Labour’s fiscal plan was never realistic

Labour campaigned with a fiscal plan last year, and it was the centre of a controversial claim by Steven Joyce that demonstrated an $11b fiscal ‘hole’.

The reality is that the fiscal plan was not a plan as it could never have been implemented – there was virtually no chance of Labour governing alone. And this is Labour’s excuse for budgeting $12b more than specified in their plan, the cost of governing arrangements with other parties.

This is an obvious reality of single party campaign policies in an MMP environment where single parties have never governed alone, so it may be more a problem of how parties (and media) portray campaign policies.

NZH: Labour’s first Budget vs its campaign plan: Does it match up?

A comparison of Labour’s campaign fiscal plan with its first Budget shows things are not tracking quite as Labour planned during the campaign, something it put down to its coalition agreements and higher costs than expected.

Analysis by NZ Herald data journalist Keith Ng shows total Crown spending is forecast to be almost $12.5 billion higher over the five years to 2021/22 than Labour forecast in the “fiscal plan” it campaigned on in the last election.

That takes it to $24 billion more than National had planned over that period.

Labour campaigned on its fiscal plan against criticism from National that it had not allowed enough to cover the costs of its policies as well as increases in Government spending such as wage increases.

The higher spending also indicates the cost of securing the support of NZ First and the Green Party was higher than Labour allowed for in its fiscal plan and some policies were costing more than expected.

Finance Minister Grant Robertson said the Budget should not be compared to Labour’s fiscal plan because it was based on Labour Party policy while the Budget reflected the Government arrangement with NZ First and the Greens.

In one way that’s a fair claim by Robertson. Labour was never likely to govern alone.

But did Robertson make it clear that his fiscal plan was not a plan?

He could not know which parties Labour may combine with to form a Government. But he must have known his fiscal plan would never remain intact in an MMP government, and should have expressed it with that clear proviso.

Will this happen next election? It’s likely to be glossed over again, or at least Labour may try that, but having been in Government with two other parties it should be much harder to get away with.

Unless Labour campaigns with the expectation that NZ First and Greens will miss the cut and won’t impact on Labour’s fiscal plan.

 

 

 

Fiscal fight continued

Steven Joyce continues to push Minister of Finance Grant Robertson on expected net debt in relation to Labour’s pre-election fiscal plan. Joyce had been widely criticised for suggesting their was an eleven billion dollar hole in the plan. Robertson was adamant Labour’s plan was sound and accused Joyce was scaremongering.

Yesterday from Stuff: Economists see Government debt rising billions more than Labour’s plan

In Opposition Labour laid out a fiscal plan which would borrow around $11 billion more than National had proposed, but still cut debt as a share of the total economic output from 24 per cent to 20 per cent by 2022.

The plan formed a major point of contention during the election campaign, as National finance spokesman Steven Joyce was widely mocked for his claim that Robertson’s plan had a major “fiscal hole”.

But bank economists, who monitor the likely issuance of government bonds, are warning of pressure for Treasury to borrow billions more than Labour had signalled because of new spending promises.

The fiscal situation continually changes, but there was always a likelihood that spending would increase due to coalition bargaining.

ANZ chief economist Cameron Bagrie

ANZ has forecast that Labour will borrow $13 billion more than Treasury’s pre-election fiscal update maintained the former Government would over the next four years, although around $3b of that would go to the NZ Super Fund. This would see net Crown debt at 23 per cent of gross domestic product, 3 percentage points higher than Labour’s plan.

Outgoing ANZ chief economist Cameron Bagrie said the estimates for new spending were “conservative”, including an assumption that the new $1b a year regional development fund would come entirely from existing budgets.

“[S]pending pressures are all headed one way – and a lot depends on the economy holding up.”

BNZ senior economist Craig Ebert

BNZ has also indicated it expects borrowing to be stronger than Labour had flagged. Strategist Jason Wong said the half year economic and fiscal update would probably show “in the order of” an additional $2b-$3b a year in bond issuance in the coming years.

BNZ senior economist Craig Ebert said the figures were hard to determine so early in the term, but borrowing “could amount to a number of billion dollars” more than Labour had outlined.

“Some of this is taking place in a little bit of a vacuum still, because we’ve heard a lot of policies but it’s still a little unclear which ones have been confirmed confirmed, as opposed to just strongly proposed,” Ebert said.

