The Government needs to heed the warning of one of New Zealand’s leading economic forecasters that its policy settings are set to slow down New Zealand’s growth, National Party Finance Spokesperson Steven Joyce says.
“Infometrics’ assessment is that Government policy changes will slow growth this year and next, at the very time growth should be accelerating,” Mr Joyce says.
“The world is doing better, so there is absolutely no reason for New Zealand to be doing worse.
“Infometrics identifies changes in immigration policy, infrastructure policy, environmental policy, international education, and lower business and consumer confidence as drags on growth in the next couple of years.
“And I suspect that’s just the beginning.”
“While Infometrics expects some growth to continue, slower growth would mean less investment, fewer job opportunities, and lower wages generally than would otherwise be the case.”
Mr Joyce says that the Government and Finance Minister Grant Robertson need to heed the warnings.
“Mr Robertson is steadfastly ignoring business confidence warnings. Perhaps he’ll take notice of this report.
“He needs to click on to the fact that policy decisions have economic consequences.
“If this prediction come to pass then New Zealand will go from faster than the world as a whole to slower than the world as a whole in just one twelve month period of this Government. That would be a big lost opportunity.
“This Government has talked a very big game about lifting growth. You don’t lift growth if you start by lowering it.”
The Coalition Government needs to convince New Zealand businesses of all sizes that they understand them and will work with them rather than against them, National Party Finance Spokesperson Steven Joyce says.
“The Government must take responsibility for the very significant decline in business confidence in this country since the election,” Mr Joyce says.
“It reflects poorly on the Coalition that businesses are much less confident now than they were six months ago, while at the same time the world economy is steadily strengthening.
“The only thing that’s changed in the interim is a whole bunch of Government policies that affect business.
“The combination of some announced policies plus a whole lot more balls the Government has in the air means businesses of all sizes are worried and confused.
“Whether it’s employment law, immigration, student visas, infrastructure, resource law, housing laws, investment rules or tax law, Labour are either stalling progress or leading the country backwards.
“It’s hard enough to run a company in a small country like New Zealand without feeling the Government is making it much harder for you.
“A number of surveys are now saying businesses lack confidence to invest and add jobs. While confidence is often cyclical, if this trend continues New Zealand is going to miss some great opportunities to obtain investment and grow more and higher paying jobs.
“The Finance Minister dismisses the surveys as a one-off and because of a change of Government. That is quite patronising. Business people know the difference between a change of faces and a change of policies. And it’s the latter they care about.
“The Prime Minister keeps declaring she’s going to work with businesses. It’s time
to stop the talk and actually start the walk. She needs to walk back a range of policies that will make it harder for Kiwi businesses to compete and succeed.”
There was confirmation today that the new Coalition Government has inherited a strong economic growth story from the previous National-led Government, National Party Finance Spokesperson Steven Joyce says.
“Stats New Zealand’s report of 3 per cent growth for the year to September together with upward revisions to recent growth figures paint a clear picture of a strong economy over the last few years,” Mr Joyce says.
“They have revised New Zealand’s growth figures for the 2014, 2015, and 2016 calendar years to 3.6 per cent, 3.5 per cent and 4 per cent respectively. That’s a highly respectable growth story in anyone’s language.
“GDP per capita has also been revised upwards in those years. We’ve had 8.3 per cent in real GDP per capita growth over the last five years.
Mr Joyce says the figures released today finally put to bed the fallacy that New Zealand was having a ‘productivity recession’.
“In addition, the figures today show that the construction industry remains strong with the largest quarterly growth since March 2016. Road and rail infrastructure was a key driver, with the largest increase in ten years.
“New Zealand has now experienced 18 quarters of consecutive economic growth; and has grown in 26 out of the last 27 quarters, all the way back to December 2010.
“These figures provide clear confirmation that the new Government has inherited a very strong economy driven by the strong economic plan of the previous Government.
“The Labour-led Coalition needs to take heed of softening business and consumer confidence numbers since the election and make sure their policy changes don’t muck this story up.”
Finance Minister Grant Robertson must explain two multi-billion dollar omissions from the Half Year Economic and Fiscal Update released on 14 December, National Party Finance Spokesperson Steven Joyce says.
“It appears the Finance Minister has omitted reference to two particular large capital projects that meet the definition of ‘government decisions and other circumstances’ that have ‘material economic or fiscal implications’ and must be included,” Mr Joyce says.
“The $1.2-1.4 billion Dunedin Hospital is not referenced despite Mr Robertson declaring in the House on 28 November that it would be funded directly from the public purse instead of through a Public Private Partnership.
