Shift from targeting Maori to targeting the poverty

Bryce Edwards looks at a shift in Government shifting from race-based (Maori) targeting to a more universal approach to dealing with poverty, but they say that as Maori feature in the deprivation statistics they should benefit the most.

Is this related to Winston Peters’ past attacks on Whanau Ora, with Labour now quietly accommodating his preference away from targeting Maori? Where do the Greens stand? Quietly on the sideline?

NZ Herald: The real political controversy of Waitangi 2018

Lost amongst the focus on BBQs, relentless positivity, and eloquent speeches at Waitangi, a fascinating and important shift in Government-Maori relations appeared to be underway. Labour and Prime Minister Jacinda Ardern have been signalling that this Government is departing from the traditional culturalist and “race-based” approach to dealing with Maori deprivation and economic inequality.

Instead, a more universal, economic-focused method will be used. The conventional approach of advancing Maori aspirations was epitomised by the Maori Party’s focus on culture, race, and sovereignty issues, and it appears to be on the way out.

Heralding what may be a highly controversial approach to “closing the gaps” in terms of Maori inequality, Jacinda Ardern made her most important speech at Waitangi by stating that the new Government would take a universalistic approach to inequality – by targeting everyone at the bottom, rather than specifically targeting Maori.

Jacinda Ardern strongly emphasised the need to deal with the long list of social ills that have a disproportionate impact on Maori, but signalled that race-based methods were not the best way of moving forward.

Since then, the Finance Minister has confirmed this shift in approach to dealing with inequality. In an interview with Morning Report’s Guyon Espiner on Wednesday, Grant Robertson responded to questions about whether the Government would specifically target Maori in its programmes, saying: “Our focus is on reducing inequality overall” – you can listen to the six-minute interview here: Global market dive: Grant Robertson optimistic.

Espiner sought clarification: “So there won’t be a specific Closing the Gaps type programme that we saw under Helen Clark? We’re not looking at heading off down that path?” Robertson replied: “That’s not the approach that we are taking. But we believe that we will be able to lift a significant number of Maori out of poverty, and increase employment outcomes, because of the approach we are taking.”

Robertson went on to explain that the Government would keep some targeted funding for Maori, but stressed that a more universal approach would dominate:

“Maori will benefit disproportionally from the families package – from those payments, because at the moment, unfortunately, Maori appear in those negative statistics. We’ve got a range of programmes coming down the line that will support Maori and the wider population as well. Where it’s appropriate, where there are programmes – particularly in an area like Corrections – where we know that we can have a real impact on that Maori prison population, then we’ll have a look at them.

“Similarly, with employment programmes. But in the end, Guyon, this is about reducing inequality overall. It’s about providing opportunities for all young people – and we know that Maori will benefit more from that, because unfortunately they are in those negative statistics.”

Essentially, this new approach means directing resources and solutions to poor Maori “because they are poor” rather than “because they are Maori”.

This isn’t popular with some Labour Maori:

In RNZ interviews following on from Robertson’s, both Willie Jackson and John Tamihere reacted negatively against the notion that the Government was shifting in this direction – you can listen to the interviews with Jackson and Tamihere.

Jackson is a Labour MP.

Nor with the Maori ‘elite’:

The Government’s shift away from focusing on iwi property rights has also been signaled by Regional Development Minister Shane Jones. Sam Sachdeva reports: “Whereas English and his predecessor John Key seemed to focus on Article Two of the Treaty of Waitangi and property rights, Jones says the new government will have a greater emphasis on Article Three and the entitlements, rights and obligations of citizenship” – see: A fresh start at Waitangi?.

This might all end up in legal fights. 1News has obtained the letter from iwi leaders to the prime minister complaining about their change in direction, and threatening Supreme Court action if iwi rights to freshwater were not addressed – see TVNZ: Iwi leaders unhappy issues like water ownership aren’t on new Government’s radar.

An interesting observation:

There was nothing about this in the Labour-NZ First coalition agreement.

I wonder what the Greens think. And I wonder how much they have been consulted.

From Green policy: “We would continue to support and strengthen Whānau Ora”

Robertson u-turn on public debt

From a comment from High Flying Duck:

The sky is falling! The sky is falling!…oh no, as you were. All good.

“Out of nowhere, Finance Minister Grant Robertson has made a significant U-turn, reversing what seemed to be a core Labour position.