ASB chief economist Nick Tuffley

However ASB chief economist Nick Tuffley now forecasts that unemployment will eventually fall to 3.9 per cent by 2021, while wage growth would gradually rise to 2.8 per cent by early 2020, on the back of both lower migration and plans to hike the minimum wage to $20 an hour by 2021.

Tuffley said based on its forecasts, and the assumption that Labour was able to stick to its spending plans, ASB was forecasting borrowing would be $1b higher than Robertson had signalled.

“Any slippage in [spending plans] will mean more debt issuance,” Tuffley said.

Joyce questioned Robertson about that in in Question Time yesterday, joining a patsy (question 1):

Tamati Coffey: What objective does the Minister have for core Crown net debt?

Hon GRANT ROBERTSON: As indicated during the Speech from the Throne, the Government is committed to reducing net debt to 20 percent of GDP within five years. Progress towards this will be set out by the Government during the usual Budget reporting cycle to the House, starting with the Half Year Economic and Fiscal Update, before Christmas.

Hon Steven Joyce: Has he seen amongst those reports the economic forecast from ANZ chief economist, Cameron Bagrie, who calculates that the Minister , in fact, won’t be able to meet his own Budget responsibility rule No. 2, to keep net debt below 20 percent of GDP, even with some rather heroic spending assumptions?

Hon GRANT ROBERTSON: I have seen those reports and I disagree with them.

Then in question 3:

Transcript (slightly edited):


3. Hon STEVEN JOYCE (National) to the Minister of Finance: Can he confirm core Crown net debt was $59.5 billion at 30 June 2017, and that it is his intention as Minister of Finance to increase net debt to $67.6 billion by 2022, as laid out in Labour’s pre-election fiscal plan?

Hon GRANT ROBERTSON (Minister of Finance): I can confirm that at 30 June 2017 net core Crown debt was $59.48 billion. I can further confirm that it is this Government’s policy to reduce net core Crown debt to 20 percent of GDP within five years. As the member knows, the exact dollar amount of debt in each year will be determined by the Budget process.

Hon Steven Joyce: I raise a point of order, Mr Speaker. That was a question written down on notice, and I don’t believe the Minister of Finance answered the second part of the question. He talked about something about 20 percent of GDP, but he didn’t actually answer yes or no to whether it was his intention to increase net debt to $67.6 billion by 2022.

Hon GRANT ROBERTSON: Speaking to the point of order, I’m not sure if the member heard the last part of my answer, where I did specifically address the question of what the exact dollar amount might be.

Hon Steven Joyce: He didn’t answer the question. Nobody is any the wiser as to whether, actually, he will allow net debt to get to $67.6 billion by 2022, as laid out in Labour’s pre-election fiscal plan.

Mr SPEAKER: Well, Speakers’ rulings are pretty clear in this area. I think somewhere around page 171 is the ruling that members cannot demand a yes/no answer, and I’m just about confident enough that the former Minister of Finance understands that these figures might be affected by growth figures.

Hon Steven Joyce: Sorry to prolong things, Mr Speaker, but actually it is possible to say whether it will be higher or lower or about that figure. It is a question on notice—it’s not a supplementary question—and I do think that the Minister of Finance could be a bit more specific as to that number, given that prior to a certain date in September he was actually accusing people of showing an affront to democracy for—

Mr SPEAKER: OK—[Interruption] All right, OK. I think where I’m going to leave it is that I might be slightly more liberal, as long as they are direct, on the supplementaries, if the member wants to drill down that way.

Hon Steven Joyce: Can the finance Minister confirm that the pre-election fiscal update forecasts net debt to reduce to $56.2 billion by 2022, meaning that his forecast of $67.6 billion is over $11 billion higher than in the pre-election fiscal update?

Hon GRANT ROBERTSON: I can confirm that those were the numbers in the pre-election fiscal update. What we have discovered is that those numbers did not take account of the need for increased spending in education capital expenditure, health capital expenditure, or a range of other areas.

Hon Steven Joyce: Is the Minister then saying that, actually, he expects to increase debt significantly higher than $67.6 billion because of his concerns about the matters he raised in the previous answer?

Hon GRANT ROBERTSON: The commitment of this Government has been that we will reduce net core Crown debt to 20 percent of GDP. The member well knows, from having prepared a Budget himself and being beside someone else who’s prepared Budgets, that the exact dollar figures for debt are never decided until later in the Budget process.

