Who knows regions best?

July 24, 2014

Labour has decided the regions are suffering and its MPs are doing their best to talk them down, but those who represent them have a different story:

Hon DAVID PARKER (Deputy Leader—Labour) to the Minister of Finance: Does he agree that there are growing gaps among the regions of New Zealand, making the economy and society increasingly unbalanced; if not, why not?

Hon BILL ENGLISH (Minister of Finance): No, I do not agree with that. A variety of data suggests the regions have led New Zealand’s recovery. Statistics New Zealand regional GDP data shows that Bay of Plenty, Gisborne, Hawkes’s Bay, Nelson-Tasman, Canterbury, Otago, and Southland, of course, all grew faster than the national average in the 5 years to 2013. The most recent ANZ Regional Trends survey shows rural regions growing faster than urban areas, and just last week I received reports from Queenstown, in my own electorate, of a significant boost from a long holiday by the Leader of the Opposition. But if the member wants to talk down the regions, then I hope he declares a crisis, because on recent established history every time Labour declares a crisis, things come right pretty quickly.

Hon David Parker: Does he agree that when the top few percent own most of the wealth the squeezed do not have enough to spend and invest and the economy will not perform to its fullest potential until the imbalance is fixed?

Hon BILL ENGLISH: No. In fact, in respect of the distribution of benefits of growth I can tell the member that the number of people on working-age benefits in Greymouth dropped 5 percent in the last year. In Blenheim it dropped 9 percent. In Napier it dropped 8 percent in the last year, and in Wanganui the number of people on working-age benefits also dropped 5 percent. Those people are now enjoying the benefits of more jobs and a stronger economy.

Hon David Parker: Then why is it that after 6 years, aside from Canterbury, the unemployment rate is higher in every region of New Zealand than it was when he took office?

Hon BILL ENGLISH: Well, on “Planet Labour” there was no global financial crisis—

Mr SPEAKER: Order! Just answer the question.

Hon BILL ENGLISH: —and the member should take that into account when he uses those measures. Of course, in the real world, which is not where the Labour Party is, there was a major recession and unemployment did rise rapidly. Fortunately, it is now dropping consistently.

Tim Macindoe: Which regions have seen the strongest increases in economic activity?

Hon BILL ENGLISH: The most recent regional trend survey shows that the strongest growth in economic activity in the March quarter was—in order—Northland, the highest, at 3.4 percent, followed by Bay of Plenty, then Waikato, then Nelson-Marlborough, then Otago, then the West Coast, and then Canterbury. ANZ reports that Northland was also the fastest growing region in the year to March at 7.4 percent. Business confidence is at a 9-year high in the survey and the top two areas for business confidence are Otago, despite the complaints of its civic leadership, and the Waikato. As I said, the evidence tends to suggest that the regions have led the recovery not lagged it.

Hon David Parker: Is his selective use of statistics because the latest Statistics New Zealand figures on per capita GDP show that per capita GDP in the last year has gone backwards, not just in Gisborne, Hawke’s Bay, Taranaki, Manawatū, Wanganui, Marlborough, and on the West Coast but also in his own province of Southland?

Hon BILL ENGLISH: No, I do not agree with that. But what I do agree with is the proposition that a significant carbon tax, a capital gains tax, and water rules that mean that every river has to be absolutely pure, will have dramatic economic effects on the regions and they will all be negative. That is why the regions are turning up to meetings all over the country, to tell us how determined they are to stop the Greens and Labour taking over Government. . .

 

Rangitikei MP Ian McKelive continued the theme in his contribution to the general debate:

IAN McKELVIE (National – Rangitīkei): That speech by Russel Norman was without a doubt one of the most boring obituaries I have ever heard in my life. It was, in my view, a gross misuse of facts to run down rural New Zealand. It will not help our cause. Regional New Zealand has faced its share of challenges in the past 40 years as our population and economy has adjusted and acclimatised to change. The progress we have made in the past 6 years under this Government is now having positive effects as the buoyant world food market and demand lifts farmer confidence, optimism, and ability to invest further in their industry. New tourism initiatives such as the * Forgotten World Adventures, cycle trails, and walking tracks are appearing. The growth in these businesses is leading to new opportunities for growth and investment in our regions. The announcement in Levin last week by Ministers Joyce and Guy of an ambitious plan to double my region’s agribusiness production by 2025, after some early feasibility studies by mayors ** Margaret Kouvelis and * Jono Naylor, who of course is the very good candidate for National in Palmerston North, is another example of proactive Government determined to enable our regions. The interesting point to note is that this agribusiness strategy is not all about increasing agricultural production, as the previous speaker would have us believe. It includes science, tourism, and the manufacturing sectors, which complement our traditional farming activities. Fresh water is critical to the future of our country and the Rangitīkei, as tourism and farming rely heavily on our pristine environment for our futures. The Government has invested heavily in this area, adding a further $12 million to it in the Budget just passed. This is on top of $350 million already committed to lake and river clean-ups, and the $101 million already spent in this Government’s term. The Rangitīkei has three of New Zealand’s major rivers—the beautiful * Whanganui River, which is a beautiful river and a great tourism opportunity for that region and certainly for the electorate of the member sitting next to me; the Manawatū, the subject already of a considerable amount of clean-up funding and, of course, New Zealand’s first river accord; and, of course, the Rangitīkei, one of the best fishing rivers in New Zealand. National has also developed the Agricultural Greenhouse Gas Research centre in Palmerston North in partnership with * AgResearch and nine other partners. This, as it progresses, will add significantly to our contribution to climate change measures and increase our productivity. The other key measure adding to the productivity in our region and announced in the past few weeks is the increase in the regional roading spend. In my region the replacement of the * Whirokino trestle bridge south of Foxton, which is over 1.5 kilometres long, when completed, will take some 30 kilometres off the trip for the average heavy truck from the central North Island to Wellington—30 kilometres. Add this to the Ōtaki to Wellington roading improvements, including the capital expressway and Transmission Gully, and the benefit to the central North Island will be significant. The * Tongariro and * Whanganui National Parks are a huge resource for the people of Rangitīkei, with winter sports, walking, boating and cycling growing at a great rate. On top of this we have a net migration inflow of people into the region in the last month, an increase in population, and a drop in unemployment. Despite the wailings of Labour and the Greens, this Government has made significant investment in the future of regional New Zealand, and we are seeing the benefits in our region. One of the key challenges that our rural councils face is managing demand for access to our vast network of paper roads, and careful thought will need to be given to the future management of these. The * Walking Access Commission has started this work but there is much to do and funding will be required in the future to complete this work. I want to briefly acknowledge the huge role that Tarania Turia has played in the Māori communities throughout my region, and congratulate her as she leaves this place on making such a great contribution to the welfare of so many. I want to briefly note the work done by Ngāti Apa in the south of the Rangitīkei, particularly in the social field, and now, with the acquisition of * Flock House and the subsequent partnership they have formed to farm this historic property. It will be the forerunner of things to come and perhaps the trendsetter to help unlock the vast potential of Māori land in New Zealand. In * Taumarunui the * Kōkiri Trust is achieving fantastic results in areas such as health, education, work projects, and aged care, under the leadership of Christine Briers—another initiative—and thanks again to the great work of Minister Turia. Finally, I want to acknowledge the time that my north-western neighbour, Shane Ardern, has spent working for the people of the north of the Rangitīkei. In the hill country of the North Island, boundaries are obscure and challenges are the same wherever you live. Thank you.

Waitaki MP Jacqui Dean added more:

JACQUI DEAN (National – Waitaki): What is Labour’s policy solution for everything? Talk it down, say how bad it really is, and then throw some money at it. That will do it—that will absolutely do it. Oh, and have a Minister. Labour members say “Let’s form another committee. Let’s have another Minister.” Who is that going to benefit? Oh, yes, that is right—it is going to benefit themselves. Do you think—or does one think; thank you, Mr Assistant Speaker—that after flying in over * South Canterbury’s beautiful water storage facility, the Opuha Dam; the highly productive dairy factories, one under full operation, one just about to be commissioned; and the most beautiful farms in South Canterbury, with grain stores glistening down below and new sheds everywhere, including milking sheds, and landing at the Timaru airport, and this happened last week, David Cunliffe apologised to South Canterbury for how badly the region is doing? And as he crossed the brand-new $20 million Kurow bridges, with their own cycle lane, creating 150 jobs regionally, on the way through the reinvigorated towns of Kurow, of Otematata, and of Omarama, following the $3 million * Alps 2 Ocean Cycle Trail, do you think that Mr Cunliffe apologised to the locals for the new business opportunities and the incredible new tourist traffic that is now running through the region? And do you think after he recovered from his 2 days—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! Many times the member has brought me into the debate. You cannot mention “you” being the Speaker.

