Prime Minister-elect John Key, his deputy Bill English and the new national MPs:
Prime Minister-elect John Key, his deputy Bill English and the new national MPs:
Another reason to vote National for strong, stable government and a growing economy:
New Zealand continues to enjoy one of the fastest-growing economies in the developed world, confirming that the Government’s sensible economic programme is taking New Zealand in the right direction, Finance Minister Bill English says.
“It’s only through a strong economy that we can provide New Zealanders with new jobs, higher incomes and opportunities to get ahead,” he says. “The Government’s economic programme is successfully delivering those things and families can now look forward to the future with some confidence if we stick with that programme.”
Statistics New Zealand today reported gross domestic product expanded by 0.7 per cent in the June quarter. This took annual growth – from the June quarter 2013 to the June quarter 2014 – to 3.9 per cent – the highest growth rate for 10 years and the highest so far reported by OECD countries. Average annual growth was 3.5 per cent.
Mr English says New Zealand’s challenge is to build on the solid foundations provided by the growing economy.
“It’s pleasing to see the good progress we have made as a country over the past few years. The economy is growing, the Government’s books are on track to surplus and another 83,000 jobs have been created in the past year. But one or two years of growth will not change New Zealand’s economic prosperity. We need to stay on course to really lift our long-term economic performance.”
Growth in the latest quarter was driven by construction activity, up 2.2 per cent, business services, up 4.2 per cent, and retail trade and accommodation, up 1.4 per cent.
New Zealand’s 3.9 per cent GDP growth in the year to June compares with 3.1 per cent in Australia, 3.2 per cent in the United Kingdom, 2.5 per cent in the United States, 2.5 per cent in Canada, no growth in Japan and 1.3 per cent in Germany. Average growth across the OECD was 1.9 per cent.
As the election gets closer and polls get tighter some people are beginning to think about getting clever with their votes.
Bill English just told Jamie Mackay on the Farming Show that if people want a National-led government they should vote for National and leave the coalition permutations up to the politicians when the votes are counted.
It’s the party vote that counts and the only way to get a strong, stable government is to give National your party vote.
It’s also the only way to keep the country on course.
A re-elected National Government will return to surplus this financial year and stay there so we can reduce debt, reduce ACC levies on households and businesses and start modestly reducing income taxes, Finance Spokesman Bill English says.
“National’s clear economic plan is working for New Zealand by successfully supporting higher wages and more jobs, and ensuring government spending is invested wisely to deliver better results,” he said when issuing National’s Finance Policy today.
“National is working hard to ensure the economy grows sustainably into the future, supported by more savings, productive investment and exports. This will provide opportunities for Kiwi families to get ahead here in New Zealand.”
As set out in the Budget, a National-led Government will restrict average Budget allowances for discretionary new spending and revenue measures to $1.5 billion a year over the next three years. Within this allowance National will:
• Allow around $1 billion a year for new spending, including between $600 million and $700 million a year more for health and education. This total new spending is consistent with the level of new spending in our last two Budgets and it’s well below the $2 billion to $3 billion spending increases under the last Labour government, which had little to show for them.
• Reserve the remaining $500 million per Budget for modest tax reductions and further debt repayment, as economic and fiscal conditions permit. This portion of the allowance will be moved between Budgets and accumulated as necessary. Therefore, by the third year there will be around $1.5 billion available for tax cuts and debt repayment.
“It means that over the next four years, National will spend around $10 billion more in total, and most of that on health and education,” Mr English says.
“This is well below the $18 billion in extra spending Labour has already earmarked for the next four years, and that’s not counting the Greens and Dotcom.”
National’s five fiscal priorities for the next three years are:
1. Return to surplus this year and maintain surpluses over subsequent years. These growing surpluses will enable us to meet the Government’s capital requirements and reduce debt.
2. Reduce net government debt to 20 per cent of GDP by 2020, including starting to repay net debt in dollar terms in 2017/18. Reducing government debt puts New Zealand in a better position to cope with the next economic shock or natural disaster.