Hon Steven Joyce: Why doesn’t he agree with the ANZ analysis of 7 November that concludes net debt will be billions of dollars higher than he has forecast, and that he will breach his own Budget responsibility rule number 2 to reduce net debt to 20 percent of GDP within five years, particularly as he’s just told the House—

Mr SPEAKER: Order! The member’s finished his question.

Hon GRANT ROBERTSON: Because nothing that I have seen, in terms of the advice I’ve got to this point, would point to that, and because this Government is committed to reducing debt as a percentage of GDP—20 percent—within five years of taking office.

Hon Steven Joyce: If he doesn’t like the ANZ’s commentary, does he agree with the comments from the Bank of New Zealand on Monday, who stated that Labour’s election campaign budget was just too tight to be credible; if not, what does he think the BNZ has got wrong?

Hon GRANT ROBERTSON: What this Government has committed to is a set of Budget responsibility rules, and we will work within those. We made commitments before the election to address the social deficits in health, in education, and in infrastructure, and we will do that. I make no apology for having a slower debt track than that Government if it means that we build affordable houses, contribute to superannuation, and invest in our regions.

Hon Steven Joyce: Just to be clear, does he commit to meeting all the Government’s promises, including those in his coalition agreement and his agreement for confidence and supply with the Green Party, and also the Speech from the Throne, while increasing net debt by only $11 billion, from what it was going to be, over the next five years?

Hon GRANT ROBERTSON: I absolutely stand by those Government commitments and the Budget responsibility rules that we have put forward.

Hon Steven Joyce: Does he commit to meeting all the Government’s promises, including those in those coalition agreements from the Speech from the Throne, not in relation to a percentage of GDP but by increasing net debt by no more than $11 billion relative to the pre-election fiscal update over the next five years? A very specific question.

Hon GRANT ROBERTSON: The final exact dollar figures, as the member well knows from the Budgets he’s been involved in, will be decided later in the Budget process, but we remain 100 percent committed to our goal of reducing net debt to 20 percent of GDP within five years.


No doubt there will be continuing questioning on Government spending and deficits.

Minister of Finance refuses to commit to campaign promises

In the first Question Time (Oral Questions) in the new Parliament the Minister of Finance Grant Robertson was asked repeatedly whether he would stand by his fiscal statement made prior to the election. Robertson repeatedly refused.

Crown Expenses—Fiscal Plan

3. Hon STEVEN JOYCE (National) to the Minister of Finance: Can he confirm it is his intention as Minister of Finance to ensure core Crown expenses do not exceed $81.9 billion in 2017/18, $86.1 billion in 2018/19, $88.2 billion in 2019/20, $91.8 billion in 2020/21, and $96.1 billion in 2021/22, as specified in the Labour Party’s pre-election Fiscal Plan?

Hon GRANT ROBERTSON (Minister of Finance): I can confirm that it is my intention for core Crown expenditure as a percentage of GDP to be within the recent historical range. As to the exact figures in the member’s question, I cannot confirm those as, of course, they are subject to detailed Budget decisions and revenue forecasts that are yet to be finalised.

Hon Steven Joyce: Can he confirm that he stands by his statement from 4 September this year, and I quote, “Labour’s Fiscal Plan is robust, the numbers are correct and we stand by them”?

Hon GRANT ROBERTSON: I can confirm that the Budget that this Government is putting together will be robust and it will deliver on a commitment that this Government has made to ensure that all New Zealanders share in prosperity.

Michael Wood: What else, in addition to managing core Crown expenditure, will guide the Government’s approach to responsible fiscal management?

Hon GRANT ROBERTSON: The Government will observe the Budget responsibility rules as indicated in the Speech from the Throne: namely, delivering a sustainable operating balance before gains and losses; reducing net core Crown debt to 20 percent of GDP within 5 years; and ensuring a fair and balanced progressive taxation system. We will also never forget that the purpose of a strong economy is to give every New Zealander the chance to share in prosperity, and we will never be satisfied while children live in poverty or families sleep in cars.

Hon Steven Joyce: Does he stand by his statement also on 4 September, and I quote, that “Our operating expenses are above the line and are clearly stated.”?

Hon GRANT ROBERTSON: The Budget that this Government will prepare will be clear about what we are spending and where the revenue for that is coming from.

