The Government will shortly introduce legislation aimed at putting the Public Trust on an equal footing with private sector institutions.
The new legislation will remove the Crown guarantee of the Public Trust, in line with government policy for several decades that Crown-owned commercial businesses should not have a competitive advantage through being Crown-owned, Finance Minister Steven Joyce says.
“Public Trust recently received an AA credit rating from independent credit rating agency Fitch. This rating is a sign of very low credit risk, and a high level of ability to meet financial commitments. The rating places the Public Trust just one notch below the Government's own rating.”
Associate Justice Minister Mark Mitchell says the rating gives the Public Trust’s customers certainty that it is a strong, stable, sustainable business.
“Gaining the AA rating is a considerable achievement. It shows customers that they can have confidence in the organisation, and that they will not be disadvantaged by the removal of the guarantee.
“No other business in New Zealand that provides the same services as the Public Trust is underpinned by a Crown guarantee,” he says.
The Crown guarantee will remain in place until the legislation is passed by Parliament. This is likely to be in the second half of 2018.
The New Zealand Labour Party must explain how it can possibly justify exploiting 85 international students for its election campaign while at the same time campaigning against legitimate law-abiding international education providers, National Party Campaign Chair Steven Joyce says.
“This is truly appalling behaviour both for its lack of human decency and industrial strength hypocrisy,” Mr Joyce says.
“If the allegations are correct, Labour has brought international students to New Zealand on false pretences, failed to look after them, and failed to meet their obligations to the students in the most basic way, while at the same time campaigning against exploitation of migrants.
Mr Joyce says Andrew Little, Jacinda Ardern and Campaign Chair Phil Twyford must explain how this happened, apologise immediately to the students involved, and put things right for them.
“They also must explain their personal involvement given their use as a drawcard to lure the students into the scheme,” Mr Joyce says. “They can’t pretend Matt McCarten has nothing to do with Labour.
“This is not how we do things in New Zealand. Labour is known in campaigning circles for a win at any costs approach, but this is a new low even for them.
“Labour has attacked people with Chinese sounding names and attacked international students studying in New Zealand. Little did we know that at the same time they were exploiting vulnerable young migrant workers.”
Three Community Housing Providers have been given the opportunity to present formal proposals to take over up to 2500 Housing New Zealand properties and tenancies in Christchurch, the Government announced today.
This follows an invitation in April for Expressions of Interest from Community Housing Providers interested in participating in the proposed transfer, centred on the suburbs of Shirley, Bryndwr and Riccarton.
The three short-listed respondents each bring together an experienced New Zealand registered community housing provider with equity providers that have worked on social housing and major infrastructure projects. The three providers are:Community Futures Christchurch, a consortium whose members are the community housing provider Trust House Limited, Whitehelm Capital Pty Ltd, and Broadspectrum (New Zealand) Limited Ōtautahi Community Housing Consortium, made up of the community housing provider Ōtautahi Community Housing Trust and Morrison & Co PPP GP 2 Limited A third consortium whose members are the community housing provider Compass Housing Services Co (New Zealand) Limited, AMP Capital Investors Limited, and Brookfield Financial Australia Securities Limited.
Finance Minister Steven Joyce said all three respondents submitted high-quality Expressions of Interest.
“Each demonstrated their capability for providing innovative and responsive services for tenants from a sound, sustainable financial base, while also delivering on the Government’s requirement to supply at least another 150 social housing places,” Mr Joyce says.
Social Housing Minister Amy Adams said the purpose of the process was to ensure that not only the social housing stock is increased and improved, but to deliver better services to tenants.
“While ownership of these properties may change, the properties will remain as social houses, just as they are now. They won’t be able to be sold off and must continue to be used as social housing. Current tenants will remain in their homes. Neither their rent or rights will change as a result of the transfer, including their eligibility for social housing,” Ms Adams says.
“At the same time we are looking for a provider who will apply fresh thinking and make a positive difference to the way tenants are supported, and properties are managed.”
Housing New Zealand will continue to own and manage up to 3300 properties across Christchurch.
The Government is proposing to make tax simpler for individuals, with people whose only income is from a salary, wages or investments no longer being required to file tax returns to receive tax refunds or to calculate any additional tax.
The consultation document, Better administration of individuals’ income tax, was released today by Finance Minister Steven Joyce and Revenue Minister Judith Collins.
“The Government is very keen to ensure that the tax system is as simple as possible so people can clearly see the link between their efforts and their after-tax income,” Mr Joyce says. “We started the process in Budget 2017 with the tax threshold changes and the removal of the Independent Earner Tax Credit, and this is the next step to a simpler fairer tax system.”
Ms Collins says currently, many people might be owed a refund or have tax to pay and not realise it.
“This could occur if they haven’t worked for the full year, they have fluctuating earnings, or some of their income has been taxed at the wrong rate,” Ms Collins says.