3. Further reduce ACC levies on households and businesses, starting on 1 April 2016. A National Government will cut levies on all ACC accounts by an average of around 30 per cent. Subject to public consultation, this will reduce levies by between $700 million and $900 million a year – the equivalent of a tax cut for households and businesses.
4. Begin to reduce income taxes from 1 April 2017, providing economic and fiscal conditions allow, and if the first three priorities have been achieved. Any tax reductions will be modest, given the fiscal headroom available, and they will focus on low and middle income earners.
“We will consider the details of a possible tax package closer to the time,” Mr English says. “As the Prime Minister and I have said, we won’t be setting out a specific tax package before this election.”
5. Use any further fiscal headroom – including from positive revenue surprises – to get net debt to 20 per cent of GDP sooner than 2020.
“Once debt gets to 20 per cent of GDP, we will begin to resume contributions to the New Zealand Superannuation Fund,” Mr English says.
“In addition, we will help to keep interest rates lower for longer for New Zealand families by reducing core Crown spending to below 30 per cent of GDP by 2017/18 from 34.4 per cent in 2008/09 under the previous government. And our focus will remain relentlessly on targeting that spending where it delivers better results for New Zealanders.”
National will continue to improve management of the Government’s capital investment programme, which totals around $24 billion over the next four years.
“That includes using the remaining $1.7 billion of proceeds from the Government share offers to reinvest in new public assets like schools, hospitals and regional roads – without having to borrow this money.”
Mr English says New Zealanders have a stark choice this election.
“They can continue to support National and its clear economic plan that is working for New Zealand. It’s delivering a strong economy, it’s getting us back to surplus and it’s getting on top of debt. Under National, we will achieve sustained growth that delivers solid increases in household incomes and new jobs through the next term.
“Or they can put all that at risk by changing course to who knows what direction.
“Under Labour, the Greens and Dotcom, the economy would stall. They would introduce five new and unnecessary taxes and create a surge of wasteful government spending.
“And they would undermine the confidence necessary for businesses to invest now so we get stronger growth later.” . .
National has been criticised from the right for not offering bigger tax cuts and the left for offering the cuts at all.
The amount isn’t big but the contrast the plan provides with Labour and its potential coalition partners is significant.
National will allow low and middle income earners to keep a little more of their own money.
Labour and its partners would leave them with a lot less because of the five new taxes they’d impose on top of higher KiwiSaver contributions.
On top of that we’d be faced with higher interest rates, higher inflation and lower growth.
National’s plan is working.
It’s cushioned the most vulnerable from the worst effects of the recession and got the country back on track to surpluses and growth.
The policies Labour and its mis-matched mates would impose on the country would undo the good work and take us backwards again.
National will be announcing its economic policy next week.
When it does the leader and finance spokesman will understand it and agree on the details, which is more than Labour seems capable of.
But then in another contrast with Labour, National’s economic plan is clear, it’s simple and it’s working for New Zealand:
David Cunliffe has given five different answers to the question of whether or not CGT will be due on the family home when your parents die.
The answer is maybe and that’s final as far as he’s concerned because whether it is or whether it isn’t he’s got a problem.
If it is it will be a death tax by stealth which would be politically unsellable.
New Zealand families will be distressed to learn that Labour would force them to sell their deceased parents’ home within a month of their death or face a punitive capital gains tax, National Party Finance Spokesman Bill English says.
“The more David Cunliffe tries to explain his complicated capital gains tax, the more he ties himself in knots and confuses New Zealanders,” Mr English says.
“Last night on NewstalkZB, he contradicted his finance spokesman by saying Labour’s capital gain tax would apply to a family home after the death of a parent, unless it was sold within a month.
“In other words, he would force families to rush through the sale of their parents’ family home at a distressing time in their lives, or penalise them with a new tax.
“Just hours earlier, on RadioLive David Parker said the capital gains tax would not apply.
“If David Cunliffe and David Parker cannot get their story straight, it is little wonder that New Zealanders are confused and uncertain about Labour’s higher tax agenda.
“This is just one of five new taxes Labour and the Greens would impose on New Zealanders. This would stall New Zealand’s good economic momentum, creating uncertainty and costing jobs
“By contrast, National’s clear economic plan is successfully supporting higher wages and more jobs. It is steering New Zealand back to surplus this year and ensuring government spending is invested wisely to deliver better results,” Mr English says.