After years of criticising National for a significant growth in Crown debt to more than $60 billion over the last decade, Robertson now seems to think the state of public debt is the best thing about the New Zealand economy.

As sharemarket turmoil in the United States spread around the world, Robertson said in an interview that he had real confidence in New Zealand’s economic fundamentals.

“Essentially the low level of public debt is a really important part of it.”

This from a man who said that under National debt had “skyrocketed”. Barely two months ago he told Parliament he “will not be lectured” by his predecessor Steven Joyce about debt levels.

“If there is anyone in this House who needs to take responsibility for debt levels, it’s that member,” Robertson said of Joyce, which presumably now means he is in awe of his arch-rival.

As comical as it is for Robertson to now say public debt is low, it was a curious thing to name as a key economic fundamental.

Finance Minister Grant Robertson has repeatedly mocked National on its record of public debt, but now says debt levels are one of New Zealand’s key economic strengths.”

https://www.stuff.co.nz/business/101238392/grant-robertsons-uturn-on-public-debt-hints-at-deeper-concerns-about-debt

Illegally raising rents?

Grant Robertson says he will ‘make an example of any landlords found to be illegally raising their rents to exploit students’.

RNZ:  Robertson asks students to dob in dodgy landlords

From 1 January, the cap on student allowance and living cost loans rose by $50, a Labour election campaign promise.

Since then some students have complained of landlords raising rents to an unreasonable level in response.

Rental prices in Wellington for December were up $30 on October’s figures, according to Trade Me numbers.

Its Property Rental Index showed the median price had risen from $450 to $480 since October, peaking back up to match the record set last January.

If the Wellingtom flat market is anything like Dunedin’s then calendar year leases will be common, and it is common for flats to be cleaned, done up and re let. Annual increases in rental are also likely to be common.

Mr Robertson invited students to get in touch if they believed a landlord was raising rents illegally, and within 10 hours, he said, he had received dozens of reports.

“There are rules in the residential tenancies act about not putting rent up above the market rate, and we are looking very closely at some of the examples that have been put to us today to see if they would breach that act.”

I don’t know what the rules are, but in a normal market prices are set by supply and demand. if prices are too high the market will reject them. I’m not sure how rents can be put above ‘market prices’ if they are being accepted by tenants.

Property prices have been rising, that will put pressure on rental rates.

The government that Robertson is a part of may be deterring people from remaining as landlords or becoming landlords, this will put pressure on rental rates.

Are there rules in the residential tenancies act against government policies pushing up rental prices?

Tax Working Group members announced

From the Beehive:


Finance Minister Grant Robertson and Revenue Minister Stuart Nash today announced the members being appointed to the Government’s Tax Working Group.

“The Tax Working Group has been established to look at the structure, fairness and balance of New Zealand’s tax system. The wide range of expertise and experience among the membership means the Working Group is well placed to consider changes to make our tax system fairer,” Grant Robertson says.

Along with chair Sir Michael Cullen, the Working Group members being appointed are:

  • Professor Craig Elliffe, University of Auckland
  • Joanne Hodge, former tax partner at Bell Gully
  • Kirk Hope, Chief Executive of Business New Zealand
  • Nick Malarao, senior partner at Meredith Connell
  • Geof Nightingale, partner at PwC New Zealand
  • Robin Oliver, former Deputy Commissioner at Inland Revenue
  • Hinerangi Raumati, Chair of Parininihi ki Waitotara Inc
  • Michelle Redington, Head of Group Taxation and Insurance at Air New Zealand
  • Bill Rosenberg, Economist and Director of Policy at the CTU
  • Marjan Van Den Belt, Assistant Vice Chancellor (Sustainability) at Victoria University of Wellington

“We’ve got a good mix of people on the Working Group – from tax experts and academics, to people with private sector, union and Maori community expertise. The Working Group is tasked with looking at how we can make our tax system fairer for all and the diversity in this team makes it well placed to do that,” Stuart Nash says.

The Tax Working Group will also look at how the tax system can promote the long-term sustainability and productivity of the economy.

“New Zealand faces significant opportunities and challenges in the future of our economy. It is prudent to start thinking now about how we respond,” Grant Robertson and Stuart Nash say.

