Finance Minister Steven Joyce has welcomed the release of the Productivity Commission’s report Better Urban Planning.

“The report is a comprehensive study of the workings of New Zealand’s current urban planning regime and it proposes major changes to it. The issues raised in the report cross over a significant number of ministerial portfolios,” Mr Joyce says.

“The Government shares the Commission’s view that well-planned urban areas and cities that function effectively are hugely important to the wellbeing of New Zealanders. Ministers will carefully review all of the recommendations and opportunities identified in the report.”

The Commission’s report makes 105 findings and 64 recommendations, including:

Replacing the Resource Management Act and other statutes with a single new planning law that governs both the built and natural environment Clearer central government stewardship of the planning system Using statutory principles to set expectations for fair, efficient and proportionate planning decisions Making greater use of targeted rates and alternative infrastructure funding tools

“As New Zealand becomes more economically successful and our population grows we need better and more responsive planning for growth and more investment in the infrastructure that supports that growth,” Mr Joyce says.

“The Government has made a number of changes to existing planning and funding tools over recent years. These include the National Policy Statement on Urban Capacity, the proposed Urban Development Authority legislation, the Housing Infrastructure Fund, and the current round of RMA reforms, all of which progress some of the areas of work the Productivity Commission identifies.

“However in this report the Government asked the Productivity Commission to take a blues skies approach and provide a longer term view at what a future planning system could look like.

“The Government will respond formally to the Productivity Commission’s recommendations in due course. We would like to acknowledge the Commission’s time and effort in considering this issue, and the wide engagement it has had with individuals, local authorities and firms throughout New Zealand and Australia in the inquiry,” Mr Joyce says.

The full report is available here.

Leading credit rating agency Moody’s Investors Service has reaffirmed New Zealand's highest possible Aaa sovereign credit rating with a stable outlook, highlighting the country's high economic resilience, effective policy making and very strong fiscal position.

"The latest Moody's credit rating statement is a very positive endorsement of New Zealand's economic performance and the Government's policy settings," Finance Minister Steven Joyce says.

"Moody's expects that New Zealand will be one of the fastest-growing Aaa rated economies over the next few years. It notes that New Zealand's strong population growth, including through immigration, lifts the country's economic potential.

“The Agency also notes that New Zealand's number one world ranking for ease of doing business supports the country's robust growth outlook.

"Moody's draws attention to New Zealand's targeting of and subsequent achievement of a Budget surplus in 2014/15 as evidence of the country's effective policy making.

"Finally it notes that the Government's focus on preserving strong public finances provides New Zealand with the room to buffer the economy from any future economic shocks or natural disasters."

Mr Joyce says the Government will continue to implement its strong economic plan, focusing on building better public services and infrastructure, steadily reducing net debt, and ensuring the benefits of economic growth are shared with Kiwi families.

"This latest report from Moody's underlines the benefits of all the work New Zealand has done over the last few years to strengthen our economy and our country's finances. It's a tribute to the hard work of all Kiwis and a position we can all take real confidence from,” Mr Joyce says.

Moody’s credit analysis of New Zealand is available here.

Finance Minister Steven Joyce, and Tertiary Education, Skills and Employment Minister Paul Goldsmith have welcomed the release of the Productivity Commission’s report New models of tertiary education.

“We would like to acknowledge the Commission’s time and effort in considering this issue, and the wide engagement of the tertiary sector in the inquiry,” Mr Joyce says.

“We share the Commission’s commitment to further improving the way that tertiary education delivers relevant skills for New Zealanders, and will review the recommendations and opportunities identified in the report.”

“The Government will carefully consider the Commission’s recommendations over the coming months. We have work underway on some of the matters raised such as improving the accessibility of information for prospective students,” Mr Goldsmith says.

The Commission’s report is wide-ranging, and makes 49 recommendations. These focus on:

Improving information and its use across the tertiary education system, Improving regulatory settings, particularly around quality assurance, Reforming how Government purchases tertiary education, Ensuring the “system architecture” supports clear roles, accountabilities, and expectations to drive better, and more innovative, tertiary education performance.