Hon Steven Joyce: So that’s a no. Can I also ask: does he stand by his statement, and I quote, “We have quite clearly put in the spending requirements to meet the promises we have made. Our fiscal plan adds up. We are absolutely clear that we have the money to meet the commitments that we’ve made.”, also on 4 September?

Hon GRANT ROBERTSON: The Government will prepare a Budget that shows how we will pay for the important commitments that we have made to ensure that every New Zealander benefits from economic prosperity.

Hon Steven Joyce: Can the Minister of Finance then confirm that it is not his intention to necessarily ensure core Crown expenditure does not exceed $81.9 billion this current financial year, $86.1 billion in the next financial year, $88.2 billion in 2019-20, $91.8 billion in 2020-21, and $96.1 billion in 2021-22? Can he confirm that’s not his intention, even though it was specified in the Labour Party’s pre-election fiscal plan?

Hon GRANT ROBERTSON: I can confirm that we will keep Government expenditure as a percentage of GDP in line with the historical range.

Hon Steven Joyce: Can the finance Minister then confirm that he doesn’t at all stand by the numbers he presented in the Labour Party’s fiscal plan prior to the election?

Hon GRANT ROBERTSON: The Government is currently going through the usual process of putting together a Budget. We are absolutely confident that we will deliver a Budget that is in line with the Budget responsibility rules that were outlined in the Speech from the Throne and that will deliver to New Zealanders a fair share in prosperity. As I said in my primary answer, the final numbers are the subject of the normal Budget process.

Hon Steven Joyce: I’m sorry, Mr Speaker, but just to be clear, the Minister released a fiscal plan prior to the election—

Mr SPEAKER: Order! I will sit the member down now and ask him to ask a question. Speaker Hunt used to have an old saying that questions start with a question word, rather than something else.

Hon Simon Bridges: I raise a point of order, Mr Speaker.

Mr SPEAKER: No.

Hon Simon Bridges: It’s a fresh, genuine point of order.

Mr SPEAKER: Right.

Hon Simon Bridges: It’s simply this. The question was straight, really: whether he stood by the numbers they had pre-election. There really wasn’t any attempt to answer that specific question.

Hon Chris Hipkins: Point of order.

Mr SPEAKER: No, I’m not going to take any further comments on that. Both the asker of the question and I thought that there was a very clear response.

Hon Steven Joyce: Is he saying that the actual numbers written on the Labour Party’s fiscal plan prior to this election, which he and his colleagues defended vigorously during the election campaign, are no longer relevant? The comments he has made suggest that he will put whatever numbers he likes in front of the public in due course in the next Budget.

Hon GRANT ROBERTSON: I have been absolutely clear that the commitment that we have made is that Government expenditure as a percentage of GDP will remain in line with the long-run historical trend. Members on the other side of the House well know that we will now be looking at new revenue forecasts and, indeed, new growth forecasts. They will determine the exact numbers that are presented. But we are very clear on this side of the House: our number add up.

During the campaign Robertson had also been absolutely clear about commitments on expenditure and the robustness of Labour’s fiscal plan.

From PDF of Labour’s  fiscal plan (3MB).

LabourFiscalPlan

Obviously coalition agreements and changing fiscal situations can force changes on a Government.

But the Opposition has kicked off by establishing a clear separation between campaign promises and what the new Minister of Finance is prepared to commit to at the start of his tenure in charge of the country’s finances.

Labour’s 100 day challenge

During the election campaign Jacinda Ardern committed to these 10 priorities in the first 100 days of a Labour government:

  • Make the first year of tertiary education or training fees free and increase student allowances and living cost loans by $50 a week from January 1, 2018
  • Pass the Healthy Homes Guarantee Bill so renters could live in warm, dry homes
  • Ban overseas speculators from buying existing residential properties
  • Stop the sale of state houses
  • Legislate to pass the Families Package, including the Winter Fuel Payment, Best Start and increases to Paid Parental Leave, to take effect from 1 July 2018.
  • Introduce legislation to set a child poverty reduction target and change the Public Finance Act so the Budget reports progress on reducing child poverty
  • Resume contributions to the New Zealand Superannuation Fund
  • Set up ministerial inquiries into mental health and abuse in state care
  • Hold a Clean Waterways Summit
  • Increase the minimum wage from the current $15.75/hour by 4.8 percent to $16.50/hour from 1 April 2018.