JACQUI DEAN: Thank you so much—thank you so much for your help, Mr Assistant Speaker. And do the Assistant Speaker and the members of the House think that once Mr Cunliffe did recover from his 2 days in beddy-byes with his man flu that he enjoyed all the magnificence that Queenstown offers, from the restaurants to the magnificent high life to the skiing? Actually, I did hear some of my spies report to me that some time last week there was seen on the slopes of Cardrona ski field a man in a red scarf desperately trying to be noticed. But do you think that—

The ASSISTANT SPEAKER (Lindsay Tisch): Order!

JACQUI DEAN: Oh, right. Thank you so much. Thank you so much. It is just that I am so enthusiastic about the topic that I cannot help but try to include the Assistant Speaker in the conversation, but I will not do that any more. But does one think that Mr Cunliffe then apologised to the people of Queenstown for how well their local economy is doing, with the expansion of the Queenstown airport and with the commitment of Air New Zealand to bringing tourists both domestic and international into the region? And do you think he apologised to the wineries? Do you think that David Cunliffe, when enjoying a pinot noir or a little a pinot gris, perhaps, for his cold, apologised to the wineries and said to the House how awful it was for them? And what about the cherry producers, the pip fruit producers, and the apple producers, who are producing so much that this Government had to respond by increasing the * Recognised Seasonal Employer numbers and, in fact, creating a new seasonal worker programme down south to assist New Zealanders into the region and into work? You see, what we are having to do with Central Otago is have programmes to bring workers into the regions. Unemployment is so low in Central Otago and the whole region is so productive that we need programmes to bring people into the region. There are jobs, all right. There are jobs in Central Otago, all right, and we are creating them. David Cunliffe should apologise. David Cunliffe should apologise because the South Canterbury and Otago regions are doing just fine. Things do not feel so hollowed out when the Winter Games NZ or the Queenstown winter festival are in full swing, or when the BMX world championships or the Wanaka triathlon festival are all go—all supported by what? All supported by this Government. Things do not feel hollowed out to the 11 Otago companies supported by the * Venture Investment Fund, or the initiatives in the meat and wool industries through the Primary Growth Partnerships, or the towns of Queenstown—or what about Ōāmaru or Dunedin city, which have been supported with their ultra-fast broadband upgrade? And what about the hundreds and hundreds of small businesses that now benefit from the * Rural Broadband Initiative and the New Zealand Trade and Enterprise capability development programme?

Labour holds only a couple of general electorates outside the main centres and really don’t understand what makes them tick.

They and their potential coalition partners are against most of the industries which provide the jobs there and export income for the whole country.

Rather than helping the regions their policies would handicap them with more restrictions and higher taxes.

National provides a happy contrast to that with MPs who represent rural and provincial people, understand their issues and how best to help them.


BPS working for NZ

July 22, 2014

National set targets for its Better Public Services programme which are showing positive results.

Long-term welfare dependency is reducing and more young people are achieving higher qualifications under the Government’s Better Public Services initiative, Deputy Prime Minister Bill English and State Services Minister Jonathan Coleman say.

The Government today published the July update of BPS targets, which confirms more good progress in tackling some of the most challenging issues facing New Zealanders, however making headway in other areas is slower, Mr English says.

“The Government is committed to making progress on the really difficult issues that affect our communities and families, and particularly the most vulnerable,” he says.

“Taxpayers spend billions of dollars a year on public services to help their fellow New Zealanders and this Government is determined to ensure they get what they pay for. Our focus on reducing welfare dependency, increasing achievement in schools and reducing crime require government agencies to find better solutions and to work with others to implement them.

“We are prepared to spend money on effective programmes which change lives, because what works for the community also works for the Government’s books.”

Dr Coleman says the ambitious goals set by the BPS initiative were chosen to make a real difference to the lives of New Zealanders.

“We have always said some of the targets will be challenging and require determination and teamwork to achieve, and it’s pleasing to see agencies working co-operatively.

“The latest update shows we are making good progress overall. We have now met the targets for reducing total crime and youth crime. There has been good progress in reducing long-term welfare dependency, increasing Level 2 NCEA pass rates and those with New Zealand Qualifications Framework Level 4.

“Progress in the past 12 months towards our target of reducing long-term welfare dependency is encouraging, with 6434 (8.5 per cent) fewer people continuously receiving jobseeker support for more than one year. We are also seeing people stay in employment for longer.

“In other result areas, more work is being done to reduce rheumatic fever, reduce assaults on children, and improve online business transactions.”

Dr Coleman says that because of the BPS programme, agencies are working together more effectively and delivering results through collaboration and innovation.

“Agencies are making better use of data to drive better services and to meet the needs of local communities. Agencies are also learning about what works through research and evaluation,” he says.

“There is a greater focus on chief executives doing what is best for the system as a whole, rather than just looking at the short term interests of their department, and that is supporting the changes needed to achieve results.”

The BPS programme began in 2012 when the Prime Minister announced goals and measurable targets in 10 challenging areas, including reducing long-term welfare dependency, supporting vulnerable children, boosting skills and employment, reducing crime, and improving interaction with Government.

The Better Public Service Results July update is here.

Money is being spent where it will have a positive impact.

This is often more expensive in the short term but it will pay off with both social and financial dividends in the medium to longer term.

Behind these numbers are individuals whose lives and outlook are better than they would have been had National not introduced targets and policies that are working for New Zealand.

We’re committed to tackling some of the most challenging issues facing New Zealanders. You can check out our good progress here: national.org.nz/better-public-services #Working4NZ


Fitch tick backs govt programmes

July 9, 2014

The National-led government has received a tick from Fitch for its economic programme:

Credit ratings agency Fitch Ratings’ decision to revise New Zealand’s AA sovereign rating outlook from stable to positive is a vote of confidence in the New Zealand economy and the Government’s programme, Finance Minister Bill English says.

The positive outlook, which was announced overnight, indicates the likely direction of the credit rating over the next year or two, although it is not confirmation that a change will occur.

“As Fitch notes, the Government’s fiscal consolidation and its track to surplus in 2014/15 are strengthening the resilience of New Zealand’s credit profile,” Mr English says.

“Furthermore, it confirms that the Government has a credible plan to increase its fiscal surplus in the years ahead and to reduce net core Crown debt to 20 per cent of GDP by 2020.

“And Fitch comments that New Zealand’s economic policy framework, business environment and standards of governance rank among the world’s strongest from a credit perspective, warranting ‘high grade’ sovereign ratings.”

In its ratings update, Fitch also notes that New Zealand’s main vulnerabilities relate to its high net external debt and dependence on commodity exports.

“The Government remains focused on working with New Zealand households and businesses to lift our economic competitiveness,” Mr English says.

“We have made some good progress in addressing our longstanding vulnerabilities, with both the current account deficit and New Zealand’s net international liabilities substantially lower than they were five years ago.”

Alongside Fitch’s AA rating with a positive outlook, New Zealand is rated Aaa with a stable outlook by Moody’s and AA with a stable outlook by Standard and Poor’s.

This is a vote of confidence in the government’s programme and the direction it is taking New Zealand.

It’s not just academic. The more positive the view of the ratings agencies the lower the risk for lenders and that has an impact on interest rates.

 


What’s Labour’s position on buying back assets?

July 2, 2014

Finance Minister Bill English explains the benefits of using funds from the partial sale of a few state owned assets to invest in new ones:

Hon BILL ENGLISH (Minister of Finance): The Government continues to make good progress in investing almost $4.7 billion from its share offer programme into new public assets. We are able to invest this money without having to borrow more from overseas lenders. At the weekend the Prime Minister and Minister Brownlee confirmed that $212 million from the Future Investment Fund will be invested in 14 important regional State highway projects around New Zealand. That is on top of the $360 million that we have already proposed for regional roads across New Zealand. This investment will continue to build on the Government’s extensive investment in vital infrastructure, which includes ultra-fast broadband, schools, hospitals, roads, and rail, and more of it will be financed from the Future Investment Fund.

John Hayes: How will the latest investment in regional roads meet the objectives set for using capital raised from the Government’s share offer programme?

Hon BILL ENGLISH: This investment follows through on the logic of the sales, where the Government sold shares to investors, the investors passed cash to the Government, and now we have the opportunity to invest that cash. As the Prime Minister said at the weekend, the investment in regional roads is a perfect example of money from the share floats being invested for the benefit of New Zealanders, its economy, and its families. The 14 projects are spread across the country from Otago to Northland, from the West Coast to the East Coast.

John Hayes: What other investments in new public assets has the Government confirmed using proceeds from the share offer programme?

Hon BILL ENGLISH: As the House is now familiar with, there is $4.7 billion of proceeds from the share offer programme. In Budget 2014 the Government confirmed a further $1 billion of new investment. This included $200 million for health, including $67 million for the new Grey Base Hospital on the West Coast. This took health spending from the Future Investment Fund to $684 million. It also allocated $172 million to education, including the upgrade and replacement of schools in Canterbury. KiwiRail received another $198 million. All up, the $1 billion allocated from the fund in Budget 2014 brought the total allocated to almost $3 billion, which left nearly $1.7 billion in the fund for new public assets over the next couple of years without having to borrow more money.

Using the proceeds for new investments without additional borrowing is very sensible practice and exactly what National said it would do.