“The Government will keep an open mind on all of the recommendations, with the exception of the Commission’s view that interest should be reintroduced on new student loan borrowing.

“The Government is committed to retaining interest-free student loans for borrowers residing in New Zealand,” says Mr Goldsmith.

“We do not want to see young people starting their working lives with unmanageable debt. We know that for those who stay in New Zealand after graduating, half will have repaid their loan in under six and a half years.”

“Tertiary education provides students with the skills and qualifications to get good jobs and good incomes, contribute to the country’s economy, and be part of an innovative and successful New Zealand,” Mr Joyce says.

The Government will respond formally to the Productivity Commission’s recommendations in due course. The report will be tabled in Parliament at 9am today, and can be found on the Commission’s website www.productivity.govt.nz.

The construction and services industries drove New Zealand’s economic growth in the December quarter as some other sectors eased back, Finance Minister Steven Joyce says.

Statistics New Zealand reported Gross Domestic Product grew by 0.4 per cent in the December 2016 quarter. This took annual growth to 3.1 per cent (2.7 per cent higher than the December 2015 quarter).

“Our economy is successfully navigating a still challenging international environment, and growing the prosperity of New Zealanders,” Mr Joyce says.

“While growth has softened in this latest quarter, the continuing trend is consistent ongoing growth ahead of most other developed countries.

GDP per capita has grown 0.9 per cent over the last year, and real gross national disposable income has grown 4.1 per cent over the year.

“We have seen particularly impressive growth in construction and services partly offset by a fall in primary production and the related manufacturing sector,” Mr Joyce says.

Construction activity grew 1.8 per cent in the quarter and 10.5 per cent in the calendar year – the highest rate of growth since 2004.

Other industries with strong quarterly growth include:

•         health care and social assistance (up 1.3 per cent)

•         professional, scientific and technical services (up 1.6 per cent)

•         accommodation and food services (up 1.0 per cent)

•         Arts and recreation services (up 5.5 per cent)

The Current Account deficit released yesterday is down to 2.7 per cent in the 2016 year. Our net international liability is down just below 60 per cent. This is the lowest on record.

“This week’s statistics on economic growth and our external accounts show the benefit of the Government’s sensible, consistent economic management,” Mr Joyce says.

“We will continue to provide the economic conditions that encourage businesses to invest and grow jobs to the benefit of Kiwi’s and their families.”

The Government’s books are better than expected, with a $1.1 billion OBEGAL surplus for the seven months to January, Finance Minister Steven Joyce says.

“Stronger tax revenues as a result of a healthier economy are flowing through to the Government’s financial performance,” Mr Joyce says.

Tax revenues year-to-date are 3.8 per cent more than they were predicted to be in Budget 2016.

“Company tax in particular is higher than expected, and that reflects the good performance of New Zealand companies in what is still an uncertain world,” Mr Joyce says.

The $1.1 billion OBEGAL surplus compares to Treasury’s forecast of a $517 million surplus at the start of the fiscal year.

Core Crown expenses for the seven months to January were $234 million lower than the Budget forecast, reflecting the Government’s ongoing commitment to prudent spending.

Mr Joyce says that a number of variables made the final out-turn for the full financial year hard to predict.

“The biggest variable at this stage is the cost of the Kaikoura earthquake and how those are allocated between this year and next year,” Mr Joyce says.

“The good news is that this Government’s strong economic management means we can afford to step in to help these communities and support them when they are most in need.”

Progressively lifting the age of entitlement to New Zealand Superannuation from 65 to 67 is the responsible and fair thing to do for New Zealand, Finance Minister Steven Joyce says.

"Average life expectancy is increasing by around 1.3 years each decade and more older people are staying in the workforce,” Mr Joyce says.

“Greater life expectancy is of course positive but it does drive up the cost of NZ Super. While New Zealand has a more affordable scheme than most countries, the increasing costs would require future trade-offs – either restricting spending increases in areas like health and education, or increasing taxes.”

