Grant Robertson on Newshub Nation

Minister of Finance Grant Robertson was interviewed on Newshub Nation yesterday.

First, the sideshow.

imon Shepherd: It’s the highlight of the political year, for the government and one man in particular, the Finance Minister. I asked Finance Minister Grant Roberson if he was disappointed that the unauthorised early release of budget details overshadowed his first wellbeing budget. 
Robertson: I don’t think that it did. The reaction that we’re getting from New Zealanders to the budget is that they’re really pleased that we’re focused on a big, long-term issue like mental health. I don’t think New Zealanders are focused on the political games in Wellington.
But there were so many of them. There was the leak of the documentation, the allegations of a hack — you sort of seemingly linking the National Party to that, and then it wasn’t a hack. It was shambolic.
Look, I’ve expressed my disappointment in the fact that the Treasury system could be infiltrated this way and also that the Treasury didn’t do more to find out what had happened before they referred it to the police. The reality is that that’s now in the hands of the State Services Commissioner, who is doing an inquiry, and we’ll await the outcomes of that.
Well, how do you think you handled it all?
Look, I invite you to put yourself in my shoes. On Tuesday night the Chief Executive of the Treasury arrived in my office and said about an hour ago I have referred to the police 2000, of what he called, hacks into the system. I said to him, ‘Do you know how that’s happened?’ He said, ‘No, I don’t.’ I said, ‘Do you know if any other areas of the Treasury system have been compromised?’ He said, ‘No, I don’t.’ So at that point, I’m going to take that matter pretty seriously. That’s what we did. Obviously more information has now come to light. That’s what the inquiry will cover.
Do you think you acted too quickly? Do you think you should’ve waited and got some more information before you put out that press release just then, which seemed to indicate that National was linked to the allegations of a hack?
Like I say, I think most people in my shoes, having received the information I did, would react and say, ‘Well, we need to make sure, regardless of how the National Party might’ve got the information, that they were aware of what the Treasury had advised me. We all now know that the situation is somewhat different. The inquiry will look into how that happened.

Then the meat of the topic.