Updates on the Group’s work will be available through its website – taxworkinggroup.govt.nz. Its first meeting is set to be held towards the end of January 2018.

Interim budget – families package

The Government released it’s interim budget today, which mostly confirmed what was already known, with a few numbers thrown in.

Budget update – fairness and prosperity

The Government is delivering on its commitment to manage New Zealand’s finances responsibly while ensuring the dividends of economic growth are more fairly shared.

We promised we would be a Government of change. The Government has made a clear choice to put the wellbeing of all New Zealanders firmly at the heart of what we do.

The Budget Policy Statement and our 100-Day Plan announcements are proof that this Government will be different, one that will lead the country in a new, positive and inclusive direction.

 

Budget update press releases:

Rt Hon Jacinda Ardern  – Prime Minister

The Government is delivering on its commitment to manage New Zealand’s finances responsibly while ensuring the dividends of economic growth are more fairly shared, says Prime Minister Jacinda Ardern.

“We promised we would be a Government of change. Together with our coalition partner, New Zealand First and our confidence and supply partner, the Green Party, we have made a clear choice to put the wellbeing of all New Zealanders firmly at the heart of what we do.

“Today’s Budget Policy Statement and our 100-Day Plan announcements are proof that the Government I lead will be different, one that will lead the country in a new, positive and inclusive direction.

“It will be a Government that makes reducing child poverty and inequality a priority. That is why we are moving with urgency to introduce legislation for the Families Package. This delivers on one of the key promises of our 100-Day Plan, alongside running balanced Budgets and paying down debt.

“We can pay for the Families Package and our fees-free policy for post-secondary education by cancelling National’s tax cuts.

“The Families Package will provide a significant boost to the incomes of low- and middle-income families. No family will be worse off than they are today, and most families with children will be better off.

When fully rolled out in 2020/21, 384,000 families with children will be better off by an average of $75 a week, with many lower-income families receiving more.

“We know working families struggle at times to provide the very best for their children. The early years of a child’s life are critically important to their long-term wellbeing and development.

“The Families Package is projected to lift 88,000 children out of poverty by 2020/21* – a 48 per cent reduction in the number of children living in poverty compared to the status quo. That’s 39,000 more children lifted out of poverty than under the previous National Government’s package.

“The Families Package includes a targeted boost to Working for Families, giving more money to low- and middle-income families with children, and increasing the number of families who will be eligible for support.

“The money saved from reversing National’s tax cuts also allows us to invest in Best Start as part of the Families Package. Every child deserves the best start in life; our policy will provide an income boost for all families with newborns.

“The Families Package includes the Winter Energy Payment, providing a welcome support to one million superannuitants and beneficiaries who face big heating bills in winter.

“This will provide long-term gains for the country and is fiscally responsible. We can do this while meeting all the targets we have set ourselves under the Budget Responsibility Rules, and without raising anyone’s personal income tax.

“The steps we are taking today show this Government’s determination to make a difference to the lives of many New Zealanders so more can share in the gains of economic growth. It’s about priorities and choices,” says Jacinda Ardern.

*   Defined as living in a household with an income less than 50 per cent of median equivalised household income before deducting housing costs

Hon Grant Robertson – Finance

“We can meet all of our commitments within our Budget Responsibility Rules. These commitments include our 100-Day Plan; Labour’s other policies in the pre-election Fiscal Plan; the Coalition Agreement between Labour and New Zealand First; and the Confidence and Supply Agreement between Labour and the Green Party.

“The Treasury’s Half Year Update incorporates the costs of our 100-Day Plan. The BPS indicates how policies outside this will be afforded within the capital and operating expenditures allowed in future Budgets. Over the next four years, allowances for policies outside of the 100-Day Plan provide $21.7 billion in new operating expenditure, and capital allowances provide for $12.6 billion of new investments.

“Today we are announcing the full details of the Government’s Families Package. This is paid for by rejecting National’s tax cuts and instead targeting spending at those who need it most. It will lift 88,000 children out of poverty by 2021.*

“Boosts to Working for Families, the introduction of Best Start and the Winter Energy Payment, reinstating the Independent Earner Tax Credit and continuing with the recent Accommodation Supplement changes will greatly help struggling families to access the basics which all New Zealanders should have.

“Within our 100-Day Plan we have kept our promise to begin fees-free post-secondary school education and training, kicked off the work on KiwiBuild, legislated for 26 weeks Paid Parental Leave and Healthy Homes, and much more.

