with National, or backwards with Labour’s very different economic agenda including at least seven more taxes, more spending, more debt, higher interest rates, and trade and industrial relations policies that would hurt Kiwi businesses.
“Labour still hasn’t made the case for why we need such a big shift in economic policy, which would take stall our economy at a time when families and businesses are steadily getting ahead.
“We have a great opportunity to lock in the gains from the last few years, build on this momentum, and successfully deal with some of New Zealand’s longest standing challenges. Only National can deliver this.
“A vote for any other party is effectively a vote for a Labour-led Government that would set us down an uncertain and costly path.
“We’re focused on getting out our vote in the final few days of the campaign and ensuring New Zealanders know the only way to keep Bill English and his team delivering for them is to Party Vote National.”
National’s new “Clear Choice” ads are available here: www.national.org.nz/vote
Only four days out from the election, and Labour’s leader still has no idea how much her planned water tax would cost New Zealand households, businesses and farms – and who would pay it, National Party Finance Spokesperson Steven Joyce says.
Challenged this morning about New Zealanders’ frustration at this lack of detail, Jacinda Ardern said “yeah, me too.”
“She couldn’t say how many farmers would have to pay her water tax or how much it would cost them,” Mr Joyce says.
“And in another interview she raised the prospect of regional variations of the tax but again with absolutely no detail.
“Ms Ardern said Labour simply didn’t have the ability at this point to tell New Zealanders what they would be charged. And these people want to be running the country next week.
“It’s simply not good enough for Labour to be guessing about one of their most controversial policies less than a week out from the election. And it is just one of the seven new taxes Labour would impose on hard working New Zealanders.
“They continue to flip-flop on capital gains tax. They are now saying they would legislate for one in the next term of Government, and they refuse to rule out applying to it small businesses, farms or inherited assets. Yet they still can’t tell anyone what small businesses or farms have got to do with the housing market.
“Labour remain all at sea on tax. All we know is that they would add lots of taxes which would only slow down the economy.”
National has released its five point plan for the New Zealand economy and our tax system, designed to deliver sustained economic success and help families and businesses get ahead.
“Under National New Zealand will have a stronger economy that works with Kiwi businesses and not against them, so we all succeed,” Finance spokesperson Steven Joyce says.
"We’re focused on increasing the rewards from work by reducing taxes so that families keep more of what they earn.
“A stronger economy will allow National to invest in better public services and build more infrastructure while growing family incomes at the same time.”
The five point plan is as follows:
Build surpluses and pay down debt - National will reduce net debt to around 20 per cent of GDP in 2020 and to between 10 and 15 per cent of GDP by 2025. Now is not the time to increase debt as other parties are planning, we should be saving for the next rainy day.
Raise family incomes - our Family Incomes Package means 1.3 million families are better off by an average of $1350 a year from 1 April 2018. National will introduce a second Family Incomes Package in 2020, subject to economic conditions at the time.
Invest in public services and infrastructure - National will commit to the budget allowances laid out in the Pre-election Fiscal Update and invest in new schools and hospitals, cheaper doctor’s visits, and transport and broadband projects throughout New Zealand. Our social investment programme will help vulnerable New Zealanders change their lives.
Keep simplifying taxes - we’ll roll out real time provisional and terminal tax for all businesses, and we will overhaul tax settings on multi-national companies to ensure everyone pays their fair share.
- Support business confidence – we will maintain our broad-based tax system which is fair to all businesses. We will not introduce new taxes as the opposition parties propose nor will we increase uncertainty and slow the economy with long discussions about new capital gains taxes on small businesses or farms.
“This five point plan will provide a strong and growing economy that keeps delivering for New Zealanders," Mr Joyce says. "It will encourage investment, grow jobs, and strengthen the Government accounts so we can invest more in our future.”
Mr Joyce noted there are big differences in the economic policies being offered by Parliament’s main parties in this election.
“Labour and the Greens in particular propose a major change in economic direction,” Mr Joyce says. "It is not just in tax, but also in their plan to increase spending, increase debt, make big changes to industrial relations and trade policies, and their big migration changes.
“The Labour Party leadership have acknowledged the strength of the New Zealand economy. They need to explain why such major changes in policy are needed or justified.