The logic of that has until now escaped the Opposition but it now appears to have approval from one party on the other side of the House:

John Hayes: What reports has he seen supporting the Government’s approach to investing proceeds from the share offer programme in new public assets?

Hon BILL ENGLISH: I have seen reports from an unlikely source: an alternative budget that was issued in the last week or two. The reports indicate that this alternative approach to the Government’s finances will continue the current Government’s approach of using proceeds from the share offer programme. The Opposition budget includes the $4.7 billion proceeds from the asset sales being spent on public assets, which was rather a surprise given that they had spent 4 years vigorously opposing the policy.

Labour has prevaricated over whether it would  buy back shares in the state-owned companies which were partially sold by the government.

But its alternative budget indicates it’s now decided it won’t.

That is sensible but how would that go down with potential coalition partners in the Green and NZ First Parties who opposed the sales at least as vigorously and continue to do so?


Inside and outside

June 29, 2014

Spot the difference:

Outside the National Party conference: the lonely figure of Trevor Mallard announcing Labour’s lame anti-growth immigration policy – to which he’d forgotten to invite the media.

Inside the conference venue: hundreds of delegates, a united caucus and policies which will build New Zealand and make a positive and sustainable difference to New Zealanders – economically, socially and environmentally.

We're working for a stronger economy.


Envy still drives Labour’s tax and spend

June 26, 2014

Labour’s announcement on its financial plan shows it has learned nothing from the mistakes it made when it was last in government.

Labour’s tax and spend ‘plan’ released today is the Opposition’s usual approach to public finances, Finance Minister Bill English says.

“After nearly six years in Opposition, all Labour can come up with is a re-hash of its failed old recipe of taxing more and spending more,” Mr English says.

“No one will be surprised – or impressed – by that.

“Labour want to increase taxes so they can spend more without any focus on better results. They are out of touch with New Zealanders’ expectations that the measure of good government is better results, not more spending.

“Labour’s complex capital gains tax would be full of holes, slap a new tax on 2.3 million KiwiSavers and on every New Zealand farm and business without addressing the real issues around housing affordability.

“As for the proposed new top tax rate, it’s just the politics of envy. It wouldn’t actually raise much money, it would encourage those who could do so to shelter money in companies and it would ignore the fact that these taxpayers already pay 22 per cent of income tax – even though they are just 2 per cent of taxpayers.”

Labour still hasn’t learned that lower tax rates lead to higher tax takes and the reverse also applies.

Never before in Britain’s history has so much tax been drawn from so few high earners – and lower tax rates are the cause:

The biggest problem with the last government was its failure to realise what it was doing wrong. David Cameron, by contrast, often doesn’t seem to realise what his government is doing right. . .

It sometimes seems that even Conservatives are surprised by just how well conservatism works.

Tax cuts, especially, have been viewed with deep suspicion by those around Mr Cameron.  . . This was about tribalism, rather than economics, and it took some time for the Prime Minister to realise that tax cuts are often the surest route to recovery and stability.

But, then, the top rate of income tax was lowered from 50p to 45p in the pound, and the Liberal Democrats forced the Government to lift three million of the lowest earners out of income tax.

It has been politically difficult – Ed Miliband chastises Mr Cameron for his “tax cut for millionaires”. But something remarkable has happened: those millionaires are now paying more tax than ever. The best-paid “one per cent” are spoken of as if they all employ clever accountants to wriggle out of paying any tax. Yet figures show they now earn 13 per cent of all paid income, and provide 28 per cent of the income tax collected.

This is higher than at any point under the last government, and twice as high as under the Callaghan government (when the top rate of tax was 98 per cent). We are witnessing what John F Kennedy called the “paradoxical truth” that lower tax rates can mean higher tax revenues. When people are taxed less, they tend to earn (or declare) more. It has taken Britain into a golden era of milking the rich. . .

 Here it’s similar with the top 2% already paying 22% of the total income tax.

Labour’s planning to increase the tax rate on trusts to circumvent the wealthy channelling money into them to avoid higher taxes.

But it’s not just the wealthy who have trusts and those not so well off will have to pay the higher rates too.

Labour will be taking more money from everyone for KiwiSaver and reducing the return from those savings with their Capital Gains Tax too.

Their plan is the same old tax and spend, driven by envy that put New Zealand into recession before the Global Financial Crisis.


NZ one of better for inequality

June 25, 2014

The left have done their best to make inequality the problem of the moment.

Fortunately for New Zealand, though not the left’s campaign, the OECD facts contradict their story:

New Zealand was one of only six developed economies in which both income inequality and disposable income inequality was flat or slightly better between 2007 and 2011, according to the Organisation for Economic Cooperation and Development.

In its latest report, which looks at the impact of the global financial crisis on inequality across 33 developed economies, the OECD confirms New Zealand performed relatively well through the GFC and its aftermath, Finance Minister Bill English says.

“The domestic recession in New Zealand under the previous government in early 2008 and the global financial crisis that followed were tough on many New Zealanders and their families,” he says.

“However, this Government ran large deficits and borrowed through that period to continue its significant support programmes. At the same time, we also set a track back to surplus and supported an economic recovery that is now delivering more jobs and higher incomes.

The opposition criticise the increase in debt but give the government no credit at all for using it to protect the most vulnerable from the worst impact of the GFC.

“This latest OECD research confirms that while inequality increased in many OECD countries during the global financial crisis, this was not the case in New Zealand.”

Using data compiled for the Ministry of Social Development’s household incomes report, the OECD’s latest Income Inequality Update confirms that both income inequality and disposable income inequality were flat or slightly better in New Zealand between 2007 and 2011.

It also finds that the disposable incomes of the top 10 per cent of New Zealand’s income earners were hit harder than the bottom 10 per cent of income earners through this period.

“Across the OECD as a whole, the opposite was true,” Mr English says. “The bottom 10 per cent of disposable incomes fell by twice as much through the GFC and the top 10 per cent.

Mr English says that the Government remains focused on supporting the most vulnerable New Zealanders by improving public services, lifting education standards and supporting more New Zealanders off welfare and into work.

“It’s in these areas that we can make a real difference to the lives of New Zealanders most in need.”

The easiest way to solve inequality is to make the rich poorer – as the left want to do by taxing them more.

That might close the gap between the top and bottom but will do nothing to improve the lot of those in most need.

Addressing their problems, as the government is doing through better public services, higher achievement in education and helping those who can work to do so is the only way to get sustainable improvement in living standards for the vulnerable.

The OECD report is here.


Political story of the day

June 22, 2014

A new candidate needs to get noticed but the run-of-the-mill campaign launch isn’t going to do it.

National’s Clutha Southland candidate Todd Barclay chose a novel way to launch his campaign and was rewarded with nation-wide TV coverage:

. . . Queenstown Bay was also the site of an unlikely campaign launch for Clutha-Southland National candidate Todd Barclay.

“People take politics quite seriously and so do I, but I still want to demonstrate that I can get out there and have a bit of fun as well,” says Mr Barclay.

Almost derailed before his team left the jetty, Mr Barclay was the last to leave his sinking ship.

“My relative youth some people see as an issue, but I think that’s a strength. We want to put a play on that goes to show that age is no barrier. We are getting involved and having a bit of fun.”

And while his predecessor admired the novel campaign launch, he didn’t seem too bothered he wasn’t invited to participate.

“I wasn’t even asked or even tempted,” says Deputy Prime Minister Bill English. “I wasn’t even invited. I just stick to meetings in town halls.”

But he did have plenty of advice for his young replacement.

“He needs to work pretty hard to earn the right to represent people here because it’s been a National seat. They actually expect the National Party candidate to work harder than anyone else and that’s what he’s doing.”

There’s little doubt Mr English will be a tough act to follow, but it seems Mr Barclay isn’t too bad at keeping his head above water. . .

Having fun is important, especially when you’re working with volunteers as Todd is.

He made a splash with his campaign launch and he’s working very hard to meet people throughout the 38,247 square kilometres of the electorate he’s seeking to represent.

He knows he has to earn the right to be the MP and he’s taking nothing for granted.


Meanwhile what matters more

June 19, 2014

Political sideshows might excite political tragics.

But what matters far more are what affects people directly.

One of the biggest of those is the economy and there’s good news on that front today:

Strong growth in construction led to a 1.0 percent rise in gross domestic product (GDP) in the March 2014 quarter, Statistics New Zealand said today.

Construction activity grew 12.5 percent, due to large rises in residential and non-residential building. Growth in construction activity was strong in Canterbury and in the rest of the country.

“Construction was responsible for two-thirds of GDP growth this quarter,” national accounts manager Gary Dunnet said. “This is the largest increase in construction in 14 years.”

This is the third consecutive quarter in which GDP has grown by 1.0 percent or more. GDP growth for the year ended March 2014 was 3.3 percent.

The expenditure measure of GDP rose 1.3 percent in the March 2014 quarter. Growth in construction activity was reflected in a 2.1 percent rise in investment. Rises in residential and non-residential building were partly offset by falls in plant, machinery, and equipment and intangible assets.