“We will measure our progress as a Government differently – by focussing on improving wellbeing and lifting living standards. The first steps towards this are in our 100-Day Plan, with legislation to develop child poverty indicators that must be reported against at Budget time.

“Over the next four years, economic growth is set to remain strong, averaging 3 per cent. Unemployment is forecast to fall to the Government’s 4 per cent target, and wages are forecast to rise on average by more than 3 per cent annually.

“The Treasury forecasts we will keep government spending within its recent historical range, and that net core Crown debt will fall to 19.3 per cent of GDP within five years of us taking office – as promised.

Hon Carmel Sepuloni & Hon Tracey Martin – Social Development & Children

Hon Kelvin Davis – Crown/Māori Relations

Hon Auptio William Sio – Pacific Peoples

Hon Phil Twyford – Housing and Urban Development

Hon Chris Hipkins – Education

Hon James Shaw – Climate Change, Statistics, Associate Finance

Hon Megan Woods & Hon Carmel Sepuloni – Energy and Resources & Social Development

Now a $20bn hole accusation

Steven Joyce’s accusation of a $11 billion ‘fiscal hole’ livened up campaign debate. he was widely criticised but didn’t back down.

Now the Government is reversing the hole blame.

RNZ: Govt accuses National of leaving $20bn hole

The government has accused National of leaving it with a $20 billion bill which has not specifically been included in future budgets.

Finance Minister Grant Robertson told Parliament this afternoon that National failed to put aside the money for its promised big ticket Defence Force upgrade.

“As one commentator has said, the National Government never accurately costed it and made no provision in any of its long-term forecasts to pay for it.

“This is far from providing certainty.”

Government officials are now reviewing the programme to look for better value for money, he said.

“This is the responsible thing to do given the mess left by the previous government,” Mr Robertson said.

Robertson seems to be preparing the ground for either a cut back to spending on the Defence Force upgrade, or justifying larger than promised spending and deficits. Or both.

But his predecessor Steven Joyce denied National had left behind a fiscal hole.

He said the $20 billion of promised spending stretched over 15 years and could be paid for out of nearly $110 billion of unallocated capital funding over that same time period.

“There’s plenty of room in the long term forecasts.”

Mr Joyce said it was a desperate ploy to divert attention from Mr Robertson’s plan to ramp up debt.

“I think the Labour Party might be tilting at windmills to suggest this somehow leaves a fiscal hole.”

Expect this fiscal punching and counter punching to continue, but the crunch will come when Robertson presents his first budget next year. Then we should see the actual fiscal situation as affected by new Government policies and spending, for the short term at least

A problem with Kelvin Davis

There is no doubt that Jacinda Ardern stepped up into the role of Labour leader, and stepped up further in post-election negotiations, as new Prime Minister and generally in her role in international politics (Manus aside).

Not so Kelvin Davis. It seemed to be a good idea to appoint him deputy to Ardern, he had appeared to be a good prospect, he complimented Ardern and he strengthened Labour’s Maori mana.

But Davis always seemed uncomfortable in the role. Some initial swagger was swept aside after he made some poor comments, and he slipped into the background, probably by design of Labour’s campaign.

He has been forced into the foreground again over the last week as acting Prime Minister when both Ardern and Deputy Prime Minister Winston Peters were overseas. Davis was unimpressive fronting for the Government in Parliament this week. He stonewalled without conviction.

Jo Moir at Stuff talks tough: Labour has a problem – the trainwreck of acting prime minister Kelvin Davis

For the last week, Kelvin Davis has been acting prime minister and it’s been nothing short of a trainwreck.

While Prime Minister Jacinda Ardern and her deputy, Winston Peters, have been cutting deals and forging relationships on the international stage in Vietnam and the Philippines, Davis has been left back in New Zealand to handle the day-to-day business.

Before embarking on this week-long mission, Davis was pretty cool and calm about the whole thing and even described the role as a “figurehead” position.

In this column a week ago, I congratulated Davis for doing an excellent job of saying absolutely nothing, but nobody seriously thought that was a strategy Labour could keep up.

Roll on to Tuesday and Davis was back in the House facing Opposition Leader Bill English on statistical steroids as he did what he does best – stringing together sentences with enough jargon and numbers to make a Treasury report look like child’s play.