"National’s policies and the hard work of New Zealanders are together delivering one of the best performing economies in the world since the Global Financial Crisis. Our five point plan will keep that going and growing.”
The National Party has today released a new advertisement updated to reflect the latest changes in Labour’s tax policy, National Party Campaign Chair Steven Joyce says.
“Our advertising team have worked tirelessly overnight to incorporate yesterday’s changes to what has become the movable feast that is Labour’s tax policy.
“Labour has changed the start date for two of its planned new taxes on hard working New Zealanders but the other five remain in place.
“We’re expecting further amendments and clarifications in the coming days as there are many more unanswered questions.
“For example, Labour still hasn’t told horticulturalists and farmers what the level of their water tax will be and whether it will be imposed before or after they make farmers pay for emissions through the Emissions Trading Scheme.
“More broadly, there are other big questions to be answered around their economic policies. For example, exactly how many of our free trade agreements do they plan to renegotiate and by when, so they can institute their flawed house buyers policy?
“And exactly which industries would be first required to sit down with Andrew Little and the CTU to agree on their wage rates?
“We appreciate that a lot of Labour’s policies are still being white-boarded at this point and there may well be further revisions in the coming days. If they were able to give us a heads up on their next changes before they release them, we’ll do our best to keep our advertising up to date.”
The updated ad can be viewed here: www.national.org.nz/letstaxthis
The Labour Party has postponed two new taxes but has left five more in place that would slow down the New Zealand economy and restrict growth, National Party Finance spokesperson Steven Joyce says.
“They’ve postponed the introduction of two taxes but have reaffirmed their intention to impose a water tax, regional fuel tax, tourism tax, income tax increases, and bringing farming into the ETS,” Mr Joyce says.
“In particular, Labour keeps denying they are putting up income taxes but they have today confirmed again that would legislate to remove the tax threshold changes that occur on April 1. That means someone on the average wage would be $1060 a year worse off if Labour becomes the Government.
“They’ve begun the long march back but they’ve got a long way to go.
“This is about the fifth version of their tax policy in the last month. They are just too vague on a whole range of policies and it shows.
“It’s interesting that it was a “captain’s call” to allow for a capital gains tax but the captain was nowhere near the back down.
“We know that Labour desperately want to put a capital gains tax and an inheritance tax on farms, small businesses and the family bach. They have had it in their policy for two elections and they have only dropped it this time because they were rumbled by the public.
“The public simply can’t trust Labour on tax.
“The big puzzle that remains is why Labour wants to restructure the New Zealand economy.
“Even Labour agrees that by nearly all measures New Zealand’s economy is performing well. They need to explain why they are proposing such a major change in economic direction in tax policy, trade policy, industrial relations, spending and debt.
“Voters have a clear choice in this election. They can keep New Zealand moving forward with a strong National government or change direction and go backwards under Labour.”
National’s newest campaign ad “Let’s tax this” highlights the tax burden Labour would impose on hard working New Zealanders, National Party Campaign Chair Steven Joyce says.
“New Zealand’s economy is growing strongly. As a result we’re creating more permanent jobs and growing family incomes,” Mr Joyce says.
“With a strong economy we have the opportunity to meet long-term challenges as with the Prime Minister’s commitment to lift 100,000 more children out of poverty and give 80,000 more Kiwis the chance to get into their first home.
“Labour wants to stall our economic success through heaping at least seven new taxes on New Zealanders just when they’re starting to get ahead.
“New Zealand currently has a broad-based fair tax system. We simply don’t need to impose a Capital Gains Tax, Land Tax, Regional Fuel Tax, extra Income Tax, Water Tax or an Inheritance Tax. We also don’t need to bring farming into an ETS when no other farmers worldwide are included.
“Labour needs to front up and be honest about its tax agenda. It’s quite obvious they have one and they don’t want to talk about it. Real transparency is the least that hard-working New Zealanders deserve.
“Voters are becoming aware of the clear choice facing them this election. It’s between continuing to go forward with Bill English’s strong National team or backwards with Labour and its very different economic agenda.”
The new ad will be running on TV and online, and is available at: www.national.org.nz/letstaxthis