“The Government’s new $15 billion rapid transit light rail programme for Auckland is also not listed in the update, even though Mr Robertson committed to it in a speech to the Auckland Chamber of Commerce on 11 December.
“When questioned in the House today, Mr Robertson tried to say Dunedin Hospital was included in the ‘Other Capital Cost Pressures’ fiscal risk on page 84 of the HYEFU document. However the description of that risk makes no mention of health capital projects or Dunedin Hospital.
“The Dunedin Hospital project is now of such materiality and at such a high level of likeliness to be funded by the Crown it should have been specifically included as a risk to the accounts. That applies even more so to the $15 billion of new light rail projects the Crown has publicly committed to.”
Mr Joyce says that it is important that these major projects be included in the Government’s primary fiscal documents.
“The Public Finance Act is clear that this sort of information needs to be included. To exclude it will lend weight to the impression that the Government’s update is an unrealistic representation of the future fiscal position of the Government. And that won’t boost consumer and business confidence.
“This is a serious matter that needs a proper and clear explanation from Mr Robertson.”
The coalition Government has 29 new fiscal time-bombs waiting to go off according to the half-yearly economic and fiscal update, National Party Finance Spokesperson Steven Joyce says.
“Treasury has identified an unprecedented number of new fiscal risks that are caused by the arrival of the new Government,” Mr Joyce says.
“These cover a huge range of election commitments that are yet to be included in the Government accounts.
“Major policies like the Provincial Growth Fund, extra DOC funding, their justice policies, their primary health care policy, new rail links in Auckland and Wellington, and the effect on government of increasing the minimum wage, are all not included in the accounts in this update.
“Bearing in mind that the threshold for Treasury to note a specific risk is $100 million, across the 29 new risks that’s billions of extra spending that isn’t quantified so far.
“The Government’s allowances for new spending are already very tight because of their pre-election health and education commitments, and their distaste for PPPs to fund infrastructure.
“They haven’t even included an estimate for the America’s Cup - despite the urgency of that decision.
“The new Government may have convinced themselves they will be fiscally responsible but they clearly haven’t yet convinced the Treasury.
“Despite assurances that the coalition Government’s policy programme would be fully costed and released before Christmas, the HYEFU only contained policy items in the 100 day plan. It’s clear that the public has only been given a small taste of the new Government’s spending appetite in the half-year update.
“As Grant Robertson has become fond of saying, this update is truly just a starting point.”
Labour needs to come clean on exactly how many additional children will be lifted out of poverty with their Families Package, National Party Finance Spokesperson Steven Joyce says.
“Grant Robertson proudly announced yesterday in the Budget Policy Statement that 39,000 more children would be lifted out of poverty than through the previous Government’s package,” Mr Joyce says.
“Yet the independent disclosure statement and Regulatory Impact Statement provided by Government Departments clearly states that only 12,000 more children will be lifted out of poverty through this package.
“This is a concerning difference.
“Asked to explain the discrepancy in Parliament today, the Government simply said that different officials have different views.
“And yet the Regulatory Impact Statement is signed off jointly by Inland Revenue, MSD and Treasury. These are the relevant officials for this package. This is their official view.
“The Government owes the public an explanation.
“They trumpeted their numbers loudly yesterday but the numbers in the RIS contradict them.
“Why did they provide their number and why are officials contradicting them?
“National announced last year that its Family Incomes Package was projected to lift 50,000 children out of poverty on 1 April 2018 and a further Package was announced during the election campaign to apply from 2020 with a similar impact.”
It is clear that Labour’s new baby bonus in its revised Families Package is a rushed addition to a spaghetti of entitlements that will only confuse families, National Party Finance Spokesman Steven Joyce says.
“As Parliament debates this new programme under urgency it is apparent that having yet another entitlement for families will result in families facing high effective marginal tax rates and confusion as to how different entitlements interact with each other,” Mr Joyce says.
“This is one of the difficulties of rushing through this sort of legislation under urgency. And that’s ironic given that the House has been marking time over the last several weeks before this bill has finally come before it.”
Mr Joyce says that the National Opposition has put forward a number of other changes to improve the legislation and the $1.1 billion Best Start proposal. These included proposals to:
- Incorporate the baby bonus into the existing Working for Families Tax Credit system to reduce high effective marginal tax rates and target it to lower income families
- Allow parents to receive tax credits for an extra month following a death of their child
- Ensure children receive their immunisations and Well Child checks
“During the debate National is also proposing to keep modest tax cuts for low-income earners in line with Green Party policy, but indications are the Government will vote against these demonstrating that there are no circumstances under which the Government would let workers keep more of their own money.
“When Officials warn about high effective marginal tax rates, possibly in excess of 100 per cent, then it is crucial that these proposals are fully examined and considered.”