National worked out a long time ago that Davis was the weak link in the Labour leadership team and the party is in overdrive finding every way possible to expose that.

Every question Davis had thrown at him on Tuesday was answered first in muffled tones by ministers Phil Twyford, Chris Hipkins and Grant Robertson. Davis then stood up and repeated the answers.

I hadn’t noticed that. Question 1 from Tuesday:

You can see it at times here, with Robertson prompting Davis on some answers and appearing to act as his minder.

The ministers didn’t even try to hide the fact they were doing it and Davis blatantly looked to them every time before rising to his feet.

It was like a seriously bizarre game of Chinese whispers that started at Twyford and ran along the front bench until the message was received by Davis.

That wasn’t noticeable on video but must have stood out from the press gallery.

Wednesday arrived. It was a new day; perhaps a new strategy? Not a chance.

There were only two political stories anyone was interested in that day – North Korea and the Government’s net debt target, economists having warned billions would need to be borrowed over the coming years.

As the media gathered on “the tiles”, where ministers are questioned on their way into the House, Davis strode across the bridge toward journalists on his own.

Davis got thrown to the pack and desperately tried to keep his head above water.

Asked what year Labour wanted to reduce net debt to 20 per cent of GDP by, Davis stumbled around before spluttering “over the economic cycle”.

Unconvinced, the reporter asked again, yes, but what year?

Red-faced and out of his depth, Davis conceded he had lost and switched to straight-up honesty, saying, “I’m sorry, I don’t know the answer to that”.

This is a key policy of Labour’s and, yes, it’s hard to remember lots of numbers and years but Davis was presumably well prepped on this topic and still didn’t get across the line.

Was Davis prepped? Or is he just being left to flounder by Labour?

Things didn’t get much better in Question Time. The Opposition had not one but three questions lined up for Davis to put him under pressure in a number of portfolios.

But that’s not before he had made a clarification to the House, after saying the week before in answer to a question about the cost of additional police that “those costs have been finalised”.

Actually, “those costs have yet to be finalised”.

This isn’t just a problem with Davis. There seems to be a problem across Labour with different stories on a number of topics – there appears to be a lack of communication and knowledge on key policies.

In Question 1 on Wednesday Davis tried a different strategy – he gave all his answers in Maori, which mewant that many people listening would not know what he said, but again they were vague and ‘in due course’ answers. Nothing answers.

The problem Labour has is that Robertson is the obvious person to be acting prime minister and actually there’s no reason he can’t be.

Peters is barely ever going to fill that role because chances are if Jacinda Ardern’s out of the country, then, as foreign affairs minister, he’s likely to be too.

Labour needs Davis to remain the party’s deputy leader because his promotion to that role ahead of the election was a smart one and no doubt went a long way to helping it win all seven Māori seats.

A smart campaign strategy – once they worked out that Davis needed to be kept in the background. But not so smart it seems when it comes to governing.

But the party can’t sustain the cringeworthy chaos on display of late and it needs a new plan by the time Ardern and Peters jet out of the country again.

Ardern can appoint Robertson in the acting role and keep Davis as deputy leader. It’s messy, but not as messy as what was on display last week.

Failing that, the Government can choose who answers questions in the House on behalf of the prime minister.

If Ardern is away, then Robertson needs to be nominated as acting leader for the purposes of the House at least. It doesn’t solve the issue of press conferences but it gets halfway there.

Labour obviously has a problem with Davis, who is more than struggling.

They have wider problems with mixed messages over a number of policies, so overall their policy decisions and communication needs to improve.

Ardern and Peters are back in the country so the Davis problem can be forgotten for a while, but if Davis can’t step up into a leadership role then Labour need to seriously look at his position.

Robertson must be frustrated, he looked like he was squirming in Parliament each time Davis got up to speak.

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.

Who will reversing the tax cuts affect the most?

The previous (National) government legislated for tax cuts from next April that would benefit everyone earning money, in particular all workers.

Labour campaigned on scrapping these tax cuts, and intend to pass legislation that will reverse them. But they have been quite quiet about it.