Labour also said it would begin work to set up an Affordable Housing Authority and begin the Kiwibuild programme, establish the Tax Working Group, establish a Pike River Recovery Agency, set a zero carbon emissions goal and begin setting up the independent Climate Commission.

This will all depend on whether Labour leads the next Government, and will be subject to what policies are ruled out in any coalition or governing agreements.

One of these at least is in tune with a Green 100 day pledge:

The Green Party announced today it will seek to pass binding climate change legislation in the first 100 days in Government.

If a Labour-NZ First-Green government takes over this will be a challenging target.

They will need to set up a legislative programme.

It will take time for a new Government to settle in and for new Ministers to take over their portfolios.

Anything requiring legalisation will first need to be agreed on by all three parties, legislation will need to be written, and then will need to go through the normal stages of Parliament…

…unless it is passed under urgency, so it can obviously take some time. Six months is often allowed for the select committee/consultation stage.

It looks like a new government will take over mid to late October at the earliest.

A lot of new legislation for an incoming government in 100 days will be a challenge – especially when for half of that time Parliament will be in recess for the summer break.

A Labour policy notably absent from their 100 day list is legislation that would be needed to increase income tax, as there is already legislation in place to reduce income tax for everyone.

This is likely to be essential to pay for the policies negotiated between them and NZ First and the Greens. This week Jacinda Ardern re-committed to Labour’s fiscal plan:

Our policies will see major investments in housing, health, education, police, and infrastructure, while creating more jobs and lifting the incomes of families. These investments will be made while running surpluses and paying down debt.

Of course the ‘running surpluses’ pledge may be discarded in coalition negotiations with NZ First and the Greens.

National: ‘Labour would borrow $7b more’

The National party response to Labour’s fiscal plan ‘to build a fairer New Zealand’:


The Labour Party’s fiscal policy reveals they want to borrow $7.2 billion more than the Government over the next four years while still cancelling tax threshold changes for low and middle income earners, National Party Campaign Chair Steven Joyce says.

“It’s a classic Labour tax and spend approach, but this is the wrong time to be building up debt. We need to be reducing debt now to be ready for the next rainy day,” Mr Joyce says.

Mr Joyce says Labour’s spending choices are also confusing.

“They seem to be spending more and getting less. They are actually proposing to spend less new money on health next year than the Government has added this year. After all their complaints about health spending, that’s surprising.

“All they’ve really done is add up a bunch of additional spending that governments add to the Budget every year to core public services and said, hey here’s a lot of money.”

Mr Joyce says some of Labour’s other spending proposals are now looking much less than previously advertised.

“In many cases the rhetoric doesn’t match up with the numbers. $200 million a year isn’t going to buy much in the way of R&D tax credits, and $265 million a year isn’t going to buy three years’ post schools education.

“And the most telling aspect of the whole document is they’ve managed to put out 17 pages without referencing the importance of the economy once, yet no government initiatives are possible without a strong economy.

“All in all this is a very underwhelming proposal. More debt, higher taxes for low and middle income New Zealanders, and no more spending on health. I don’t know how they managed it but they simply seem to be proposing to waste more money and get very little to show for it.”

 

Labour’s fiscal plan ‘to build a fairer New Zealand’

Labour released their fiscal plan today:


Labour’s fiscal plan to build a fairer New Zealand

Labour will re-build our housing, health and education while responsibly managing New Zealand’s finances, says Leader of the Opposition Andrew Little.

“Under Labour’s Fiscal Plan we will deliver big investments in the services we all need and care about, invest in our long term future and meet the expectation from New Zealanders that we will do so in a prudent and effective way.

“This will be achieved because we have different priorities than National. We are committed to rejecting National’s election year tax cuts that will hand $400 million to the top 10 per cent of income earners.

“Labour’s Fiscal Plan prioritises new investment in housing, health, education, and infrastructure. Our plan will boost the incomes for low and middle income families, create opportunities for our young people, and improve the lives of all.

“Labour will invest $8 billion more in health, $4 billion more in education and $5 billion more for Kiwi families through Working for Families, Best Start and the Winter Energy Payment than the Budget 2017 projections for the forecast period.

“Importantly, Labour will restore contributions to the New Zealand Superannuation Fund to help keep the age of Super at 65. Under Labour’s plan, we’ll double the existing size of the current fund to around $63 billion by 2022.

“This is a credible plan which has been vetted by economists BERL.

“We can continue to run surpluses and pay down debt because, unlike National, we do not believe a tax cut can be justified at this time.