But if CTG isn’t levied on the family home when your parents die the tax take won’t live up to their projections which will leave a big hole in their budget.
Voters have a right to know the answer before the election.
Prime Minister John Key stepped up his attack on Labour’s capital gains tax today, suggesting it will create a headache for grieving children who inherit a house on the death of their parents. . .
Mr Key said: “You’d have to say by any definition it’s a complete and utter mess.”
Mr Key said Mr Cunliffe had yesterday told New Zealanders “that if they don’t sell the family home of their deceased parents, then within one month they will have to start paying a capital gains tax”.
“‘That is a horrifying thought for New Zealanders to be put in that position. Probate wouldn’t even come through within one month.
“I think everyone would accept the number one priority when your parent or parents pass away is not whether you should be out there flogging off the family home so you don’t have to pay a capital gains tax, it’s dealing with all the emotions and stress and issues that go with losing a loved one.”
Labour’s policy states the tax is payable only on the gains since inheritance and only when the home is sold.
Mr Cunliffe this morning said the fine details of when an inherited home would be liable for the tax would be worked out by and expert advisory group.
“Other countries have a range of periods — Aussie uses two years, some countries from the point of death, others from the point of settlement.”
Mr Key said Labour should have the answers now.
“We are now a couple of weeks out from an election this is a key policy for Labour and they can’t tell New Zealanders when it comes to their number one asset, their family home, how it will be treated.”
Prime Minister John Key floored David Cunliffe last night when he couldn’t answer whether or not Labour’s capital gains tax would apply to homes owned by trusts.
After the debate he said it wouldn’t but that’s not what the policy says:
David Cunliffe’s inability to answer the most basic questions about Labour’s proposed capital gains tax underlines key problems identified by successive tax reviews, National Party Finance Spokesman Bill English says.
“David Cunliffe’s failure to explain how he would implement a new capital gains tax, which has now been Labour policy for more than three years, will leave many thousands of New Zealanders confused and uncertain,” Mr English says.
“Nowhere in Labour’s capital gains tax policy does it exclude family homes owned by trusts. In fact, Labour actually says: ‘We will ensure trusts are not used as a means of avoiding a CGT’. David Cunliffe cannot have it both ways.
“And now Labour is trying to say the test for whether a capital gains tax applies is not whether a trust owns the property, but who lives in it. That would require Inland Revenue to confirm the living arrangements of householders in deciding whether the tax would apply.
What if there are adult children paying rent?
What if there is a boarder?
What if the boarder is a relative, for example an elderly parent?
Would it make a difference if the relative lived in a granny flat?
Would it make a difference if someone living in the granny flat wasn’t a relative?
What if there’s more than one family in the house?
“This latest confusion follows Labour previously making contradictory claims about whether the KiwiSaver accounts of 2.3 million New Zealanders would be exempt from their new tax. They now claim they would be exempt, but this is not reflected in their policy or their costings.”
Mr English says Labour’s proposed capital gains tax was already full of holes, applying only to only a quarter of the housing market, but to every New Zealand business and farm.
“All of this underlines what tax experts and independent reviews have said over the past 20 years. Implementing an extra capital gains tax would be much more complicated and confusing in practice than it appears in theory.
“By contrast, National’s clear economic plan is successfully supporting higher wages and more jobs. It is steering New Zealand back to surplus this year and ensuring government spending is invested wisely to deliver better results.
“The five new taxes promised by Labour and the Greens would stall the New Zealand economy and cost thousands of jobs.”
People who trade in property or shares already pay taxes on the capital gains.
CTG CGT would add cost and complexity to the tax system which wouldn’t be justified by the money raised.
Labour wants to introduce a
CTG CGT and four more taxes for the worst reason – so it can spend more.
The best way to increase the tax take is through economic growth which enables businesses to make bigger profits, increase jobs and wages.
The worst way is to increase tax rates and add new taxes which add complications, complexity and costs and put a hand brake on economic growth.