In two interviews in the weekend new Minister of Finance Grant Robertson mentioned then just once in passing. On Q+A:

CORIN You will be well aware of the famous winter of discontent or so-called ‘winter of discontent’ – 1999, Labour government that came in. Are you worried that business is going to react badly to you? I mean, what is your message to, I guess, the small business owners, the business people in New Zealand this morning watching? Can you assure them that you’re not going to rip up the rulebook for them?

GRANT Absolutely. I mean, we are a party that’s committed to a partnership here with business, with working people as well. And, yeah, I went to a Mood of the Boardroom event with, you know, 150 CEOs just before the election and heard from them that their biggest concerns about New Zealand were about inequality. They said that we didn’t need tax cuts; we needed to invest in social services. They were worried about multinationals not paying their fair share of tax. They’re the same policies that we’ve got. Now’s the time for us to sit down with the business community and say, ‘How do we make this work together? How do we grow businesses and ensure a fair share in that prosperity?’

CEOs said “we didn’t need tax cuts” – good for them, they probably don’t, but they don’t speak for all workers. It’s curious to see a Labour finance minister taking a justification for a significant policy from big business CEOs on what they think all workers don’t need.

From the interview on The Nation:

Lisa Owen: Minimum wage — you’re going to raise it to 20 bucks an hour by the end of your first term. Are you worried that that’s going to put a handbrake on job creation?

Grant Robertson: No, not at all. When Labour was last in government, we were raising the minimum wage by about a dollar a year during that period. In fact, we had some of the best economic growth and the lowest unemployment that we’ve seen. Bear in mind, the people who will be getting these minimum wage increases will then be spending that money in the economy. It actually stimulates growth.

Lisa Owen: So in terms of paying for that, the Prime Minister’s indicated that there could be some breaks for small businesses, perhaps, to offset the cost of rising wages. But the thing with that is that will lower your tax take, and don’t you need that money?

Grant Robertson: Look, obviously, as Minister of Finance, I’m always keen to see the money that comes in that we can use, but we do have to make sure we’re being fair on small businesses. Australia has this — the idea of potentially a progressive tax rate for small businesses with low turnover. We want to take a look at that and see whether that could work in New Zealand.

Increasing the minimum wage will help low paid workers (if it doesn’t trigger price inflation. And Labour are also considering tax cuts for small businesses.

Jacinda Ardern has also mentioned small business tax breaks – see Ardern considers tax cut for small businesses to offset $20 minimum wage.

Ardern has also said little about reversing the tax cuts. She has said that their first 100 days plan is largely going to happen. This includes:

  • Make the first year of tertiary education or training fees free from January 1, 2018.
  • Increase student allowances and living cost loans by $50 a week from January 1, 2018.
  • Increase the minimum wage to $16.50 an hour, to take effect from 1 April 2018, and introduce legislation to improve fairness in the workplace.
  • 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.

So that will provide more money to students, low wage workers, families and superannuants (Winter Fuel Payment).

From Labour’s Families Package:

Now is not the time for tax cuts. The top 10 percent of income earners get $400 million from National’s tax cut, which is as much as the bottom 60 percent receive combined. So Labour will eliminate National’s tax cuts, saving $1.5 billion a year. Making this choice provides Labour with the opportunity to reduce inequality and boost family incomes.

Families, students, old people, and possibly small businesses will all benefit from Labour’s changes.

There’s a large group of people who will miss out on the currently legislated tax cuts, and will also miss out on handouts from the incoming Government – wage earners who earn more than $20 an hour who don’t have dependant children.

Many ordinary middle New Zealanders will be paying for ” the opportunity to reduce inequality and boost family incomes”. They will do this in a number of ways.

They are already gradually paying higher tax rates due to bracket creep, and that will continue.

If pushing up minimum wages pushes up inflation those not getting more wages will see their costs increasing.

There is also a risk that interest rates will be pushed up – that will impact in middle New Zealanders the most.

The fuel tax will cost Aucklanders more.

And there’s another risk – house prices may drop. Prices have already levelled off in Auckland. The incoming government has plans to dampen property inflation further. This could impact on middle new Zealanders who already own homes (and have mortgages).

During the election campaign Labour kept emphasising the tax cuts ‘the top 10%’ would get in comparison to ‘the bottom 60%’ from the currently legislated changes.

They ignored the other 30%.

Labour will need to be aware of the risks of building resentment by ignoring many middle New Zealanders in their modifications of wealth redistribution. There are a lot of people who will not just miss out, they may end up paying out.