Spending by New Zealand households was flat, while spending by tourists increased 7.7 percent. Higher tourist spending also drove an increase in exports of travel services, which contributed to a 3.1 percent rise in exports.

The size of the economy (in current prices) was $227 billion for the year ended March 2014.

The third consecutive quarter in which GDP has grown by at least 1% and annual growth of 3.3% – that is a remarkable turnaround in the wake of the GFC.

While earthquake recovery work is helping, growth in construction is not confined to Canterbury.

This reflects the good work led by the government, but Finance Minister Bill English says there is still a big challenge:

. . . “This is the latest in a run of encouraging economic indicators,” Mr English says. “Our challenge is to ensure this growth continues over the long term, because that’s the best way to deliver more jobs and higher incomes for New Zealanders.”

“Business and consumer confidence remains high, manufacturing activity has been expanding for almost a year and a half and the current account deficit is less than half of what it was five or six years ago.

“However, we still have plenty of work ahead of us to ensure these positive indicators continue to translate into real opportunities and progress for New Zealanders and their families.”

The solid growth was widespread across the economy in the March quarter. Construction made the largest contribution, with mining, agriculture, retail trade and accommodation also making positive contributions.

“This confirms businesses are investing for the long-term to support productivity and higher wages,” Mr English says. . .

“We are making good progress but our long-term challenge is to make the enduring structural changes needed for New Zealand to reach its economic potential,” Mr English says.

That will require more of the policies that are working now and none of the anti-growth, higher-tax, higher spending policies the left want to inflict on us.


Politics Daily

June 10, 2014

IMF report

Bill English – IMF report backs NZ’s economic progress

TV3 – NZ given tick by IMF

Jonathan Underhill @ NBR – China slowdown, weaker commodity prices, drop in house prices biggest risks to NZ: IMF

Manufacturing

Inventory 2 @ Keeping Stock – Manufacturing still in crisis. Yeah right.

Cameron Slater @ Whale Oil – Labour’s Manufacturing Crisis just keeps crisising along

Beehive

Bill English & Steven Joyce – Business Growth Agenda boosting investment, jobs & growth

Steven Joyce – Encouraging sole parents into higher study

Murray McCully - Whaling comments “worrying”

Judith Collins – New MOU signed to improve family justice

Craig Foss – Going Digital on time and under budget

Quake Court

Kloe Palmer @ TV3 - National: Labour’s quake court poorly considered

Mike Hosking @ NewstalkZB – Issues with Earthquake Court plan

The Press - Labour’s bold Canterbury policy

Derek Cheng @ NZ Herald –  Insurance Council rejects Labour’s ‘Earthquake Court’

Election

Inventory 2 @ Keeping Stock – Tweet of the Day – 10 June 2014

Scrubone @ Something Should Go Here Maybe Later - Reminder all politicians play games

Phil Quin @ Pundit – How Internet Mana could help National reach 50%

Patrick Leyland @ The NZ Progress Report - NZ Facebook pages

Pete George @ Your NZ – Craig’s Conservatives cold shouldered

Peter Cullen @ Stuff Fixed-term payouts when ministers gets marched

Pattrick Smellie @ NBR – Coat-tail deals ‘a few weeks away’, says Key

Lew @ Kiwi Politico – Doubloons

Peter George @ Your NZ – Green election prospects

Cameron Slater @ Whale Oil – Green Hypocrisy on Coat-tailing and strategic voting

Cameron Slater @ Whale Oil – More trouble amongst the alliance partners

Cameron Slater @ Whale Oil – A reader emails about the so-called “missing million”

Dominion Post – Nats don’t need another tea party

Campaign funding

Stacey Kirk @ – Campaign funding allocations ‘unfair

Taxpayers’ Union – Civilian Party Surely Playing Practical Joke

Hannah Herchenbach@ The Press – Civilian Party leader: Criticism ‘dishonest’

Electoral Prosecutions

David Farrar @ Kiwiblog – Police electoral prosecutions

NZ Herald – Investigation into police needed over Banks case

The Press –  Banks faces political reality

Bryce Edwards @ NBR – NZ POLITICS DAILY: The impact of John Banks on the election campaign

Liam Hehir @ Manawatu Standard – Redemption never impossible

Labour

Chris Trotter @ Bowalley Road – Labour’s Caucus Still In Charge

David Farrar @ Kiwiblog – Smith on Labour

Cameron Slater @ Whale Oil – Mike Smith – On Labour’s Mantra of Misery

IMP

Inventory 2 @ Keeping Stock – Cash for credibility

Other

ACT – The Letter

Cameron Slater @ Whale Oil – ACT’s Letter on Banks and Hone

Cameron Slater @ Whale Oil – Uh oh, the Greens aren’t buying Cunliffe’s dog whistle either

Dominion Post - Today in Politics Tuesday June 10

Matthew Beveridge – Tweet MPs

ODT – Fraction too much friction

David Farrar @ Kwiblog – NZ Public poll methodologies

Dominion Post – Today in Politics: Tuesday, June 10


IMF backs NZ progress

June 10, 2014

The IMF is backing New Zealand’s progress:

New Zealand should expect strong and increasingly broad-based economic growth, according to the International Monetary Fund’s latest report on New Zealand, published today.

The IMF is forecasting annual economic growth in New Zealand to peak at 3.5 per cent next year and not fall below 2.5 per cent over the next few years.  This growth will be driven by strong construction activity, higher prices for exports and increases in net migration.

“This is the latest in a series of encouraging reports on the New Zealand economy, which confirms that we are well placed compared with most other developed countries,” Mr English says.

“The IMF highlights the importance of getting the Government’s books back to surplus to help the Reserve Bank keep interest rates lower for longer. Under the previous government, excessive spending, alongside the booming housing market, contributed to floating mortgage interest rates reaching almost 11 per cent.

“A range of indicators points to broad-based growth in the economy. Building consents in March were nearly double the number issued three years ago. Business confidence remains near 20-year highs. And employment figures showed 84,000 more jobs in the year to March – the largest annual increase in employment since 2004.

“Sticking to our responsible economic management will help ensure Budget forecasts for strong economic growth, average wage increases of $7,600 by 2018, and unemployment falling to 4.4 per cent, all occur.”

The IMF is expecting New Zealand’s current account deficit to increase to around 6 per cent of GDP by 2016 – still well below the levels seen in the mid-2000s.  

“Although this longstanding imbalance remains a vulnerability, the latest figures are encouraging with Statistics New Zealand showing the current account deficit at 3.4 per cent of GDP,” Mr English says.

“Getting on top of Government spending to keep interest rates down and promote broad-based economic growth is a key plank of that improvement.

“Overall, the IMF report confirms the Government’s economic programme is taking New Zealand’s economy in the right direction,” Mr English says.

“This is the best way to support jobs and raise New Zealanders’ living standards.”

Economic progress is not just important, it’s necessary if we also want sustainable environmental and social progress.

 The IMF report says:

1. Economic developments. The economic expansion is becoming increasingly embedded and broad-based, with growth exceeding 3 percent in the second half of 2013, somewhat stronger than expected. The drivers include supportive financial conditions, record high export commodity prices, resurgent construction activity related to the Canterbury post-earthquake rebuild and general housing shortages, and a substantial increase in net immigration (text figures). Business and consumer confidence indicators have risen to the hi ghest levels since the global financial crisis. The labor market continues to strengthen with the unemployment rate falling to 6 percent (Figure 1). Strong terms of trade have narrowed the 2013 current account deficit to 3¼ percent of GDP and have contributed to the elevated New Zealand dollar, which continues to hold back growth in the non-agricultural tradeable goods sector. With the high exchange rate damping tradable price inflation, headline inflation has remained below the mid-point of the target band (Figure 2). Nominal wage inflation has so far remained subdued.  . . .

3. Fiscal developments. Supported by healthy output growth the government’s aim of reducing the budget deficit is going according to pl an. The deficit is currently projected to decline almost ½ percent of GDOP to less than ½ percent of GDP this year due to restraint in expenditure growth. 1 The plan would reduce public debt from it s peak of 26 percent of GDP in 2013 to about 20 percent by 2018. The government just concluded selling stakes in state-owned enterprises, which generated proceeds of about 2 percent of GDP.

Near-term outlook. Growth is forecast to increase to about 3½ percent this year and moderate to a trend rate of 2½ percent over the medium term. Strong construction activity is expected to remain an important driver for near-term growth (text figure), although the speed of the Canterbury post-earthquake rebuild and its interaction with the wider economy are less certain. The terms of trade are projected to ease somewhat due to an assumed moderation in global dairy prices, but remain high relative to historical levels and continue to boost growth in national income. The current monetary policy stance remains well below neutral, and with leading indicators pointing to an economy that is set to grow above trend in the near-term, pressure on core inflation should follow, particularly from the construction sector . . .

Economic expansion which is becoming increasingly embedded and broad-based. Growth peaking at 3.5% next year and going no lower than 2.5% over the next few years. That is very encouraging.

