Grant Robertson rejects ‘spending spree’

Yesterday the Government announced a much larger than expected surplus of $5.5 billion ($2.4 billion more than forecast)- see Government announces strong surplus.

James Shaw called on a big spend up:

Green Party Co-Leader James Shaw is calling on the Government to use the money from its “extremely healthy” books to invest in New Zealand’s public sector.

“What good is a surplus if you have people living in cars or garages – that makes no sense,” he told the Herald.

“Frankly, a surplus is inefficient if you don’t use it.”

Shaw said the Government should be using that money to invest in New Zealand’s “massive infrastructure deficit”.

“New Zealand’s debt levels are well within what the international markets would deem to be prudent, interest rates are historically low and we have a massive infrastructure deficit; to me, that just all points in the direction of using that surplus for infrastructure investment in particular.”

That investment, he said, should come from both the surplus and the 2.1 per cent headroom the Government has before it reaches its 30 per cent spending limit – a combined total of $11.5 billion.

https://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=12139642

But Minister of Finance Grant Robertson is trying to dampen down spending expectations.

Is this a one off result? Surely Treasury has adjusted it’s budget forecasts after this unexpected result.

Government announces strong surplus

The Government has announced a surplus nearly twice what was in the Treasury’s Budge 2018 surplus – this is good news for spending plans or debt reduction, but may also increase demands from state servants seeking large pay rises.

This gives the Government an opportunity to make some bold moves on things like child poverty, prisoner rehabilitation to reduce prison numbers, reducing violence, addressing drug abuse and related problems, and climate change.


Government books show surplus, falling net debt

A strong surplus and falling net debt reflect a growing economy and show the Coalition Government is managing the books responsibly, Finance Minister Grant Robertson says.

The Crown financial statements for the year to 30 June 2018 are the first official check in on the Government’s commitment to run surpluses, pay down net debt and keep expenses under control.

“It’s important we run surpluses and pay down debt to make sure we are in a good position to deal with any rainy day. Economists have been warning about growing risks in the international economy, particularly due to rising trade protectionism, which we need to be well-placed to face in case this flows through to the New Zealand economy,” Grant Robertson said.

“The headline results today are ahead of the Treasury’s forecasts in Budget 2018. This was largely due to timing issues with Crown expenses, which will reverse out as that planned spending occurs early in the 2018/19 year. This means Budget 2018 spending and investment plans are on track.

“The books show we are meeting the Budget Responsibility Rules. A headline $5.5 billion surplus operating balance before gains and losses (OBEGAL) is $2.4 billion above the Treasury’s Budget 2018 forecast.

“A number of factors contributed to this result being ahead of Budget 2018 expectations. A number of one-offs led to core Crown expenses coming in 1.4 percent below forecast at 30 June 2018. The Treasury says that this was largely due to timing issues, meaning much of this variance is set to reverse out in the 2018/19 accounts. Core Crown expenses were stable at 27.9 percent of GDP.

“A strong economy contributed to core Crown tax revenue coming in 0.9 percent higher than expected in the year to 30 June 2018. Corporate tax revenue was up, due to profits for both large and small businesses being higher than the Treasury had forecast at Budget 2018. This result indicates the strength of the growing economy.

“This underlying strength of New Zealand businesses saw the number of people in employment rise by 3.7 percent over the year, while average wages rose 3 percent. These numbers show that our economic fundamentals are strong.

“The financial statements also indicate the Coalition Government’s commitment to making the important infrastructure investments New Zealand needs to unlock the growth potential of our cities and regions. At the same time, we are making up for neglected investment in critical public services in recent years.

“Net capital investment of $5.9 billion in the year was the highest since 2009 and an increase of $2.2 billion from the previous year. This included investments in hospitals, schools and state highways, while also reflecting the Coalition Government’s move to resume contributions to the NZ Super Fund.

“We are committed to a balanced approach by adopting a responsible debt reduction track. At 30 June 2018, net core Crown debt was 19.9 percent of GDP, compared to the 20.8 percent forecast in Budget 2018.

“We remain committed to the Budget Responsibility Rule that net debt will be 20 percent of GDP in 2021/22. This gives us the space required to make the critical infrastructure investments that New Zealand needs, while still building a buffer,” Grant Robertson said.

