As good as it gets?
Finance Minister Bill English released the Budget Policy Statement and the Half Year Economic and Fiscal Update this week confirming we are through the worst of the GFC. Treasury forecast an average growth rate of 2.6% over the next five years. They characterise this as relatively strong. However, it is significantly lower than forecast growth in a protein hungry Asia which accounts for about 44% of our trade and slightly less than Australia whose growth may, or may not, stay on forecast. Of course some of New Zealand’s growth results from the re-build in Canterbury.
Interestingly, Treasury note the strong increase in net permanent migration to New Zealand (17,500 in the year to October), half of which is from Australia and two-thirds of that, returning New Zealanders. This may be a good reason to stop advocating for an extension of Australian welfare entitlements to New Zealanders as all our Prime Ministers ritually do.
The size of government is set to grow
Mr English confirmed that Budget 2014 will achieve a forecast surplus $86million which is paper thin compared to a NZ$72 billion spend, but it’s a surplus nonetheless. Revenue is rolling in while expenditure is constrained. Net core Crown debt peaks at 26.6% of GDP and drops to a 22.3% by 2017/18 largely due to the improvements in the cash position. Revenue in 2013 was NZ$61.1 billion and is set to hit NZ$84.9 billion in 2017/18. Core Crown expenses in the same period start at NZ$70.3 billion and hits NZ$79billion in 2017/18. Treasury say we can expect a surplus of NZ$5.6 billion at the end of the forecast period assuming ongoing spending restraint.
Houston we have a revenue problem
Treasury say that tax revenue is due to grow by about 5.8% p.a. over the forecast period. They correctly identify the risk of a change in emphasis away from expenditure restraint. Nominal increases in core Crown expenses are driven by social programmes: social welfare benefits (the biggest of which is super and it accounts for most of the increased spend), health and education. From an ACT perspective an expansion of poor quality social spending could start under either a National led government in its last term or an incoming Labour-led government in 2017.
Election 2014 – giving some back or more tax and spend
With more than a third more revenue forecast in 2017/18 than in 2012 the big question for election year is whose narrative wins. The conventional wisdom is that an improving economy helps the incumbent Government. This is likely true, however improving finances will also lead to political demands for more spending.
Already the child poverty ‘industry’ is in high gear essentially advocating more welfare and trying to make their issue and election issue. Labour will probably run on the gap between rich and poor, (inequality) and echo their UK counterparts. This they will do, all the while ignoring the drivers of upward social mobility, which are not about more welfare programmes, but about better educational achievement.
National’s narrative is steady-as-she-goes and is about good economic stewardship. Will National make even the gentlest philosophical argument about taking less in revenue from taxpayers when it conflicts with the repayment of debt line? We know they will not undertake to address the future cost of superannuation. They have done some reform in welfare and education and nothing particularly substantial in health, although Tony Ryall will almost singlehandedly ensure that health is not an election issue.
Making the case for slimming the State in 2014
The best way to keep on pressure to restrain spending is to focus on public debt repayment and limiting new spending which makes politicians and bureaucrats consider value for money and the quality existing programmes. But spending self-control won’t be enough. History is against a record of on-going restraint, politicians and bureaucrats are simply not incentivised for it. Touchingly, Treasury have confidence that today’s politicians are keen to prepare the books for the GFC#2 sometime in the future. Returning some revenue to the New Zealanders who generate that wealth in the first place is the only sure-fire way to slim government over the longer run and generate a higher rate of economic growth.
Traditionally, making the early case for tax cuts falls to ACT. In 2002 we campaigned on tax cuts. By 2005 both Dr Brash and Dr Cullen were too. In 2008 National campaigned on tax cuts, implemented the first tranche and ditched the rest of the programme because of the GFC.
As New Zealand moves into the post GFC economy, the real world arguments about whether the New Zealand State should aspire to do so much for so many citizens, who could probably make better arrangements for themselves with more of their own money, will and should return.
RT will return on 10 January 2014. We wish everyone a Happy and Safe Christmas and a prosperous New Year.
行动党领袖John Banks 今天要求工党和绿党解释“电力系统国营化计划”中6.7亿元的资金“黑洞“。
公有发电厂的市值将大幅下滑，纳税人将失去他们的财产。就在昨天Contact电力， Trust 电力和 Infratil 等公用股下跌超3亿元。投资者和kiwisave持有人已经承受经济损失。
因为海外投资者担心政府粗暴干预市场，他们将远离新西兰市场。 我们急需的资本投资将越来越少，商业将停止扩展。 缺少投资将损害整个社会。
Labour’s David Parker has shown remarkable ignorance of his own Government’s poor economic record with his claim today that a current account deficit of 7% puts New Zealand’s economy in a ‘danger zone’, ACT Leader John Banks said today
“Under the last Labour Government, the current account deficit was 8.7%, 8.0%, 8.0%, and 7.9% of GDP in the years ended March 2006, 2007, 2008, and 2009 respectively. But did we hear Labour warning of us of the ‘danger zone’ then?” Mr Banks said.