It will be driven by construction activity, much but not all of which will be in Christchurch. Higher prices for exports and increases in net migration will also help.

This is of course predicated on a continuation of current government policies which encourage economic development, exports and immigration, not a change to a left-wing government which will hamper growth, is anti business in general and farming in particular and anti-immigration.

 

 

 


Is inequality really the problem?

June 10, 2014

Forget inequality, it’s not the real problem. This is the view of Roger Partridge, chair of the New Zealand Initiative:

Since the publication of The Spirit Level in 2009, and its ‘devastating critique’, The Spirit Level Delusion, in 2010, debates in the media and among politicians have been gripped by wealth inequality fever. The latest instalment is French economist Thomas Piketty’s Capital in the Twenty-First Century – a book which is at the centre of its own maelstrom over the accuracy of its analysis.

But is inequality a worthy cause célèbre? All other things being equal, few people on either the left or right would disagree that less inequality is better than more. And any parent will know that equality will lead to a more civil, stable, state of affairs within the family – and this is no doubt also true for society as a whole. But the factors that drive inequality in economic outcomes in a free market economy also produce great benefits. China may now have greater extremes of wealth than it did before Deng Xiaoping’s reforms, but the Chinese live 25 years longer and are 50 times richer than they were 25 years ago. . .

This reinforces the view that we can be equally poor or unequally rich.

Focussing on inequality – and looking to redistributive policies to solve it – risks throwing the baby out with the bath water. We would not restrain our more talented child just to make her less successful, younger brother feel better, so why should we levy our most talented, productive citizens?

The easiest way to reduce inequality is to bring the top down but that won’t improve matters for anyone.

What is needed is a focus on the real problem: that not everyone in our society has the skills needed to take advantage of the opportunities that should be available to all. Among them are the 20 per cent of New Zealand’s school-leavers who, year after year, do not achieve NCEA level 2. It requires a suspension of belief to conclude they are failing because the rich are getter richer. The problem is more complex, but we will not solve it if we look in the wrong place.

If Piketty’s thesis is correct, and inequality in the West has increased in the last 50 years, then it has coincided with a great social experiment, the welfare state, which has seen an unprecedented rise in just the sort of redistributive policies Picketty believes are needed to solve the inequality problem. But as the Welfare Working Group reported in 2011, the welfare state in New Zealand has led to long-term welfare dependency, deprivation, financial stress, low living standards, and poor health and housing. It just might be that Piketty’s solution is the real problem.

In spite of what the opposition and their supporters think, inequality isn’t getting worse:

. . . Hon BILL ENGLISH (Minister of Finance) : The evidence shows that inequality in New Zealand has been flat or slightly declining since the mid-2000s. We also believe that a number of the measures the Government took through the recession certainly prevented inequality from worsening at a time when the Government was very short of revenue. But I welcome the member’s interest in the IMF’s view, because among its recent comments on New Zealand, the IMF emphasised the importance of ongoing fiscal discipline to a sustainable economic recovery. Nowhere in the statement does the IMF refer to inequality, and that is for a very good reason in respect of New Zealand—that inequality in New Zealand has not increased over the last 10 years. . . .

That inequality isn’t getting worse doesn’t mean it couldn’t – and shouldn’t – improve.

Education is one of the keys to improvement:

The interesting thing about the OECD work is that it shows that economic inequality in New Zealand has among the lowest levels of impact because of our education system. Part of the reason for having public education—in fact, the main reason—is to overcome the inequalities of birth and inequalities of opportunity. That is why this Government is so strongly focused on helping our system be more effective in overcoming economic inequality. Another reason there is high transience in those schools is that the State housing system does not meet the needs of those with serious housing need. That is why the Government is changing that policy next week.

Hon David Parker: Why can the Minister not see that rising inequality under National goes against the egalitarian values that New Zealanders hold dear, is making educational outcomes worse, and is holding back economic growth?

Hon BILL ENGLISH: There is a very simple reason we do not believe those things, despite the fact that the member does, and that is that the measures of inequality in New Zealand and the facts demonstrate that it has not got worse. That is not a political assertion or an ideological conviction; it is the facts as laid out in the annual report from the Ministry of Social Development, which was set in place by the previous Government. On “Planet Labour” I know facts have very little impact, but on Planet Earth and in New Zealand the facts matter. . .

The opposition has leapt on the inequality band wagon but have fought every initiative National has introduced to move people from welfare to work.

Welfare dependency is the cause of a great deal of inequality and helping those who can work to do so is one of the most effective way to improve not only financial outcomes but social ones like health and education too.


Politics Daily

June 3, 2014

New Zealand Politics Daily is taking  a break.

I don’t have the time or inclination to provide the same service of a reasonably comprehensive list of links to news stories and blog posts on issues of the day.

However, I’m willing to start with a few and invite anyone who has read anything I’ve missed to add a link to it in a comment.

I won’t pretend to be balanced – there will be more links to blogs of a bluer hue. Anyone who wants the red and green end of the spectrum better represented is welcome to leave links.

John Key in Samoa

BeehiveNZ to invest $1 million into Samoa’s tourism sector:

Prime Minister John Key has today announced New Zealand will invest $1 million to help boost Samoa’s tourism sector. . .

Tova O’Brien - Pacific voters warming to National:

With large sections of New Zealand’s Pacific Island community now gravitating towards National, the battle for the Pacific vote has gone offshore. . . .

Immigration

David Farrar @ Kiwiblog – So what will Labour cut?

is claiming that it will cut migrant numbers by somewhere between 20,000 and 35,000 to get net migration from 40,000 to somewhere between 5,000 and 20,000. . .

Pete George @ Your NZ – Cunliffe still vague on immigration:

Cunliffe was interviewed about immigration on Q & A on Sunday. . .

Housing

Hannah McLeod @ Southland times - State house sales reap $4m:

Millions of dollars from state housing sales in the south could be going towards new homes in Auckland. . .

Catherine Harris @ Stuff – ‘Holistic’ plan for housing sought:

New Zealand needs a wider discussion about housing affordability and the issues that surround it such as migration, say senior figures in local government. . .

RadioNZ – Fast-track housing plan for Taruanga:

Tauranga City Council wants special rules to speed up housing developments.

 Labour Party

Andrea Vance @  Stuff – Labour MPs not happy with Mana Internet:

Senior Labour Party MPs have used social media to attack the alliance struck between Mana and the Internet Party. . .

Inventory 2 @ Keeping Stock – White-anting in Labour? Surely not…:

Is David Cunliffe being white-anted again? You’d have to wonder after reading Andrea Vance’s story on Stuff: . . .

Cameron Slater @ Whale Oil – Things are falling apart in Labour:

When something happens that isn’t going the way a political party particularly wants, they need to get together, work out a strategy, and communicate that coherently. . . .

 Isaac Davison @ NZ Herald –   Labour looks at changing $10m-for-residency scheme:

Labour is looking “very closely” at changing the rules for foreign investors who can get residency in New Zealand by paying $10 million. . .

IMP

Chris Keall @ NBR – Laila Harre NBR interview part 2: Baboom offshoring jobs; getting paid; the UFB; how she rolls:

Chris Keall – Where’s all the Baboom development taking place? . . .

Cameron Slater @ whale Oil – Internet Mana Party “a joke from the far left” – Key:

Unlike our media, John Key is refusing to take the Internet Mana Party seriously. . .

Josie Pagani @ Pundit – Say no to the cup of Te:

No way should Labour do a ‘Cup of Te’ deal.

Labour should stand up for its own strong values. . .

Danyl Mclauchlan @ Dim Post – On the logic behind a strategic loss:

Rob Salmond makes fun of Bomber, which is something we can all enjoy. But I do think that Bomber’s theory that a faction within the Labour Party would prefer a National victory in 2014 if the alternative is a Labour/Greens/New Zeland First/Mana/Internet Party government is pretty plausible. . .

Q & A @ TVNZ –  Laila Harre   interviewed by Susan Wood:

SUSAN: Long time unionist and left wing politician Laila Harre is back, she’s been a member of Labour, New Labour, Alliance, and the Greens, and now she’s taking the helm of the Internet Party, she joins me now good morning. Most political parties are built on something positive, on a movement, on beliefs. How can the Internet Mana Party which is built on yes, wanting to change a government, but an almost pathological dislike of the Prime Minister work? How can it be a force for good? . . .

Carbon Tax

Andrew McMartin @ TV3 – Carbon tax means nothing without Labour – English:

The Green Party’s carbon tax policy “means nothing” without Labour support, Finance Minister Bill English says. . . .

Peter Cresswell @ Not PC – The Greens cutting taxes?

Let’s start with the good news. . .

Lindsay Mitchell – Support for the Greens carbon tax surprises:

The Taxpayer’s Union has come out in support of a carbon tax that is revenue neutral. On balance they find it preferable to the Emissions Trading Scheme.

I wonder why we need either. . . .