“It would mean that Inland Revenue will have better income information and will be able to calculate and issue refunds, or let people know if they have tax to pay without the need for taxpayers to do anything else.”
“Under this new system people will be much less likely to end up with large tax bills at the end of the year. They’ll be paying a more accurate amount through the year and receive any refunds automatically. This is good news for about three million taxpayers,” Mr Joyce says.
Submissions close on 28 July 2017. See www.makingtaxsimpler.ird.govt.nz for the detailed proposals.
Finance Minister Steven Joyce has welcomed the OECD’s latest review of the New Zealand economy as outlined in a report released today.
“The 2017 OECD Survey of New Zealand notes New Zealand’s strong economic growth off the back of a booming tourism market, strong net inward migration, solid construction activity and supportive monetary policy,” Mr Joyce says.
The report is also positive about New Zealand’s sound fiscal position with low public debt and a balanced budget.
“The report highlights that New Zealand outperforms most OECD economies in regards to our standard of living, health status, the quality of our education system and our overall environmental quality.
It shows that New Zealand’s labour market is performing strongly with high levels of employment and relatively strong real wage growth since the Global Financial Crisis. New Zealand also has one of the lowest gender pay gaps in the whole of the OECD.”
The OECD makes recommendations under three key themes, making growth more sustainable and greener, improving productivity, and adapting to the changing labour market.
“The report is consistent with the government’s economic policy direction, with our strong focus through the Business Growth Agenda on increasing our international connections, encouraging more international investment, improving environmental outcomes, lifting the level of business research and development, and training young people in the skills needed for the modern world, especially in fields like engineering and ICT.”
“One of the OECD’s recommendations is adding debt-to-income limits to the Reserve Bank’s macro-prudential toolkit with attention to satisfying a cost benefit analysis,” Mr Joyce says. “Last week the Reserve Bank released its consultation document on that proposal, and I am looking forward seeing the responses to it.”
The OECD also recommend bringing forward the age of eligibility for Superannuation increase, lengthening the transition period, and indexing the pension age to life expectancy.
“The Government is confident its existing plans for adjusting superannuation policy strike the right balance between ensuring sustainability of the scheme and providing time for current generations of working New Zealanders to respond to any change.”
Mr Joyce said the OECD report will be helpful in assisting New Zealand policymakers to respond to current and emerging economic issues.
“It is always good to have our thinking tested by international agencies like the OECD. While we don’t always agree with the OECD’s proposed policy response, it is encouraging to see that government agencies and the OECD broadly aligned on the future opportunities and challenges facing the New Zealand economy.”
GDP figures out this morning are a reminder of the importance of focusing on policies that create and sustain economic growth, Finance Minister Steven Joyce says.
New Zealand's GDP grew a slightly lower than expected 0.5 per cent in the March quarter, taking New Zealand's growth rate for the year to 3.0 per cent.
"Moderate GDP growth over the last six months is a reminder that every economic gain is hard-won in what is still a challenging international environment,” Mr Joyce says.
"This is not the time to rest on our laurels and start considering policies that would damage growth in key sectors or across the economy."
Growth in the quarter was across 11 of 16 industries, including:
• Agriculture, forestry and fishing (up 2.8 per cent)
• Manufacturing (up 1.0 per cent)
• Retail, trade and accommodation (up 1.8 per cent)
• Healthcare and residential care (up 1.6 per cent)
These were partially offset by weaker growth in the transport and construction sectors.
“Construction fell in the quarter, by 2.1 per cent, but the annual construction figure increased by 9.3 per cent for the year ending March 2017,” Mr Joyce says. “These figures move around from quarter to quarter, but we remain in one of the biggest building booms New Zealand has ever seen.”
Today’s GDP figures followed on from the release of New Zealand's external accounts for the March year yesterday, which showed a current account deficit of 3.1 per cent, which is the same as the March 2016 year.
"The international liability position – a measure of our indebtedness to the rest of the world – is down again to 58.5 per cent of GDP, compared to over 80 per cent when the current government came into office," Mr Joyce says.
"The improving external accounts show the benefit of a strong economic plan that delivers steadily improving economic results relative to the rest of the developed world.
"The Government will continue to take the right steps to encourage businesses to invest and grow more jobs for New Zealanders."
The Government has released the Major Projects Performance Report for the period November 2016 to March 2017, covering 55 complex major projects across government with a whole of life cost of $38.5 billion.
“The Investment System is continuing to mature with an increasing focus on realising the benefits of investment, and addressing risks before they turn into issues,” says Finance Minister Steven Joyce. “The portfolio as a whole continues to perform as expected.”
“Through this regular assessment, the Treasury aims to improve visibility of challenges and potential risks on projects where significant public funds are being invested,” says Mr Joyce. “It is my clear expectation that the public sector continue to focus on lifting productivity as a result of these investments so we can do more to help New Zealanders.”