“It is simply not credible for the Government to say that a thousand dollar tax cut for Bill English and me should be a priority over ensuring New Zealanders have homes to live in, modern schools, and world-class healthcare when they need it.

“There is a clear choice for voters this election: National’s tax cut trickle-down economics or Labour’s plan that will provide much more for the services Kiwis need and want prioritised.

“Labour’s targeted Families Package delivers a bigger boost to 70 per cent of families with kids, while costing $2 billion less over four years than National’s tax cuts, so we can also invest in the priorities Kiwis care about.

“Labour’s Fiscal Plan meets all of our Budget Responsibility Rules: it projects continued surpluses, debt down to 20 per cent of GDP within five years of taking office, resumed contributions to the New Zealand Superannuation Fund, stable spending as a share of the economy, and a fairer tax system including a crackdown on multinational tax avoidance.

“By making these choices, we will ensure New Zealand is a better and fairer place for all our people, while balancing the books. This is the positive plan and fresh approach that only a Labour-led Government will deliver,” says Andrew Little.

Major first term outputs and goals

LabourFiscal1

LabourFiscal2

LabourFiscal3

LabourFiscal4

http://img.scoop.co.nz/media/pdfs/1707/labours_fiscal_plan.pdf

 

 

Are Labour’s tax plans bottom lines?

Labour has announced changes to tax in the their alternate budge, promoting it as Labour’s alternative Budget for a strong economy and fair society.

The tax increases are modest compared to Labour’s proposals in 2011 and won’t affect most people very much (until CGT kicks in).

The biggest unanswered question is whether these changes would be bottom lines for a Labour led government, or whether Labour would be prepared to negotiate changes with Greens or Mana in a coalition agreement.

Both Greens and Mana support a Capital Gains Tax but they also want to increase other taxes except for lower income earners where they both propose large tax free thresholds.

Are Labour’s tax proposals open to coalition negotiation?

Stuff reports that Labour softens its tax stance.

Labour leader David Cunliffe said the party would impose a new top tax rate of 36 per cent on income above $150,000 a year, a move that would cost someone on $200,000 a year about $30 a week.

It is a major softening of former leader Phil Goff’s 2011 plan to lift it to 39c.

However, a parallel rise in the tax on trusts to 36c would see it bring in about the same amount of extra revenue.

Parker said aligning the trust rate with the top tax rate would avoid trusts being used as tax-avoidance vehicles.

There’s doubt about whether it will bring in the amounts claimed as the company tax rate would remain at 28% which will encourage restructuring for those who can to avoid the higher personal and trust rates.

The change would favour those in business over wage earners, but because it’s just a tweak to the top rate for high income earners most people probably won’t be bothered by it.

The 15 per cent tax on capital gains, excluding the family home, would bring in $790 million a year by 2020.

That seems much as previously announced (2011) with a number of exemptions and still defers to an Expert Panel.

An Expert Panel will be established to deal with issues that are technical in nature and involve areas where a high degree of specialised knowledge is required before a final decision can be reached.

They also propose a ‘crackdown on avoidance’ (which in general is nothing new):

A crackdown on tax avoidance, particularly by multinationals such as Facebook and Google, would bring in $200m a year by 2018-19.

Inland Revenue would “embed” auditors in companies with a history of tax avoidance.

It’s highly questionable whether tax on multinationals can be increased significantly without international co-operation.

Green Party tax policy:

To promote greater equality, the Greens will enhance the progressivity of the tax system by introducing an income tax-free threshold and a comprehensive capital gains tax (excluding the family home).

To create incentives to move the economy in a more sustainable direction, the Greens will introduce a suite of ecological taxes on waste, pollution, and scarce resources.

The introduction of a comprehensive capital gains tax, new ecological taxes, and through better enforcement of current tax law, the tax base will be broadened and hence made more resilient.

Mana tax policies:

Remove GST from all food (and everything else), but introduce a tax on fast foods and soft drinks.

Significantly increase the tax take by introducing a tax on financial speculation, called the “Hone Heke tax” (chopping down GST and income tax), which will be designed using examples of similar taxes introduced overseas. Initially it will be used to replace the annual $15 billion collected by GST.

Reduce the tax paid by low income earners by not taxing the first $27,000 earned and introduce a more progressive tax scale where the wealthy accept the responsibility to pay the largest share of the tax income.