Mark Hubbard @ Life Behind the Iron Drape - Green Naivety: Carbon Tax:

Julie Anne Genter is a New Zealand Green MP, and promoting the NZ Green Party policy this election year of a carbon tax, including on agriculture – dairy, initially, with other livestock to follow presumably. . .

Election

Rob Hosking @ NBR – Election 2014 – The Minors’ Strike:

The Green party must be quite relieved its conference was this weekend . . .

Scoop – Northland Leader Backs Kelvin Davis in Te Tai Tokerau:

Northland Kaumatua Rudy Taylor says Labour MP Kelvin Davis has the heart and the mana along with total support to win the seat of Te Tai Tokerau in the upcoming general election. . .

Scott Yorke @ Imperator Fish – How to win an election:

It’s all about the party vote. Electorate contests can be distracting, because in most cases they will be irrelevant to the result. A few electorate results will be critical, but only where they would allow a minor party to enter Parliament. . .

Scoop - iPredict Ltd 2014 Election Update #19: 30 May 2014:

Key Points:
• Internet Mana forecast to win 3 seats
• National expected to sneak in with minor parties’ support . . .

Christchurch

Beehive - Vodafone to anchor Innovation Precinct:

Canterbury Earthquake Recovery Minister Gerry Brownlee and Science and Innovation Minister Steven Joyce today released the spatial framework for the Christchurch Innovation Precinct and announced that Vodafone’s new South Island headquarters will anchor the precinct. . .

The Christchurch Innovation Precinct will bring together some of our most innovative people to help create an exciting and vibrant future for Christchurch. http://ntnl.org.nz/1oq447h

Education

Beehive – Budget 2014: $28.6m investment in ICT Grad Schools:

The Government will invest $28.6 million operating funding (including $11.8 million of contingencies) over the next four years in three Information and Communications Technology (ICT) Graduate Schools to help address significant high-level skills shortages in the rapidly growing ICT industry, Tertiary Education, Skills and Employment Minister Steven Joyce says. . . .

Beehive – $359m boost for student achievement moves forward:

Education Minister Hekia Parata has welcomed advice from sector leaders on the Government’s $359 million initiative to raise student achievement, saying it maintains momentum and strengthens the path forward. . .

Other

Trans Tasman – Trans Tasman Announces Government Department and Government Department CEO of The Year:

Trans Tasman’s 5th Annual Briefing Report – New Zealand Government Departments People and Policy, 2014 Edition , has announced its top performing Government Department of the Year and the best Government Department CEO. The pair is chosen by a 16 strong Independent Board of Advisers . .

Hamish Rutherford @ Reserve Bank governor named top chief executive:

A former top international banker, who stared down the Beehive with lending restrictions and official cash rates rises months from the election, is this year’s public sector chief executive of the year.  . .

Matthew Beveridge – Green Party AGM:

Queen’s Birthday Weekend was also the weekend the Green Party held their annual conference. As one would expect, there were a number of policy announcements, free doctors visits for up to 18 year olds and a change from the ETS to a Carbon Tax system. . .

Bob Jones @ NZ Herald - A message to screaming John Minto: Shut up:

If Parliament proposed a nationwide synchronisation of clocks and watches, then at a given date and time, invited everyone who’s had an absolute gutsful of the screaming skull, otherwise known as John Minto, to go outside and jump up and down for two minutes, imagine the reaction. . .

Lindsay Mitchell – More welfare changes on the way:

The government has announced a rewrite of the Social Security 1964 Act, which is a massive maze of dated legislation. . . .

Cameron Slater @ Whale Oil – Political porkies:

It seems the minor parties are able to get away with making stuff up, or flat out lying.

As a new service we will now start calling out these ratbags. . . .

David Farrar @ Kiwiblog – The new blockbuster:

It’s a poster of Dr No, you’ll have to pop over to see it.

Adam Bennett @ NZ Herald – Peters rubbishes claim he paid Harawira’s protest fine:

Current and former MPs and “ordinary people” banded together to pay the $632 fine Hone Harawira received last year for defying police at a 2012 Auckland housing protest. . 

Inventory 2 @ Keeping Stock – Pay your own fine Hone:

Hone Harawira is in trouble over trouble he was in last year. If that sounds confusing, hopefully the Herald will explain: . . .

NBR – Labour might revisit MMP’s ‘coat-tail’ provisions if elected — Cunliffe:

David Cunliffe says Labour may revisit MMP’s “coat-tail” provisions if elected . . .


Higher income households paying higher share of tax

May 29, 2014

The opposition fought National’s tax cuts tooth and nail and keep saying they help the rich and hurt the poor.

That isn’t supported by the facts:

New data indicates New Zealand’s income tax and support system continues to provide significant income redistribution, with households earning more than $150,000 a year forecast to pay 74 per cent of net income tax in 2014/15, compared with 58 per cent in 2008/09.

“Four years after the Government’s comprehensive tax reforms, latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Finance Minister Bill English says.

“It is now clear that higher income households are paying a larger share of income tax than they were in 2008.”

“As I’ve said previously, the Government has maintained a redistributive income tax and income support system that supports low and middle income families and helps New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr English says.

“The amount these households pay in income tax is exceeded by the amount they receive from welfare benefits, Working for Families, paid parental leave and accommodation subsidies. That’s entirely appropriate for those families genuinely in need.”

Using data from the Household Economic Survey, Treasury has updated information provided last year to include forecasts for the 2014/15 tax year.

The Treasury estimates that this year households earning over $150,000 a year – the top 15 per cent of households by income – will pay 49 per cent of income tax.

But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 15 per cent of households are expected to pay 74 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.

It also excludes the impact of other aspects of the tax changes in 2010, including tightening property tax rules and compliance, and increasing GST.

By contrast, households earning under $60,000 a year – which is just under half of all households – are expected to pay 9 per cent of income tax.

“When we take income support payments into account, as a group they will actually pay no net income tax at all,” Mr English says.

“That’s because the $2.5 billion of income tax they are expected to pay will be more than offset by the $7.3 billion they will receive in income support.

“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.

“But people who call for even greater transfers to low income families, or who call for the top tax rate to be raised, need to be aware of how redistributive the tax and income support system already is,” Mr English says.

“This also highlights the importance of Government policies to support people out of welfare and into work.”

The left’s answer to many problems is to throw more money at them.

That’s other people’s money and their favourite source of that is the wealthy who, they say, should pay more tax.

These figures show the wealthy are already paying most income tax, families on lower income are paying no net income tax and households on less than $60,000 are paying just 9%.


NZ First faltering

May 23, 2014

Confidence votes are important for governments.

Without them they fall.

No confidence votes moved by the Opposition are largely for show – and what was shown yesterday was that New Zealand First is faltering in the absence of its leader.

Yesterday parliament was asked to vote on the vote of no confidence moved by labour leader David Cunliffe.

The Green’s default position is to be against everything and it voted against it.

NZ First was leaderless yesterday and without Winston Peters its MPs don’t know what they’re for or against and they too voted against the motion.

The Greens realised their mistake before it was counted and corrected it. NZ First’s MPs did not and Cunliffe’s vote was initially defeated 50-71.

Someone must have told the hapless MPs what they’d done and Barbara Stewart returned to the house to seek leave to correct the result.

Perhaps it was a Freudian slip which shows the MPs really prefer National to Labour, or maybe it was just a sign the NZ First in not just Winston First, it’s Winston only and when he’s not there his MPs haven’t a clue what they’re doing.

The voting starts around 10 minutes, but Bill English’s right of reply which precedes the vote is worth listening to, too.

Should you prefer to read it, here’s Hansard’s draft transcript:

Hon BILL ENGLISH (Minister of Finance): It is a privilege to be able to just wind up this Budget debate as the Government looks to a confidence vote with some confidence. I was very pleased to hear Minister Tolley’s speech, because she, along with other Ministers, has done an excellent job over the last 6 years now—almost 6 years—of providing better public services when we have had a tight budget, and we have done it again this year. At a time when the Government is spending less new money, by a large factor, than the previous Labour Government, we are seeing improvements in those kinds of issues that are at the core of the purpose of our public services. Because this is a Government that seeks to resolve problems and reduce misery, not fund a system that feeds off it.

That is where the Labour Party is. The Labour Party believes in State monopolies that fund services that feed off misery. Labour does not want problems solved, because if you have less misery, you have less Government. That is a key to this Budget. Under this Budget the Government will spend 30 percent of GDP—down from 35 percent just 4 years ago. We have been able to control expenditure not by slashing and burning but by understanding the core drivers of criminal behaviour, of educational failure, and social dysfunction, and starting to act on them. I say “starting” because it is pretty clear that the changes we are bringing about in public services are only just getting going and the benefits are only just starting to flow. There is so much more to be done. That is why we have a surplus. We have a surplus because what works in our communities works for the Government’s books: less crime, less spend—you get a surplus. More educational achievement, less remedial teaching—you get a surplus. That is what is working. That is in the context of a growing economy. We are having a confidence vote tonight. This is a confident Budget for a confident country—a Budget for a country that knows where it is going from a Government that knows what it is doing. That is why it is going to win the confidence vote in this Parliament. It is because it is in the context of an economy that is growing and New Zealanders beginning to understand that all New Zealanders can share in the benefits of that growth—this time around, it is New Zealand families with young children. That is the product not of any particular, big decision in this Budget or in the previous five from the John Key – led National Government; it is a product of considered and consistent change over time, always working towards sustained economic growth that can deliver dividends to New Zealand households year after year. New Zealanders do not really measure growth in terms of GDP. They measure it in terms of better job security—and it is a lot better now than it has been for a long time—and whether their incomes are likely to rise. If we achieve, if New Zealand achieves—

Andrew Little: You’ve got a pretty bad start so far—46 percent can’t get a pay rise.