The Coalition Government’s legislation today to remove the tax threshold changes from Budget 2017 will mean less money for 1.2 million working Kiwis, National Party Finance Spokesperson Steven Joyce says.
“This bill means hard-working Kiwis on the average wage will no longer receive the $1060 extra money they were due to receive from 1 April next year,” Mr Joyce says.
“It is very strange for a Government that says it wants to increase the wages of hard-working Kiwis to start by taking more than a $1000 a year off them.
Mr Joyce says the savings the Government has made by cancelling the tax changes have all gone into providing a year’s free tertiary education, which will not be targeted to those most in need.
“It is wrong to take $1060 off average wage earners to give a year free tertiary education to lawyers and accountants.”
Mr Joyce says the decision means a majority of full-time Kiwi workers will face a marginal tax rate of at least 30 cents in the dollar for every additional dollar earned.
“This is a very high rate, especially when you add in GST and the abatement rates for programmes like Working for Families and the Accommodation Supplement.
“Kiwi families quickly get into the situation of paying more than half of any extra income they get in tax.
Mr Joyce says the package as a whole is overly complicated and poorly designed.
“National’s Family Incomes package was structured to lift 50,000 children out of poverty from April 1 next year. Labour’s 88,000 is not until 2021 by which time National would have undertaken its second similar package with a similar impact.
“Labour could have achieved the same result with a much simpler package that retains the tax cuts and provides better rewards for hard work.
“This bill complicates an already far too complicated tax and benefit system.
“Kiwis already get confused about what they are entitled to. This package makes it worse.
“We need to strengthen the link between work and income so that people know they get more when they work extra hours or change for a higher-paying job.”
Today’s half yearly accounts from Treasury have confirmed that Government debt will be going up instead of dropping over the next five years after just 49 days of the new Coalition Government, National Party Finance Spokesman Steven Joyce says.
“The previous Government left the books in very good order. Treasury’s Pre-Election Fiscal Update had net Crown debt reducing to $56 billion by 2022 from $59 billion at the start of this financial year,” Mr Joyce says.
“After just seven weeks with Grant Robertson as Finance Minister, this has turned around to an expectation of net debt growing to $69 billion by 2020 despite significant growth in tax revenues.
“And this is just the beginning. The Coalition has set up very tight operating allowances for their future spending and have left very little room for dealing with the ongoing spending pressures that any Government faces.
“Most of their big spending promises are yet to be included in these accounts.
“Their additional health and education spending, the provincial growth fund and increased police numbers and salaries must all come out of their tight operating allowance.
“The other notable change in the Government accounts is Treasury’s expectation for growth to soften over the short to medium term. This is underlined by recent business confidence surveys which show small and medium sized Kiwi businesses are concerned about the economic direction of this Government and how it will affect their competitiveness.
“The Government needs to focus on restoring business confidence quickly or the growth forecasts in these accounts could also turn out to be too optimistic.
“Now is not the time to be increasing Government debt. With New Zealand’s high level of private debt, the Government should be looking to reduce its own debt at this stage of the economic cycle so that we are ready as a country for the next rainy day.”
Labour is set to rush through legislation at the end of this week to remove $1060 from the pay-packets of average Kiwis next year in the vain hope that no one will notice, National Party Finance Spokesman Steven Joyce says.
“This new law will mean people on the average wage pay $1060 more in income tax from 1 April next year than is currently the case,” Mr Joyce says.
“It is deeply ironic that the first significant act of a Government with the stated aspiration of lifting workers’ wages is to reduce what workers will earn next year.
“With Parliament marking time for the last fortnight it is quite obvious that Labour has been delaying the debate as long as possible and hoping that the public misses the changes completely in the pre-Christmas rush.
“It is also obvious from Grant Robertson’s discomfort in Question Time last week that even Labour are embarrassed by the changes.
“Now they are saying they won’t start debating the new law until this Thursday, at which point they will ram it through cynically under urgency.”
Mr Joyce says this is an extraordinary approach for a contentious change that is being driven by a party that attracted less than 37 per cent support in the recent election.
“We need to remember that both New Zealand First and the Greens voted in support of the tax package seven months ago that Labour now want to unwind. They also didn’t campaign on removing it.
“New Zealand First in particular will have a lot of explaining to do to their voter base when they vote to remove $676 a year from Superannuitants and Veterans from 1 April.
“National will be opposing the changes vigorously. We need a proper serious debate on these changes and we’ll be debating it for as long as it takes.
“This isn’t theoretical student politics. Labour’s tax plans will have a real and significant negative effect on the lives of over a million New Zealanders.”