The Government intends to increase the age of entitlement for NZ Super by six months each year from July 2037 until it reaches 67 in July 2040. This means everyone born on or after 1 January 1974 will be eligible for NZ Super from age 67.

Other settings such as indexing NZ Super to the average wage and universal entitlement without means testing will remain unchanged; and the age that KiwiSaver funds can be accessed will remain at 65.

“Making a change over a reasonable timeframe will give future generations of New Zealanders more choice as to how they allocate their government spending,” Mr Joyce says.

"While others have called for an earlier transition, the Government's view is that giving 20 years’ notice balances timeliness with being fair to current generations of working New Zealanders.”

Average life expectancy in New Zealand has increased by 12 years over the past 60 years, including by four years since 2001, when the age for NZ Super was increased to 65.

“When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super. That has since increased to around a quarter,” Mr Joyce says. “Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average.”

Mr Joyce says the Government’s previous position of not changing the age of eligibility was appropriate in the aftermath of the Global Financial Crisis, when New Zealanders were looking for certainty at a time when the Government’s finances were under pressure.

The Government is also proposing to double the residency requirements for NZ Super so that applicants must have lived in New Zealand for 20 years, with five of those after the age of 50. People who are already citizens or residents will remain eligible under the existing rules.

The Government intends to introduce legislation to make these changes early in 2018. The residency changes will cover people who arrive in New Zealand after the legislation is passed.

"These changes are important and need to be politically durable,” Mr Joyce says. "Scheduling the legislation in this way gives all political parties the opportunity to discuss their position with the public before it comes before Parliament."

The proposed changes to the age of eligibility and the residency requirements are estimated to save the Government in excess of 0.6 per cent of GDP or $4.0 billion annually once the changes are fully in place.

Included in the legislation will be provision for parliamentary consideration of any need for any temporary transition requirements in 2030.

"It is not possible yet to determine what, if any, temporary support will be needed for people who are unable to continue working beyond the age of 65,” Mr Joyce says.

“Considering any requirements in 2030 will give a future parliament the opportunity to consider current information on health and labour market trends of different groups as the age change approaches."

Finance Minister Steven Joyce and Revenue Minister Judith Collins have released three consultation papers proposing new measures to strengthen New Zealand’s rules for taxing large multinationals.

“Our broad-based low rate tax system continues to perform very well for New Zealand overall,” Mr Joyce says. “However it’s important that it keeps evolving to ensure that all companies operating in New Zealand pay their fair share of tax.”

“The proposals in these documents are in line with the recommendations from the OECD’s base erosion and profit-shifting (BEPS) project which has developed best practice measures for the global response to BEPS.”

The consultation documents contain proposals for:

Tackling concerns about multinationals booking profits from their New Zealand sales offshore, even though these sales are driven by New Zealand- based staff Preventing multinationals using interest payments to shift profits offshore, and Implementing New Zealand’s entrance into an international convention for aligning our double tax agreements with OECD recommendations.

“We also need to be mindful of the New Zealand context so the proposals address some specific BEPS arrangements that Inland Revenue has observed,” Ms Collins says.

“We welcome multinationals’ participation in our economy, but we also expect them to pay tax based on their actual levels of economic activity in New Zealand.”

Submissions on the consultation document on implementing the international convention are open until 7 April. Submissions on the other two are open until 18 April. Ministers will consider final proposals arising from the documents later in the year.

The consultation documents are available at www.taxpolicy.ird.govt.nz.

A full cost-benefit analysis on Debt-to-Income (DTI) limits and public consultation will be conducted by the Reserve Bank before any decision is made on the potential use of the macro-prudential policy tool, Finance Minister Steven Joyce says.

“I have discussed DTIs with the Reserve Bank Governor, who remains concerned about the levels of debt in some households in the context of recent increases in house prices,” Mr Joyce says.

“I have decided that, consistent with good regulatory principles, a full cost-benefit analysis and consultation with the public should occur before I consider whether to amend the Memorandum of Understanding (MOU) on Macro-Prudential Policy.”