Hon BILL ENGLISH: It is interesting that the member keeps quoting that, because that is about the average in most years, including when Labour was in Government. In any given year when Labour was in Government, 45 percent of the workforce did not get a pay rise. But I will tell you what they were doing. I will tell you what was happening. They were paying interest rates of 10 percent for first-home mortgages. The cost of living was going up. Inflation by 2007-08 was 5 percent, and today it is less than 2 percent. So they had no wage rises, interest rates were going through the roof to 10 percent, and the cost of living was going up by 5 percent.

Andrew Little: What are you doing to lift wages?

Hon BILL ENGLISH: Well, let us discuss some of the member’s proposals that came up in this Budget debate. Here is one. Here is a question: what is the Labour Party’s immigration policy?

Hon Member: They don’t know.

Hon BILL ENGLISH: All I would say is: “Don’t ask them because they don’t know.”, because I think, as Phil Twyford said, they were going to cut immigration to a net 5,000. So I expect that this weekend at the ethnic functions in Auckland, Labour members will be getting up in front of the Indian community and saying “There’s far too many of you. We’re going to cut the number. We’re going to slash the number—no more Indians.” Then, because they are true to their word, they will be going off to the Chinese celebration and saying “Ahh, too many Asians in housing auctions around Auckland. They’re all Chinese. We’re going to slash the numbers.” And then they are going to go down to the Pasifika function. That is right, and they are going to say “No more family members from the Pacific Islands.” That is because Phil Twyford and David Cunliffe said on the radio: “We are going to slash immigration in order to control the housing market.”

Hon Hekia Parata: That’s what it means.

Hon BILL ENGLISH: It is not just what it means; it is what they said. It is what they said. Labour’s immigration policy is to slash migrant inflows. I think it is a bit weird. I think it is a bit weird from a party that has traditionally regarded itself as the representative of the migrant communities. But we will be there, Ms Collins will be there, Sam Lotu-Iiga will be there, Kanwal Bakshi will be there, and they will write down what Grant Robertson says to those people. But then it is not weird when you think about what they are saying to low-income New Zealanders.

Chris Auchinvole: What do they say?

Hon BILL ENGLISH: I will tell you what they are saying to low-income New Zealanders. They are saying—I thought you might be interested—“We’ve got this really bright new idea, which is to increase KiwiSaver contributions so that the Chinese buyers don’t have to pay higher interest rates.” OK? Or so that the Indian buyers do not have to pay higher interest rates. So we have asked a simple question: by how much would you need to increase KiwiSaver contributions in a compulsory scheme to offset a 1 percent increase in interest rates?

Chris Auchinvole: And what do they say?

Hon BILL ENGLISH: They do not know, so we have done our own calculation and it is 15 percent—15 percent. In the weekend Labour members are going to be out in the Ōtara market, saying to women who have the second job in a household and are doing 25 hours’ cleaning in the middle of the night during the week in order to feed their family: “You have to join compulsory super, and we are going to take 9 percent of your gross income off you. That’s not enough, because when the Chinese drive the interest rates up, we’re going to put it up to 15 percent.”, and we will be listening.

What a stupid, dangerous, unfair policy. Apparently slashing immigration and forcing low-income people to save money they do not have is Labour’s response to the Budget. I used to think it was lazy, but I did not think it was that silly. I really did not. I am looking forward to campaigning in south Auckland with the growing interest from the Pasifika vote. We can stand up and say that jobs are growing, wages are rising, and they will stand up and say “We are going to slash your take-home pay and make sure your family cannot come to New Zealand.” But you know what they will do, they will say something completely different. As usual, we will have no idea what their policy is, because in here, in the office buildings, and on Radio New Zealand they say compulsory superannuation and slashed migration, but when they get out in the suburbs of Auckland, I do not know what they will say. They will sound like Martin Luther King. That is what they will do—

Hat tip: Keeping Stock


English: Govt shouldn’t be business risk

May 21, 2014

Finance Minister Bill English gets it – the government shouldn’t be one of the risks businesses have to manage:

. . . “Governments need to create an environment of stability and good incentives for [businesses] to grow the economy. Businesses need confidence the rules will not shift and the Government is not one of the risks they have to manage,” English said.

It was also important for the Government to run a counter-cyclical fiscal policy which, right now, meant running surpluses, paying down debt, and limiting future initiatives in spending and tax cuts to what would not push interest rates higher than they need be.

Keeping a rein on its own spending is a far better government strategy for keeping pressure off interest rates than meddling with the Reserve Bank Act and Kiwisaver payments which Labour is proposing.

What had driven mortgage rates over 10 per cent on the eve of the last recession was the combination of runaway government spending and runaway house prices.

There was no single answer to “ridiculously expensive” house prices, he said, especially as councils made many of the decisions about land availability and other regulatory imposts.

“They need to understand that decisions planners in Auckland make about the minimum size of balconies will affect returns to a cray fisherman off Fiordland.” . . .

Steep increases in property prices are primarily a function of supply not keeping up with demand.

Council policies and nit-picky actions by planners over minor details slow new builds.

The housing price issue isn’t a national one.

The problem is mostly an Auckland and Christchurch one but by putting pressure on interest rates it affects the whole of the country.

Council there have a big role to play in solving that by making it much easier to increase the supply.

Meanwhile the government must continue to play its part by keeping a tight rein on its spending.


Lower welfare costs fund surplus

May 20, 2014

A reduction in welfare spending is funding the surplus.

Economic growth has helped but a faster than expected drop in the cost of welfare is the bigger contributor:

English told an audience of business people that in 2010 the Government had expected to be spending $11.5b on welfare this year.

However in following Budgets it trimmed the forecasts and this coming year it would be spending about $10.5b.

“The welfare bill is going down and going down faster than we expected. . .

English said governments in the past had been passive on these costs but National had tightened up the system and the expectations of people on welfare.

It got experts to work out what the 290,000 people on welfare would cost in the long run.

Their total liability was $76b. Apart from superannuation it was one of the big costs that underpinned the tax bill.

That is a huge amount of money, and National has proven that with the right policies it is possible to reduce it.

Two thirds of the liability came from people who first got a benefit under the age of 20. “So it confirms what grandma told you. “Don’t let those young people get off the rails because when they do it’s very expensive.”

The experts told the Government that if a person got a benefit once it made them much more likely to get a benefit again. If a young woman under 20 with a child went on a benefit the average length of stay on the benefit was 20 years.

“That’s expensive, very expensive,” English said.

A couple of years ago the Government put a supervising adult with the 4600 mostly young women under 20 with a child who were on a benefit. They typically had little education and lived in old, cold houses and had been left to sink or swim on their own.

That number had now shrunk by 40 per cent to 2600.

“And that’s going to save us hundreds of millions.”

Kiwiblog has a budget slide that illustrates the savings:

welfare

The savings aren’t just in welfare spending.

Health and educational outcomes are better for children in families supported by work rather than welfare.

Those savings aren’t just financial either – there are significant social dividends from stopping people going on to welfare and helping those who can work to work.

 

 


Editorial approval for Budget

May 16, 2014

From south to north:

The Southland Times writes of felines and finances:

As the budget debate was winding down in Parliament yesterday the most popular story on the Stuff website was still “Cat saves boy from dog”.

Bill English will hardly be distraught. He knows this is not an election-losing Budget.

It’s the first since 2008 to project a surplus. Technically, it is perfectly possible for a Government to be rolled in an election year while economic figures are doing OK. Jenny Shipley managed it while running budget surpluses and with economic growth knocking around 3.5 to 4 per cent.

But the public had emphatically soured on the politics of her administration whereas the Key Government, for all that it has had a wretched couple of weeks, would still need to subside spectacularly to find itself in such straits.

English has found himself in the fairly happy situation of not needing a budget that would quicken any pulses . . . merely keep them steady. This one will surely manage that.  . .

Australia has done English the very considerate favour of delivering a gasper of a hard-times Budget just days before his. So if it was a test, we’d be the winners, right? And who doesn’t like beating the Aussies? Big tick for the Nats, then?

Truth to tell those contrasting fortunes are indeed likely to accelerate the net immigration inflow of more than 38,000 this year. That’s assuming people have been paying attention, what with that fabulous cat footage.

 

The ODT calls it a clever document:

This was the Budget that National – right from the time of its re-election in 2011 – would have hoped it could produce leading into this year’s election.