You named it the Wellbeing Budget, but mental health aside, what is actually transformational about it?
I think the work that we’re doing in domestic and sexual violence is absolutely transformational. We’re talking there about breaking a cycle that has bedeviled New Zealand for many years. $320 million going into that. We’re going to transform the lives of people who are on benefits by indexing that to the average wage. That’s going to lift their incomes consistently.
Okay. Well, let’s talk about that. Obviously the Welfare Expert Advisory Group said 12-47 per cent boost to benefits is needed, something like $5 billion. You didn’t go near that. You’ve done $300 million. Why not?
Well, because we’re doing this in phases. And we’ve actually done three things —we’ve done, not only the indexation of benefits, but we’ve also lifted the abatement rate — the rate at which your income drops if you’re working while you’re on a benefit. And we’ve got rid of the sanction that was on mothers who didn’t identify the fathers of their children. That’s stage one. We absolutely acknowledge that there’s further work to do in this area.
Do you think that you missed a chance to be transformational by not implementing a capital gains tax?
Well, as you well know, I would’ve like to have implemented a capital gains tax. That, of course, would not have come into force until after the election. That was always the plan, but the realities of coalition government are we didn’t have the numbers for that.
What about a greater focus on business? If you lift them and provide incentives for business, that changes the whole economy, doesn’t it? So why didn’t you do that?
Well, we are. There’s a great deal of focus on supporting business. One of the things I’m really excited about in this budget is the $300 million fund for venture investment in those businesses that have got past the start-up phase and are looking to grow to be international companies, and Peter Beck from Rocket Lab has raised this issue with us and said, ‘Too many of these companies head offshore because there isn’t investment here.’ The government’s now got $300 million of skin in the game.
But I would say to you, that this country is made up — the backbone — is small to medium enterprises, and the businesses you’re talking about there are start-ups that want to go internationally. You’re not addressing the small to medium enterprises.
Well, I’d argue we are. The biggest issue raised with me by business is skilled staff, infrastructure, making sure we get those trade agreements going so people can export. They are the issues we are working on.
Could you have been more transformational if you’d relaxed your debt rules earlier? Is there a chance you could look back at this and say, ‘I wish I hadn’t played it so safe’?
It’s always about a balance. We have to make sure that we do keep our debt under control. We’re a small country. We’re susceptible to significant economic shocks and natural disasters. We are actually borrowing more money in this Budget. The economy is growing as well. That means the percentage of GDP stays steady, but we are borrowing to invest in those areas like infrastructure, building up KiwiRail, building more schools and hospitals. But it is all about a balance, and I think we’ve got it right.
Well, what about the balance — you’ve just mentioned shocks like natural disasters or international shocks. You are actually borrowing more. You are running down the projected surpluses. Are you leaving us vulnerable to something like that?
No, I don’t believe so. I mean, we still have a surplus of $1.3 billion here. We still have debt at a relatively low level. We are creating that balance, but we made a decision in this Budget to spend more than we had originally allocated, and that’s because the need was there. The need was there in infrastructure, but the need was also there in services like mental health. We always said, Simon, is that a sustainable surplus would be one where we’d met the needs that were there, so therefore this Budget that surplus is a bit lower, but it still exists.
Are you meeting the health needs though? Because National’s Amy Adams points out that policies for midwives, no free health checks for seniors, reduced GP fees — those kinds of things are not addressed in this particular budget. And in fact, figures from the Child Poverty Action Group show that spending on public health is forecast to be the lowest in a decade by 2023.
Well, what we’ve done is prioritise mental health, and we’ve been completely upfront about that from day one. We have a mental health crisis in New Zealand. It’s been ignored, but there’s still significant resources going into the rest of our health system, around $2.9 billion into supporting DHBs, more money for ambulances. There are other areas, within our coalition agreement, within our confidence-and-supply agreement that we’ll look to address in next year’s Budget, but we made mental health a priority.
Such as?
Well, you’ll have to wait till next year.
What about teachers, though? They’re crying out for some more love from the government, and they’ve just announced more disruptive action. So why couldn’t you address that in this Budget?
We believe we’ve got a fair offer on the table, the $1.2 billion offer. The Budget also addresses some of the non-pay-related issues that teachers have been raising. Six hundred learning support coordinators for what we used to call special ed. 2480 more teachers—
And yet they’re still unhappy?
Well, that’s the reality of the world. What I hope is happening, and I’m pretty sure it is happening right now, is that the Ministry of Education and the unions are sitting down together to say, ‘Look, how can we resolve this?’ We want it resolved. We understand the frustration of teachers after 10 years of not getting supported. Let’s take these first steps together now.
What is there in this Budget for middle New Zealanders? Sort of, those low to middle income families. There doesn’t seem to be anything.
Well, I’d give you one example. We’re removing school donations for decile one to seven schools.
But in the hip pocket there’s nothing like tax bracket creep or anything like that.
Well, look, we’ve made a commitment not to change tax rates in this term of government because we believe that we need the resources that are there to meet the needs that are there.
Well, let’s talk about housing. There is nothing actually, really, apart from the Housing First — the transitional housing — there’s nothing else for housing in this Budget. You’ve got KiwiBuild, which has stalled at the moment because it’s not delivering.
We put $2 billion in last year’s Budget for KiwiBuild for the life of the programme—
And it’s not delivering.
And as you know, there is a housing reset coming forward, and actually in the Budget documents we state that we’ve put some money aside to help manage that housing reset.
How much?
You’ll see the details of that when the reset’s released.
What about the policies that you agreed with the Greens, like a shared equity scheme to get more people to be able to afford to buy into our houses. What happened to that?
As I say, you’ll have to wait for the housing reset that Minister Twyford’s going to announce, but clearly we’ve got a large-scale building programme for housing that’s not just about KiwiBuild. It’s about state housing, transitional housing. Mr Twyford’s now going to come back with that reset, and you’ll be able to see—
But there’s 11,000 people on the state housing list, and there’s nothing extra in this Budget for them.
Well, we made a significant investment in the building of 6000 state houses in the last Budget. We’ve got an integrated programme with transitional housing and affordable housing. Phil Twyford’s going to announce a housing reset. We’ve set some money aside to support that.
What would you say to business-owners, teachers and say, middle income, low-income earners — some of those feel left out by Budget 2019. What would you say to them? What hope will you offer them for next year?
Look, I’ve always said that the three budgets of this term are a trilogy. Last year we did the foundation-building of making sure we got spending back into those core areas. This year we’ve targeted areas like mental health that all of those people will benefit from. We’ve got a third Budget to come as well.
So is that going to be the blockbuster for these people?
No, I see them all as part of an attempt to start turning around a decade of neglect in a lot of important areas in New Zealand. Two-thirds of the way through, I think we’re making good progress.