Release of Curran emails in bungled Handley appointment deferred to OIA

On Tuesday the Speaker told Chris Hipkins to front up in Parliament with Clare Curran emails on Wednesday, but Hipkins himself failed to front up (he has gone on parental leave). Instead Grant Robertson advised that emails would only be released under the official Information Act.

This means the emails will be delayed and subject to possible redactions, but it also means the bungled appointment of a Chief Technology Officer will drag out for another month or two.

Jacinda Ardern responding to Simon Bridges in Question Time yesterday:

3. Hon SIMON BRIDGES (Leader—National) to the Prime Minister: Will she release today all communications between herself, her staff, and her Ministers in respect of Derek Handley and his proposed appointment to the role of Government Chief Technology Officer?

Rt Hon JACINDA ARDERN (Prime Minister): Mr Speaker, my office has received a number of Official Information Act (OIA) requests, including from the Opposition, and is working on a response to those. We will release that information in accordance with the provisions of the Act once it has been compiled and once it has been processed.

Hon Simon Bridges: What did Derek Handley’s text message to her say?

Rt Hon JACINDA ARDERN: Mr Speaker, I would have to go from my recollection. But my recollection is that he mentioned that the Chief Technology Officer (CTO) role had been mentioned to him. Again, as I said, I did not directly reply to that message, and it was received in April.

Hon Simon Bridges: Was there more than one text from or to Derek Handley from the Prime Minister?

Rt Hon JACINDA ARDERN: The text that I received, again, as I said, was in April. I did not directly reply to that text message on that day or engage with him on the CTO role. On the CTO role, I did not engage with Mr Handley via text message.

That is potentially evasive. She said she did not respond “on that day” and “I did not engage with Mr Handley via text message” but that leaves a number of possibilities open.

Hon Simon Bridges: Well, were there any other texts between the Prime Minister and Derek Handley?

Rt Hon JACINDA ARDERN: Mr Speaker, as I acknowledged the very moment I was asked this question, I have known Mr Handley for a number of years and have had correspondence with him for a number of years.

“I have known Mr Handley for a number of years and have had correspondence with him for a number of years.”

Hon Simon Bridges: What other communications by any medium—Gmail, WhatsApp, and the like—were there between the Prime Minister and Derek Handley?

Rt Hon JACINDA ARDERN: Mr Speaker, as a consequence of the member’s question, I have had my office check. Mr Handley sent me an unsolicited email to my private email on 7 June, which I did not open and which I did not reply to. I’m advised by my staff that it informed me that he’d submitted an application for the role. But, again, it was not something I opened, saw, or replied to.

Again that leaves other possibilities open.

Hon Simon Bridges: When will the text, and that Gmail she’s referred to, be released?

Rt Hon JACINDA ARDERN: Mr Speaker, as I said in my primary answer, my office is currently working through the OIA that was received, and we will reply in accordance with the Official Information Act.

So Ardern has had correspondence with Handley over a number of years. She has revealed that she received a text from him in April regarding the CTO job, and an email in June but suggests she replied to neither but doesn’t categorically deny responses or other communications.

Nick Smith also had questions for the Minister of State Services Chris Hipkins but curiously (there could be a valid explanation) he wasn’t in Parliament, so Grant Robertson answered on his behalf.

10. Hon Dr NICK SMITH (National—Nelson) to the Minister of State Services: What are the dates and the contents of the work-related emails to and from former Minister Hon Clare Curran’s private Gmail account, in relation to the appointment of the Government’s Chief Technology Officer, that he referred to as having been handed over to the Chief Archivist in yesterday’s Oral Question No 11?

Hon GRANT ROBERTSON (Acting Minister of State Services): Mr Speaker, as I informed your office, this will be a slightly longer than normal answer. There are three email exchanges. The first: on 11 August, where Derek Handley emails Clare Curran about the Chief Technology Officer (CTO) position and questions about the role of the CTO, including resourcing for the role and potential conflicts of interest. On 14 August, Clare Curran replies to that email, confirming a call to discuss these matters. On 15 August, Derek Handley replies to that, confirming times for the call.

The second exchange: on 19 August, Clare Curran emails Derek Handley regarding logistics around the next step on the process of appointment, including the content of any public statements that might be made, and refers to contract discussions with the Department of Internal Affairs (DIA). On 20 August, Derek Handley responds to that email to Clare Curran about those issues, including the contact he has had with DIA and management of conflicts of interest.

