ANZ’s chief economist says it’s right for National to be a bit vague about its tax cuts plan because of the uncertainty in the economy.
But Cameron Bagrie says despite still owing tens of billions in debt, the Government’s proposal is “realistic”. . .
“If you step back and look at the bigger picture, it’s a signal – and the signal there is if you get out the paid work, we’re going to increase that return to paid work by allowing you to keep more of your money, as opposed to taking it off you and spending it on your behalf,” Mr Bagrie said on Firstline this morning.
“We’ve got to look at the design package in regards to whether it does truly increase the returns to work and encourage people into the labour force, because that’s ultimately the benefit of tax cuts down the track.”
As for the lack of detail in the plan, Mr Bagrie says National doesn’t have much of a choice – but as one of the few countries that includes provisions for future initiatives within the Budget, New Zealand Finance Ministers have more flexibility to adjust to changes in the economy.
“Net debt is going to be on a declining trajectory, and in that situation it gives you options. It gives you flexibility on the fiscal front.
“If I look at the combination of the policies that the Government looks like they’re going to be pursuing by 2017, they’re going to be paying down a little bit of debt, there’s going to be some modest spending increases and they’re going to try and give tax cuts – so it looks like they’re trying to strike a very tough balancing act and trying to deliver on all three, as opposed to skewing off to one side.” . . .
Balanced and realistic – that’s good, as is the signal National is sending: it trusts people to spend their own money better than any government can.
Labour and the rest of the left think government knows best.