The Finance Minister and the Governor have signed an MOU that governs the use of macro-prudential tools. This MOU sets objectives for and requires accountability around the use of the tools. The introduction of DTI limits would require that this MOU be amended. 

Debt-to-income limits are designed to regulate the amount of debt that a mortgage borrower can access relative to their incomes.

“The Bank has a number of regulatory tools available to it to address systemic risks it identifies and I am cautious about adding further tools.

“The use of macro-prudential tools can be complex and affect different borrowers in different ways. I am particularly interested in what the impacts could be on first home buyers.”

The RBNZ is currently gathering information about the DTI levels that borrowers are obtaining and assessing the potential case for the use of debt-to-income limits.

“Given the novel nature of a DTI tool in New Zealand and the fact there are a number of possible policy actions the RBNZ could take, it is important that the costs and benefits of the different policy options be adequately and rigorously explored.”

The Bank has indicated that public consultation will commence in March and occur during the first half of 2017.

The Government's 2017 Budget will be delivered on Thursday 25 May, and will be centred on providing opportunities for all Kiwis to get ahead, Finance Minister Steven Joyce says.

"The 2017 Budget will build on the strengthening performance of the New Zealand economy over the last several years. It will focus on creating the conditions for further growth and greater prosperity for all New Zealanders," Mr Joyce says.

"New Zealand businesses have generated 328,000 new jobs since 2008, and average weekly wages have grown by 26.1 per cent – more than double the rate of inflation. Budget 2017 will seek to give businesses the confidence to keep investing and keep growing, to provide more opportunities for New Zealand families.”

A key element of the Budget will involve investing in the public services and building the infrastructure for a growing New Zealand.

"As the economy grows, we have a little more headroom to invest in better public services. However, as always, our focus will be on achieving better results, and not just tipping in more taxpayers money," Mr Joyce says.

“It is also very important to remain mindful that the money the Government spends comes from hard working Kiwi families. We remain committed to reducing the tax burden on lower and middle income earners when we have the room to do so.”

Mr Joyce says the Budget will continue a relentless focus on reducing debt as a percentage of GDP.

"A key part of building a resilient economy is creating the necessary buffers to deal with the next economic shock. The Government remains committed to its target of reducing net debt to 20 per cent of GDP by 2020/21," Mr Joyce says.

Finance Minister Steven Joyce will appoint current Deputy Reserve Bank Governor Grant Spencer as the Acting Governor of the Bank for six months, following the expiry of current Governor Graeme Wheeler’s term on September 26 this year.

"Mr Wheeler's term as Governor expires on September 26, three days after the general election, and he has decided not to seek reappointment," Mr Joyce says. "Following advice from the Cabinet Office and consultation with Cabinet, I have decided that the most appropriate course of action would be to appoint an acting Governor for a six month period to cover the post-election caretaker period. This will give the next Government time to make a decision on the appointment of a permanent Governor for the next five year term.

"I have decided to appoint Mr Spencer as acting Governor from 27 September 2017 to 26 March 2018, on the advice of the Reserve Bank Board of Directors. The Government is pleased to have someone of his calibre to move into the role. He is a highly experienced member of the Bank’s Leadership team who will provide stability and continuity through this caretaker period prior to the appointment of the new Governor."

Mr Joyce and Mr Spencer have agreed that there will be no change to the Policy Targets Agreement for the period Mr Spencer will be acting Governor.

Mr Spencer has advised the Government that he won't be applying for the permanent role, and intends to retire following his period as acting Governor.

The Bank has had one previous acting Governor. Former Deputy Governor Rod Carr was appointed in an acting capacity for the pre-election and caretaker period around the 2002 General election, following the resignation of Governor Brash.

Mr Joyce thanked Governor Wheeler for his service to the Bank.

"The Governor has performed his role calmly and expertly during a highly unusual period for the world economy. I thank him for his service up until now and for the remainder of his term as Governor," Mr Joyce says.