The third exchange: on 21 August, Clare Curran emails Derek Handley regarding issues that would be on the work plan of the CTO and attaches some relevant background documents on those issues. On the same day, Derek Handley responds to Clare Curran, acknowledging the material and referring to the discussions that he is having with DIA.

I have sought and received an assurance from the former Minister that these email exchanges will be made available for release subject to the normal Official Information Act (OIA) processes.

Hon Dr Nick Smith: Will he publicly release or table those emails today, given his responsibilities as the “Minister of Open Government” and this Government’s commitment to be the most open and transparent ever?

Hon GRANT ROBERTSON: I believe I have explained the dates and the contents of the emails today. As I said at the end of my primary answer, those emails will be released in accordance with the rules of the OIA.

Hon Dr Nick Smith: Was there any inappropriate content in any of those emails between Mr Handley and Clare Curran over the appointment that influenced the Government’s decision to not proceed with Mr Handley’s appointment?

Hon GRANT ROBERTSON: The Government’s decision not to proceed with the appointment does not relate to those emails.

That leaves other possibilities open.

Hon Dr Nick Smith: Does he agree with the statement “The only conclusion that can be drawn from Ministers using private Gmail addresses for Government business is that they have something to hide.”, a statement made by Chris Hipkins in opposition; if so, what were Minister Curran and the Prime Minister doing having Government business communicated through a private Gmail account?

Hon GRANT ROBERTSON: One of the things we learn on becoming Ministers is that we receive a lot of correspondence from a lot of different sources to a lot of different places, and, as I quoted in the House yesterday, Sir John Key, the former Prime Minister, acknowledged his use of a private email address for ministerial business.

A diversion to ‘Key did it too’, but no response or denial to “what were…the Prime Minister doing having Government business communicated through a private Gmail account”.

So this saga will stretch out further, as we now await the release of communications under the OIA.

In the meantime suspicions of a less than open and transparent government with questions of competency remain.

Curran communications from NZH Grant Robertson reads outline of Clare Curran emails but no release

  • August 11 – Handley emailed Curran and asked questions about the role of the CTO, including resourcing for the role and potential conflicts of interest.
  • August 14 – Curran replied, confirming a call to discuss those matters.
  • August 15 – Handley replied, confirming times for the call.
  • August 19 – Curran emailed Handley regarding logistics about the next step of the appointment, including content of any public statement and refers to contract discussions with the Department of Internal Affairs.
  • August 20 – Handley replied, about those issues including his contact with DIA and managing any conflicts of interest.
  • August 21 – Curran emailed Handley about any issues that would be on the work plan of the CTO and attached relevant background documents.
  • August 21 – Handley emailed Curran, acknowledging receipt and referring to his discussions with DIA.

Is it normal for a Minister to be that involved with an appointment to a job?

Claire Trevett (NZH): Ministers’ evasion on emails release undermines Parliament’s Question Time

The hiring of Handley and then scrapping his appointment before he even began is the messiest mishap of the new Government so far.

The best Labour can hope for is to deal with the fallout efficiently and without being cute about it.

Labour had no doubt hoped the Handley episode would be tidied away with the departure of Curran.

But as long as the contents of those emails remain a secret so too will the suspicion the Prime Minister is somehow involved, or there is something else damaging in there.

Curran messed up and eventually resigned, but there’s a real risk that Ardern will be tainted by this mess as well.

Tax Working Group throwing CGT football back at Labour?

It is reported that the Tax Working Group may throw the Capital Gains Tax football back at Labour, deeming a decision on it being too political for them. Perhaps it is more of a hot potato.

While the CGT was a prominent part of Labour policy the WTG was limited in what they could recommend. For example they were instructed to exclude family homes from any CGT recommendations, which complicates things substantially.

And it appears that, again, the Government is asking for (forcing?) amendments to media articles after they are first posted.

Tom Pullar-Strecker (Stuff): Capital gains tax debate not over, Grant Robertson suggests

The Tax Working Group is understood to have stopped short of recommending a broad-based capital gains tax, in an interim report due out within days.

The working group chaired by Sir Michael Cullen was tasked with designing a capital gains tax for consideration by the Government, but is expected to push back any firm recommendation to its final report which is due to be published in February.

It had been widely expected that the Tax Working Group (TWG) would recommend a broad-based capital gains tax on the likes of sharemarket and property investments as the centrepiece of tax reforms on which Labour would fight the next election.