A pretty good budget

I despair about the circus leading up to and surrounding yesterday’s budget. Media even investigated the person on the cover photo of the printed budget in a bizarre sideshow. And there were a number of ‘what’s in it for you’ angles, despite lolly scramble budgets largely being very historic,

But for what really mattered, I think that yesterday’s budget was pretty good, delivered by someone who increasingly looks like a pretty good Minister of Finance, Grant Robertson.

A significant boost to mental health related initiatives is long overdue, and very good to see,

Indexing benefits to wages is also a long overdue fix to the erosion of benefit value over the years.

There’s a bunch of other stuff that can be praised or quibbled about, but generally it seems ok to me.

There is always a limit to how much a Government can spend of our money, and there’s a limit to tolerance of how much we are taxed. Robertson and the Government seems to me to have found a fairly good balance. They will never please all of the people all of the time, but I don’t think there’s much to be worried about.

National – “Robertson concedes defeat on budget rules”

National’s finance spokesperson Amy Adams has responded to Minister of Finance Grant Robertson’s announcement yesterday that the Government core debt target would change to a range (see Grant Robertson: shift from net debt 20% target to 15-25% range).


Robertson concedes defeat on budget rules

Finance Minister Grant Robertson has today thrown in the towel by scrapping his self-imposed debt target, National’s Finance Spokesperson Amy Adams says.

“Grant Robertson has been backed into a corner by allowing the economy to slow, over promising and making poor spending choices. Now, instead of a fixed target Grant Robertson has lifted the debt limit by 5 per cent. That loosens the purse strings by tens of billions of dollars.

“This is a blunt admission the Government can’t manage the books properly, it is not wriggle-room. This makes the fiscal hole look like a puddle.

“You can almost guarantee that means debt at the upper end of the range of 25 per cent. This is an admission of defeat from a Finance Minister who has repeatedly used these rules to give himself the appearance of being fiscally responsible.

“This decision will mean billions of dollars more debt because the Government can’t manage the books properly and wants to spend up on big wasteful promises in election year.

“This will pay for things like Shane Jones’ slush fund, fees-free tertiary and KiwiBuild – in other words, it’s wasteful spending.

“Debt isn’t free. It will have to be paid for by higher taxes in the future.

“The debt target is the latest broken promise by the Government as the ‘year of delivery’ continues to be an embarrassing string of failures.

“It took the last Labour Government two terms to lose its fiscal discipline. This Government has given up in 18 months. This confirms you simply can’t trust Labour with the economy.”

Grant Robertson: shift from net debt 20% target to 15-25% range

One of the biggest talking points coming out of Minister of Finance Grant Robertson’s pre-budget speech to Craigs Investors Conference yesterday was a shift from a net debt target of 20%, to a much more flexible range of 15-25% dependent on economic conditions.

The 20% target was a feature of the Labour-Green fiscal responsibility agreement prior to the 2017 election.

Robertson 24 March 2017: Labour and Greens commit to rules for responsible financial management

The Labour Party and the Green Party have agreed to Budget Responsibility Rules, which will provide the foundation for sound fiscal management after the election.

“New Zealanders rightly demand of their government that they carefully and effectively manage public finances. We understand that and are committed to delivering this,” says Labour Finance Spokesperson Grant Robertson.

“These rules demonstrate how Labour and the Greens in Government will manage the economy prudently, effectively and sustainably.”