The portfolio continues to perform well with 91 per cent of projects rated Amber or better, over half of the major projects are rated Green or Amber/Green, only nine per cent is rated Red or Amber/Red over this period.
The Red or Amber/Red rated projects are:
· Māori Land Service Programme – Te Puni Kokiri (Red)
· ANZAC Frigate Systems Upgrade – Defence (Red)
· 2018 Census Programme – Stats NZ (Amber/Red)
· Lincoln University/AgResearch Joint Facility – Tertiary Education Commission (Amber/Red).
Major projects are a collection of the most challenging projects Government agencies are currently undertaking. A red or amber/red rating is not uncommon during the life cycle of these large scale projects and highlights that there are issues or risks that are either being addressed or need to be addressed to ensure the project is delivered successful. Project governance teams are working with central government agencies to resolve those issues.
The interim report can be found at http://www.treasury.govt.nz/statesector/investmentmanagement/publications/majorprojects
Finance Minister Steven Joyce has today welcomed the release of the Reserve Bank's consultation document on the use of Debt to Income ratios for mortgage borrowers as an additional macro-prudential tool.
"The document is a comprehensive summary of the pros and cons of adding Debt to Income ratios to the Reserve Bank's toolkit of regulatory options,” Mr Joyce says.
"The use of Debt to Income ratio restrictions would be a significant intervention in the housing market, so it's important that all interested parties have their say during this consultation period."
The Reserve Bank has been using Loan to Value ratio (LVR) restrictions since 2013, and they were re-calibrated in 2016.
"The Reserve Bank's analysis suggest that LVR's have helped moderate demand in the residential housing market, particularly in Auckland where prices have been flat to falling over last ten months,” Mr Joyce says.
"The Reserve Bank has stated that even if DTIs were available now, they wouldn't be using them currently. That gives us all time to consider their possible future use carefully."
The consultation runs for 10 weeks and closes on 18 August 2017.
The Reserve Bank’s consultation document is available here.
The Government and Auckland Council have agreed on Terms of Reference to establish a project to investigate smarter transport pricing in Auckland.
“Alongside our current multi-billion dollar transport investment in Auckland, we need to look at new ways of managing demand on our roads to help ease congestion. Smarter transport pricing has the potential to be part of the solution,” Finance Minister Steven Joyce says.
“Work undertaken last year by the Government and Auckland Council found that smarter transport pricing could help make a big difference in the performance of Auckland’s transport system,” Transport Minister Simon Bridges says.
“Smarter transport pricing could involve varying what road users pay at different times and/or locations to better reflect where the cost of using the roads is higher (i.e. where there is congestion). This could encourage some users to change the time, route or way in which they travel.
“It is essential that we carefully consider the impacts of pricing on households and businesses. A key factor will be the access people have to public transport and other alternatives.
“The Government has also made a clear undertaking that any form of variable pricing will be primarily used to replace the existing road taxes that motorists pay. This is about easing congestion, not raising more revenue,” Mr Bridges says.
The Smarter Transport Pricing Project will undertake a thorough investigation to support a decision on whether or not to proceed with introducing pricing for demand management in Auckland. Officials from the Ministry of Transport, Auckland Council, Auckland Transport, the New Zealand Transport Agency, Treasury and the State Services Commission will work together and engage the public to develop and test different options.
The first stage of the project, which will lay the groundwork for assessing pricing options, is expected to be complete by the end of 2017.
“Any decision on the use of a demand management tool like road pricing is still some years off,” Mr Joyce says. “We look forward to receiving advice from officials as this work progresses. The Government and Auckland Council will then consider the project’s findings.”
Auckland Congestion Pricing Project Terms of Reference are available at www.transport.govt.nz/smarterpricing
A renewed Policy Targets Agreement (PTA), which sets out specific targets for maintaining price stability has been signed by Finance Minister Steven Joyce and incoming Acting Reserve Bank Governor Grant Spencer.
“Earlier this year I announced that Deputy Reserve Bank Governor Grant Spencer will be appointed 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 Joyce says.
“Mr Spencer and I have agreed that there will be no change to the existing Policy Targets Agreement for the period that he will be acting Governor.”
Under the existing agreement the Reserve Bank is required to keep future CPI inflation outcomes between 1 per cent and 3 per cent on average over the medium term. The Bank is also required to focus on keeping future average inflation near the 2 per cent target midpoint.
The Policy Targets Agreement takes effect on 27 September 2017, after Reserve Bank Governor Graeme Wheeler completes his term on 26 September 2017, and will apply from 27 September 2017 until 26 March 2018.
“The existing PTA has served New Zealand well and there are benefits in maintaining consistency in the agreement,” Mr Joyce says. “The renewed agreement will maintain continuity and stability in the monetary policy target over the election period and during the period of appointment of a new Governor.”
The renewed Policy Targets Agreement is available here.