However, doubts began creep in earlier this year that the Government would ultimately back the plan, amid concerns the new tax would be unpopular and would cause rents to rise without delivering much in the way of extra revenue for at least a decade.

Paul Drum, chief executive of accounting body CPA Australia, said in a newspaper column that “a close reading of the tea leaves” suggested the “highly important and politicised” issue of the capital gains tax “is probably to be parked for further consultation and input”.

Sir Michael Cullen hinted that was on the money, saying he had “not reacted strongly to that comment”.

Interestingly, the headline was changed some time after that article was posted online. The original article name:

CGT in doubt as bid to outsource political decision hits snags

Now:

Capital gains tax debate not over, Grant Robertson suggests

Some content was also changed. Earlier:

The Tax Working Group is understood to have stopped short of recommending a broad-based capital gains tax, in an interim report due out within days.

Now:

The Tax Working Group is understood to have stopped short of recommending a broad-based capital gains tax in an interim report, but Finance Minister Grant Robertson has played down the report’s significance.

I think this has been added:

Robertson confirmed the Government had received the interim report which he said would be released soon.

But he said the work was “always supposed to be a two-stage process” and commentators were “getting a bit ahead of themselves”.

And some content has been edited out.

It looks like Labour is a bit sensitive about the Tax Working Group in relation to the Capital Gains Tax.

Considering their obvious influence over media coverage (the Prime Minister’s office jumped into media coverage of Jacinda Ardern’s misleading over the Clare Curran resignation last Friday), I wonder how much Robertson and Labour may be trying to influence Cullen and/or the Tax Working Group?


Also, from Newsroom:  Capital Gains Tax looks less likely

Prime Minister Jacinda Ardern said on Monday that she had not “set expectations” about what the working group currently considering tax reform would recommend to the Government.

Ardern and Finance Minister Grant Robertson established the working group in March with terms of reference including, “whether a system of taxing capital gains or land (not applying to the family home or the land under it), or other housing tax measures, would improve the tax system”.

But Labour’s plan to de-politicise the CGT appears to have failed, with reports now circulating the working group intends to push a recommendation on a CGT back to the Government.

Ardern said she would allow the group to do its work and would not prefigure what it would produce — outside of the parameters established in its terms of reference.

But Robertson is actively trying to influence the reporting.

Newsroom understands the interim report has recently been handed to Robertson and Revenue Minister Stuart Nash. Officials will then digest the report before releasing it to the public.

So the ‘leaking’ of the CGT information could have come from a number of places, for a number of reasons.

The group’s final report is due in February. Labour will then choose tax proposals from the report to take to the electorate in the 2020 election. Should they win, the proposals would be implemented in April 2021.

So the Tax Working Group looks like a policy development exercise for Labour in Preparation for the 2020 election..

Q+A: Grant Robertson on business confidence

Minister of Finance Grant Robertson was interviewed about business confidence.

“I don’t believe low business confidence is affecting economic growth. NZ will meet growth forecasts”.

Committed to current debt target, not expecting to go over it. Even if Govt did go into more debt, NZ would be in good shape.

Doesn’t agree with Shane Jones’ comments about Air NZ boss Christopher Luxon

Full interview:

 

Panel discussion:  Professor Jennifer Curtin, Shamubeel Eaqub and Fran O’Sullivan with our host Corin Dann

Nation: Grant Robertson on the state of the economy

I think he easily met this target.

The Finance Minister says he shares some of the business community’s concerns, such as global trade tensions and their impact on our economy.

…strikes are the result of “nine years of frustration with previous government”

…says “we want our government agencies to have best practice procurement… we have put the word out to our Ministries that they should be abiding.

 

Half a billion dollars spent on movie making subsidies

Over half a billion dollars has been handed out to movie makers to encourage them to come to New Zealand.

Is this money well spent? Or is it subsidising the already rich?

Matt Nippert (Herald) – Inside Wellywood: How NZ taxpayers forked out $575 million for Hollywood to film here

Act leader David Seymour isn’t willing to dance around this issue of whether subsidising Hollywood’s costs – including for their celebrity starlets – is worthwhile: “I think New Zealanders can decide for themselves whether they feel good about likely having given Scarlett Johansson $3m.”

“Every dollar spent on subsidies is a dollar that can’t be spent elsewhere. Who amongst us believe politicians are the wisest at investing our dollars?”