Under the Budget Responsibility Rules the Government will:
• Deliver a sustainable operating surplus across an economic cycle
• Reduce the level of Net Core Crown Debt to 20 per cent of GDP within five years of taking office
• Prioritise investments to address the long-term financial and sustainability challenges facing New Zealand
• Maintain its expenditure to within the recent historical range of spending to GDP ratio
• Ensure a progressive taxation system that is fair, balanced, and promotes the long-term sustainability and productivity of the economy.

The Government will establish an independent body to make sure the rules are being adhered to.

Since the Labour-Green-NZ First Government took over in late 2017 the target (and fiscal prudence) has been strongly criticised by people on the left who have been demanding much more spending for ‘urgent needs’.

Relevant section of yesterdays speech under Budget 2019 Economic Priorities – Fiscal sustainability:


We are reducing the level of net core Crown debt to 20 percent of GDP within five years of taking office. New Zealand has low levels of Government debt by international standards, but we remain vulnerable to shocks that are beyond our control, such as earthquakes and other natural disasters. We have made our commitment to keeping debt under control to ensure that future generations of New Zealanders are in a position to be able to respond effectively to any such shock.

This Government will prioritise investments to address the long-term financial and sustainability challenges facing New Zealand. This is apparent in the intergenerational wellbeing priorities we have identified in this year’s budget and restarting contributions to the NZ superfund and our focus on issues such as climate change.

We will maintain Government expenditure within the recent historical range of spending to GDP, which has averaged around 30 percent over the past 20 years. We are also focussed on the quality of spending, with Ministers running prioritisation exercises across their portfolios to identify spending that doesn’t fit with the Coalition Government’s priorities.

I am pleased to announce today that on the 30th of May the Budget will show that we are meeting these rules again, as we did in last year’s budget.

I know there has been some criticism of this approach – particularly around the debt target. For me it is a question of balance. We have made, and will continue to make, significant investments in our future, but we also know that the volatility of the world, be it economically or through natural disasters, biosecurity incursions or unexpected events, is never far away.

The Public Finance Act obliges Governments to outline their long-term fiscal strategies at Budget time. One of the key elements of this is the Government’s approach to debt.

People in this room will all have different views on what it could or should be. That in part depends on the levels of investment you believe the Government should be making and in what areas.

We also have to take into account capacity constraints at any point in time – like in our construction sector. With this in mind, I am comfortable with the 20% point that we have been targeting. But circumstances can obviously change.

Beyond the Budget Responsibility Rules, our fiscal intentions in this budget will signal a shift to a net debt percentage range, rather than a single figure. At this point we are looking at a range of 15-25% of GDP, based on advice from the Treasury. This range is consistent with the Public Finance Act’s requirement for fiscal prudence, but takes into account the need for the Government to be flexible so that it can respond to economic conditions.

Essentially, our current 20% target falls in the middle of the new range that will exist from 2021/22 onwards.

A range gives governments more capacity to take well-considered actions appropriate to the nation’s circumstances – circumstances that change over time. It establishes boundaries within which debt is kept to sensible and sustainable levels and where fiscal choices are driven by impact and value.

For example, a government may choose to move higher up the debt range to combat the impact of an economic recession, or where there are high value investments that will drive future economic dividends. At other times it may be prudent to reduce debt levels to the lower end of the range to provide headroom for future policy responses.

Grant Robertson: Budget 2019 Economic Priorities

Minister of Finance Grant Robertson outlined economic priorities for the 2019 budget, due next week, in a speech to the Craigs Investors Conference yesterday.

He is pushing the ‘wellbeing’ focus, mentioning it 15 times in his speech overall.


Budget 2019 Economic Priorities

In next week’s budget you will see investments to support our economic strategy.

This year’s Budget is different. There are three fundamental elements to the Wellbeing Budget.

First, a whole-of-government approach. This is about stepping out of the silos of agencies and working together to assess, develop and implement initiatives to improve wellbeing.

Secondly, a wellbeing approach means looking at intergenerational outcomes. We have to focus on the long-term thinking about the impacts of policy on future generations as well as thinking about meeting the needs of the present.