Mr English has not swayed from his path of fiscal restraint. Sure, he has had to borrow heavily during the past six years, but not to the extent the country plunged into recession.

Now, the return to surplus gives options such as paying down debt.

The careful management of the country’s finances by Mr English, and his team of ministers, has helped ensure New Zealand has been mainly immune from the worst of the global decline affecting Europe, parts of Asia, the United States and, latterly, Australia.

Economic growth has been one of the highest in the OECD and, for once, all Treasury indicators are pointing in a positive direction.

This was a Budget of few surprises, but with enough good news to count for something. . .

It will enable Prime Minister John Key to go into the election campaign confident his 2008 promises of fiscal restraint, providing the best care for families, and delivering a better public service have not been compromised.

Opposition parties will have to promise big to counter National, and if they do, the onus will be on them to say exactly how they will fund those promises. . .

If he is looking for a document to define his legacy as Finance Minister, Budget 2014 is a good place to start.

There is some criticism the Budget is too conservative, but that personifies Mr English, who learnt the trade from former finance minister Sir William Birch. And would most New Zealanders rather have a gambler as a finance minister, or a safe pair of hands?

The ”Boy from Dipton” has lived up to his reputation as a ”conservative” politician in every way.

The Timaru Herald opines on the Budget highlight:

The contrast was telling, helped by the fact Australia’s Budget and ours came just two days apart.

Theirs: there will be pain for everyone.

Ours: we’re operating with a surplus and tax cuts may even be on the way.

But hey, we’re heading into an election, so there’s bound to be some gloss. They aren’t.

The National Government has worked long and hard on being able to say it is spending less than it is collecting, and right on cue it has achieved that.

Selling off a few state assets and spending most of the proceeds has helped, of course, and as Labour’s David Cunliffe rightly points out, National has borrowed a massive $56 billion in its tenure, which costs $10 million a day in interest.

He says that’s a lot of money that could be spent on lifting kids out of poverty, which indeed it is.

But because National is the Government it sets the agenda, and the agenda yesterday was for enough lollies to keep sugar levels up without creating a free-for-all. . .

It’s a steady Budget without attempting to buy votes.

The best thing about it?

It’s not Australia’s.

 

 

The Press writes of seeking the recipe for growth:

When he delivered his first Budget six years ago, Finance Minister Bill English faced a grim prospect. Even though the global financial crisis had not yet hit, the economy had gone into recession some time beforehand.

Government debt was at a reasonable level, but spending in Labour’s last years in office had ballooned and, according to Treasury projections, the Government faced deficits for a decade or more ahead.

National had been elected promising responsible Government finances and a stronger economy, but without changes those looked unlikely.

English smiled yesterday as he took delivery of the bound Budget document and well he might. By delivering a surplus, albeit a tiny one, several years ahead of what he had forecast several years ago, today’s Budget will be brighter than even he expected it to be by now.

Since it came to office six years ago, the Government’s core promises have been that it would deliver a stronger economy, responsible public finances and a better public service.

In 2011, after the earthquakes, it added a promise to rebuild Christchurch. Those pledges have become a mantra and can be expected to be repeated today.

Without engaging in a wholesale slash and burn, it has kept public spending under control while maintaining services.

So far as it is possible for a government to claim credit for the performance of the economy generally, National can be pleased with the prospect of growth possibly hitting more than 4 per cent this year. The trick will be to make that growth enduring. . .

In spite of the benign aggregate position it should not be forgotten that, as an Otago University survey reiterated last week, New Zealand still has significant pockets of deprivation.

There are likely to be numberless reasons for them but a growing economy delivering opportunity and jobs offers part of the solution for sustainably dealing with them.

The Marlborough Express writes the jobs challenge continues:

. . . Finance Minister Bill English told Parliament the realisation of job growth forecasts depends on the confidence of businesses to invest more capital and employ more people.

“That is where new jobs come from. They do not come from the Easter bunny.”

The Easter bunny didn’t get a mention when English unveiled his sixth Budget yesterday.

The test will be how much his programme can lift confidence and stimulate growth to create the environment that will put priority on employment growth.

The Dominion Post notes the crowd goes mild:

This is a deliberately bland and even boring Budget. The Government has clearly decided that grey and safe is its best hope in election year. The only surprise was free doctors’ visits for under-13-year-olds. Middle New Zealand will welcome it, as it will many of the other, carefully telegraphed, handouts. More paid parental leave: who could object? A bit more help with childcare costs: why not?

National has made a virtue of small gifts: it shows that the party is “responsible” and not spending money it doesn’t have. And that is why the $372m surplus is intended to have such political heft. The amount is piffling within a $70b budget, and would make no economic difference if it was an equally mouse-sized deficit.

But the surplus is the signal that a caring government has brought us home safely after a nasty trip through recession. And if we carry on being careful and good, the Government says, life will carry on improving. Finance Minister Bill English gave a hint of tax cuts to come, but waffled when pressed. So that means National is keeping its tax promises till closer to the election.

The real question is: is this all the voters want – thrift, mild rewards, steady-as-she-goes? The dissenters have pointed to National’s noticeable lack of flair and imagination. No big new policies, no bold new directions, no surprises.

But that is what the John Key Government is, and so far it has won elections. In tough times, the Government has spent freely to keep the ship afloat, and then it has slowly brought it to the fiscal shore. Now it welcomes us to dry land. . .

Much bolder moves will be needed, including a capital gains tax. But National’s caution here is a drawback, not an advantage. Sometimes problems are serious and need action. National seems to believe it will be enough to cut red tape and remove some of the planning obstacles in the way of housing. It won’t.

At present there is little rage about poverty, inequality and the housing crisis. These problems are raw and real but voters are patient and only a minority of voters now seem to actually hate National. It will probably take another term before a majority is truly fed up with Key and his band. In the meantime, this bland document may be a document for the times.

The Manawatu Standards call it a Budget comfortable fit for many Kiwis

There may be little bling to Finance Minister Bill English’s sixth Budget but, like a pair of sensible shoes, it will make for a comfortable fit for many New Zealanders.

It was a budget light on ambition, heavy on prudence, in its commitment towards a modest $372 million surplus, but with a few policies bearing a distinctive Labour hue to them.

Its “steady as she goes” tenor does shrewdly mine the Kiwi ethos. Yes, a tax cut would have been nice, but they’ve balanced the books and haven’t forgotten the children. So she’ll be right.

It is a budget good enough to serve its purpose, whether that is pragmatic progress towards further surpluses and the lure of an eventual tax cut or simply placating middle New Zealand until after the general election in September is a matter of perspective. . .

The NZ Herald says the Budget steers safe course in rough waters:

The Treasury gave the show away in the Budget’s supporting documents, mentioning that while tax revenue is running at a lower level than expected, some of the Government’s intended spending has been “rephased” to produce the surplus it has promised.

Opponents can call it a trick of “smoke and mirrors” but the verdict that matters comes from credit agencies. They are unlikely to be concerned. Spending rephased is spending we might never see unless surpluses can be maintained. . . .

The Budget’s best feature is the value Bill English seems to be getting for little extra spending on public services. Departments know the results he wants and seem to be delivering them without complaint from providers or the public.

They have stopped demanding endless increases in funds and he shared the credit with them yesterday for his surplus.

Doctored it may be, but it will get better.

The Herald’s last point is a pertinent one and one of the National governments successes – getting better pubic services for less money.

 


Voting with their feet

May 16, 2014

The contrast between the Australian Budget delivered by Treasurer Joe Hockey earlier in the week and New Zealand’s Budget delivered by Finance Minister Bill English yesterday was stark.

Trans-Tasman migration is a reliable indicator of the state of the two countries’ economies and even before the Budgets were delivered, the tide had turned in New Zealand’s favour.

. . . A net immigration inflow of some 38,100 this year is very high by historic standards, mainly reflecting more New Zealanders deciding to stay here instead heading to Australia or further afield in search of greener pastures.

It’s hard to argue with the way that people vote with their feet. Pattrick Smellie

The message from both Budgets is likely to reinforce this trend.

 


Economy means not end

May 16, 2014

National has earned a reputation for sound economic management.

Unfortunately too many people don’t join the dots between that and the sustainable social policy which that enables.

They fail to understand that a good head and a soft heart aren’t mutually exclusive and in fact the better the former the more the latter is able to deliver.

The focus on careful management of the economy is the way not the destination.

A growing economy is the foundation on which services depend.

It’s motivated by and required for  the sustainable provision of social policies.

A growing economy isn’t just desirable, it’s necessary for a government determined to look after the vulnerable, help those who can help themselves to do so and provide education, health, welfare and other public services which most New Zealanders regard as necessities not luxuries.

This is why National has been determined to return to surplus, not as an end but a means to provide better opportunities and more choices.

You don’t build a brighter future on deficits and no government can sustain spending unless it’s also running surpluses.

 

Photo: Follow us on Twitter from 2pm today or visit www.national.org.nz/news/features/budget-2014 to keep track of our announcements for #NZBudget.

 

 

 


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