An otherwise boosterish recent government evaluation of the latest iteration of the subsidy scheme, released yesterday, found $177.1m in grants paid out over the past three years resulted in a significant economic boost for the country but only generated $126.9m in additional tax revenue, costing the government $50m.

It isn’t stated how widely additional tax revenue was considered in that equation. It would be difficult, for example, to quantify the financial and tax benefits that tourism gets out of movies made here.

While Seymour put a firm foot forward in opposing the decades-old scheme, Grant Robertson, the Minister of Finance but perhaps more saliently member for Wellington Central – the location for two-thirds of the country’s subsidised film production – was keen to stay light on his feet.

Robertson wasn’t willing to weigh in on whether ScarJo was worth it, but said criteria letting productions qualify for the maximum subsidy had “been tightened in recent years”.

“I think it’s an area we want to be in. There are obviously always limits to how much you put in – what the scale of any subsidy scheme might be – but from my perspective, New Zealand has done well, produced good people, and this is part of being in that particular industry,” he says.

Sounds a bit like Labour’s immigration rhetoric while in opposition turning around to a more pragmatic approach in Government.

There’s a lot more about it in the Nipper article, and Rod Emmerson has his take on it too:

Q+A today – business and trade

On Q+A this morning:

Why is business feeling so gloomy? Surveys show business confidence has been persistently low since the Labour led Government took office. Corin Dann talks to Finance Minister Grant Robertson.

Plus, what could an NZ-EU Free Trade Agreement mean for you? And will European farmers give up some of the subsidies that make trade harder for our food producers? European Trade Commissioner Cecilia Malmstrom joins us.

Labour fundraising in private clubs

Labour tried to make a big deal about some National fundraising, but they seem to be doing the same sort of thing, and are looking like they have been caught with their hands in the biscuit jar.

Stuff in 2014: Does Cabinet Club buy influence?

Party funding is back under the spotlight after two ministers ran into trouble over their links with wealthy donors amid revelations National operates a ‘Cabinet Club’ offering access to top ministers in exchange for cash.

Last week National’s $1000-plus Cabinet Club dinners were in the gun, though there were counter-accusations, laced with claims of hypocrisy, that Labour offered chinwags with MPs for $1250 a pop.

The Greens have had a couple of stabs at greater transparency. The first, through Sue Kedgley’s Lobbyists Register Bill, has lapsed. Now the Greens are pressing for a ministerial disclosure regime. Co-leader Dr Russel Norman estimates John Key had raised more than $1 million from his “club” appearances.

“John Key claims the Cabinet Club is part of the normal political donations process. Cash for access to the inner circle of the Government is not normal,” Norman said. “It is democracy for sale.”

National MP Tau Henare says the Left is trying to curb National’s fundraising ability because it is jealous National can raise more. And National president Peter Goodfellow insists there is no quid pro quo for donations.

Newshub in April 2017: Labour launches exclusive ‘President’s Club’

The Labour Party has launched an exclusive secret society called The President’s Club for those who donate big bucks to the party.

It opened for business two weeks ago, with the primary role of luring in big cheques from wealthy Labour supporters.

It’s Labour’s version of National’s Cabinet Club, which sees exorbitantly-priced tickets sold for exclusive dinners attended by Cabinet ministers of the Crown.

Labour president Nigel Haworth says The President’s Club differs from Cabinet Club because Labour MPs aren’t involved, and aren’t used to lure in donations in exchange for access.

But Labour are charging big bucks, and using Ministers as an attraction. Stuff yesterday: Labour hosts business and lobbyists at $600-a-head dinners in exclusive private clubs

Finance Minister Grant Robertson gave a post-Budget speech at a $600-a-head Labour fundraiser at the exclusive Wellington Club, drawing comparisons to the previous National Government’s “Cabinet club” scandal.

According to several attendees, about 40 people, including party supporters, business figures and corporate lobbyists, attended the dinner hosted by Labour president Nigel Haworth on Wednesday, at which Robertson was the key

The Cabinet manual states: “holding ministerial office is regarded as a full-time occupation and is remunerated as such. Accordingly … accepting additional payment for doing anything that could be regarded as a ministerial function is not permissible”.

This means that if Robertson was attending in his ministerial capacity, rather than as an MP, Labour would be unable to use the event as a fundraiser.

Labour dance on the head of an MP pin…

…but get pinged for it.

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.