Thirdly, we need to move beyond narrow measures of success. This can be seen through the development of the Living Standards Framework Dashboard and from the Indicators Aotearoa New Zealand work led by Statistics New Zealand.

We have developed our Budget priorities on the basis of a wellbeing analysis. We looked at the evidence and got expert advice to assess where we have the greatest opportunities to make a difference to New Zealanders’ wellbeing. We have focused our efforts on those opportunities.

This approach has led to some significant and different programmes, like the $320 million investment announced last weekend to address domestic and sexual violence. This is the wellbeing approach in action. The evidence shows the long-term impact that domestic violence has, especially on children. We are taking a joined-up government response to start addressing this long term challenge. We have brought together eight government agencies, working with the community to take on this scourge that has such massive social and economic consequences.

From an economic perspective, our wellbeing analysis showed that we have some way to go in achieving our vision of a productive, sustainable and inclusive economy.

Productivity growth is a key driver of incomes both at a household and country level. Despite working longer hours on average than workers in many developed countries, New Zealanders’ incomes have for some time remains in the bottom half of the OECD.

In addition, the Government has set ambitious greenhouse gas reduction targets to meet the 2015 Paris Agreement goal of keeping temperature rise to no more than 1.5 degrees.

As a result, two of the priorities in this year’s budget are:

• Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy; and

• Supporting a thriving nation in the digital age through innovation, social and economic opportunities.

Come Budget day you will see targeted investments in these areas to support more productive, sustainable and inclusive economic growth.

Fiscal sustainability

Of course, fiscal sustainability is an inherent part of maintaining and improving intergenerational wellbeing and a sustainable economy.

That’s why this Government made a commitment to our Budget Responsibility Rules when we came into office.

These include:

Delivering a sustainable operating surplus across the economic cycle. The key word here is sustainable.

That means our surpluses will exist after we have funded our policy objectives, so that issues are not kicked further down the road for the next government or generation to deal with, as I discovered after coming into my role as Finance Minister.

We are, reducing the level of net core Crown debt to 20 percent of GDP within five years of taking office. New Zealand has low levels of Government debt by international standards, but we remain vulnerable to shocks that are beyond our control, such as earthquakes and other natural disasters. We have made our commitment to keeping debt under control to ensure that future generations of New Zealanders are in a position to be able to respond effectively to any such shock.

Thirdly, this Government will prioritise investments to address the long-term financial and sustainability challenges facing New Zealand. This is apparent in the intergenerational wellbeing priorities we have identified in this year’s budget and restarting contributions to the NZ superfund and our focus on issues such as climate change.

Fourthly, we will maintain Government expenditure within the recent historical range of spending to GDP, which has averaged around 30 percent over the past 20 years. We are also focussed on the quality of spending, with Ministers running prioritisation exercises across their portfolios to identify spending that doesn’t fit with the Coalition Government’s priorities.

I am pleased to announce today that on the 30th of May the Budget will show that we are meeting these rules again, as we did in last year’s budget.

Our Budget Priorities are focussed on the outcomes New Zealanders want to achieve and all Ministers and agencies will be collectively accountable for delivering them. And in their delivery, this Government will follow a disciplined fiscal strategy. The strategy gives the balance to be both a responsible manager of public finances and responsive to New Zealand’s intergenerational wellbeing needs.

We’ve prioritised spending that improves the wellbeing of all New Zealanders. This means tackling the big long-term issues, by investing in an economy that is more productive, sustainable and inclusive.

Come Budget day you will be able to see that this is not simply the same old Budget repackaged with softer edges and brighter colours. You will see a Budget that is new, with a more structured approach and a new, explicit emphasis on what we want to achieve for the long term for our country.

 

Robertson ‘surprised’ by reaction to CGT capitulation – yeah, right

Minister of Finance Grant Robertson has belatedly tried to defend the decision of Cabinet to drop any plans for a Capital Gains Tax, and the decision of Jacinda Ardern to rule out trying to bring in a CGT at any time under her leadership.

A CGT had been a prominent Labour Party policy, and was the main focus of the Tax Working Group led by ex-Labour Finance Minister, Michael Cullen.

It has been justifiably been noted that Ardern and Robertson did little to promote or sell the CGT after the release of the Working Group recommendations.