“Labour claims that it’s the policies of the National Government that has caused our economic growth to suffer. But the reality is, it’s National’s failure to wind back Labour’s wasteful spending binges that’s the problem.
“Labour’s policies of big government spending undermined the competiveness of exports and firms competing with imports, and turned surpluses in the balance between exports and imports into deficits.
“But rather than see the error of their ways, Labour is doomed to repeat their mistakes.
“Labour’s continued commitment to intrusive regulation of New Zealanders’ financial affairs, its antipathy to commercial enterprise and its love of big, wasteful and ineffectual government programmes show that it has learnt nothing from the mess the Clark-Government had made of the economy by 2008.
“If David Parker and Labour are serious about improving competiveness, they should join with ACT in calling for less government spending and lower tax rates to give our internationally exposed industries a greater ability to compete. Less restrictive labour market legislation and RMA reform would also help,” Mr Banks said.
如果政府核心支出可以减少到GDP的百分之二十九， 把税率定为百分之二十， 加上百分之十五的消费税（GST)，政府依然有足够的运行资金。
New Zealand First’s policy to offer a lower tax rate of 20 per cent to exporters only is a half-baked idea best fed to the dog, ACT Leader John Banks said today.
“ACT has always believed that lower taxes are the best way to boost our economic performance, but this is a classic example of a political party picking winners to further its own agenda,” Mr Banks said.
“Why give a tax privilege to exporters, but not to the equally valiant manufacturers competing locally with imports? To fail to treat them equally is inconsistent with New Zealand First’s professed concern to export more and import less.
“Unlike New Zealand First, ACT believes that everyone would benefit from lower taxes, not just exporters.
“A recent Treasury and IRD paper found that personal income tax reductions would be the most effective measure for boosting economic welfare.
“ACT would like to see a 20 per cent tax rate rolled out across the board so that families, individuals, and businesses can all benefit. But to do that we must cut out wasteful government spending.
“If core crown expenditure is reduced to 29 per cent of GDP, a tax rate of 20 per cent along with 15 per cent GST would be more than enough to fund government spending, with a substantial welfare safety net.
“If New Zealand First is really serious about boosting economic growth, they should support a lower tax rate of 20 per cent for everyone coupled with lower government spending, rather than picking specific groups to bestow government privileges on,” Mr Banks said.
“行动党一直都在要求更低，更平稳的所得税税率” John Banks说。
ACT leader John Banks today welcomed the release of an IRD and Treasury paper that found that personal income tax reductions would be the most effective tax measure for boosting economic welfare.
"ACT has always argued for a lower, flatter structure for income tax rates," said Mr Banks.
"Ideally we would like to see a single rate for the income tax in New Zealand, and it would not be higher than 20 per cent. With GST at 15 per cent, that would be more than enough to fund government spending on collective consumption of the order of 6-7 per cent of GDP and a substantial welfare safety net.
"The Western World has overstretched itself with high tax rates to fund welfare dependency and once-poor Asian countries such as Singapore and Hong Kong have outstripped New Zealanders in just one lifetime, in good part by not following this degenerative route.
"The 2025 Taskforce reported in 2009 that cutting core Crown expenses to 29 per cent of GDP would, at that time, have allowed the maximum personal tax rate, and the company and trust tax rates, all to be reduced to 20 per cent.
"What made this unattainable is Labour’s dramatic increase in government spending from 29.1% of GDP in 2004/5 to 34.6% in 2008/09, which put a large strain on government finances in the global financial crisis downturn. By increasing spending, Labour squandered the growth dividend from the very reforms that it scorned.
“ACT's Spending Cap Bill, in its original form, would have forced Labour to go directly to the electorate to obtain its approval for its irresponsible spending increases.
We believe New Zealanders still need the protection of such a measure.
"The latest IRD/Treasury assessment is yet another reminder of how disgraceful and economically illiterate a former Labour Minister of Finance was in dismissing sensible mainstream economic tax policy advice from Treasury as an 'ideological burp'.
"He and his colleagues were the ideologues, and doubtless still are,” Mr Banks said.
The report can be found here: http://taxpolicy.ird.govt.nz/sites/default/files/2013-other-savings-investment.pdf
中小企业占了新西兰企业总数的 97%，并贡献率了40%的国内生产总值。当前大部分中小企业生存艰难， 他们与供应商的议价能力微乎其微， 也没有能力应对持续上涨的运营成本。