NZ Herald: Finance Minister Grant Robertson leaps to defence of PM Jacinda Ardern over Capital Gains Tax ‘leadership’ claims

Finance Minister Grant Robertson said he was surprised that the capital gains tax decision was getting such a strong reaction and he said claims that Prime Minister Jacinda Ardern had shown a lack of leadership over it was “ridiculous.”

“I’m not surprised that there are people who feel strongly about the importance of getting better balance back into the tax system.”

He understood they were disappointed, as he was.

“What I am a bit surprised about the extent to which people are defining the Government by this decision when I believe we have done a lot to be proud of in terms of making New Zealand a fairer and better place, including within the tax system by closing GST loopholes, extending the brightline test and ring-fencing of rental income losses.

Ardern and Labour have been blasted by people on the left who had been sold the idea that a CGT was a significant policy that would help create ‘a fairer and better place’.

“I feel that we have done a lot that is progressive and important, so I am a little bit surprised by that reaction,” Robertson told the Herald.

Robertson shouldn’t be surprised (and I doubt that he is surprised much if at all).

“It would have represented a shift at the core of our tax system so I understand why people see it as significant but there are other ways of achieving fairness and that is what we are focused on.”

Are they focussed on standing up to or sidelining Winston Peters?  If they want to deliver the sort of ‘fairness’ and transformation that Ardern has sold the political left then they should be dealing with their biggest problem.

“In the end, we cannot beat the maths of the Government and that’s the reality of where we are.

Robertson and Ardern and Labour were there as soon as they formed a coalition government with NZ First in 2017. But they have strung everyone along with their Tax Working Group for fifteen months. They can’t have only just worked out the maths of their Government.

“The Prime Minister has shown immense leadership over recent months on a number of topics. It’s just on this particular issue, the Coalition couldn’t find consensus.”

It’s not just on this particular issue, but it is a significant failure for Labour.

Robertson said the Labour Party’s New Zealand Council were consulted about taking the policy off the table.

“I’m sure many of the New Zealand Council were disappointed in the same way I was that we couldn’t get it over the line this time,” said Robertson. “But they were certainly consulted and were part of this decision.”

A part of the decision? It’s hard to see this involving any more than being told that Winston said NO. Perhaps the Labour Council was a part of Ardern’s decision to rule out any CGT under her leadership in the future – but what about the Labour members who thought that CGT was a big thing?

“There will be plenty of ideas inside the party around how we can create the fairest possible tax system. It’s just it won’t include a capital gains tax.”

“The fairest possible tax system”, minus whatever NZ First don’t agree with. But more than that, minus any possible future CGT, with a good chance NZ First won’t be around to stop it.

“I know most members of the Labour Party understand the importance of being able to be in Government and make change and every now and then there will be something we don’t do that we would like to do but we are achieving a lot alongside that.”

What a lot of unconvincing waffle.

Robertson was largely silent when the CGT needed to be promoted. This is far too late and too unconvincing.  This just reinforces the suggestion that he and Ardern had given up on getting a CGT long ago, probably as soon as they signed the coalition agreement with NZ First.

I’ll ask again whether this was a done deal in the coalition document that Labour have refused to make public.

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

Reserve Bank must now consider employment alongside inflation

A new Policy Targets Agreement requires Reserve Bank “monetary policy to be conducted so that it contributes to supporting maximum levels of sustainable employment within the economy” as well as still keeping inflation between one and three percent.

I have no idea how the Reserve Bank will influence employment levels.

It could be tricky if the objectives clash.

Grant Robertson: New PTA requires Reserve Bank to consider employment alongside price stability mandate


Finance Minister Grant Robertson and incoming Reserve Bank Governor Adrian Orr today signed a new Policy Targets Agreement (PTA) setting out specific targets for maintaining price stability and a requirement for employment outcomes to be considered in the conduct of monetary policy.

The new PTA takes effect from 27 March 2018, when Adrian Orr starts his five-year term as Governor. The new PTA has to be signed under the existing provisions of the Reserve Bank Act 1989, which has price stability as the Reserve Bank’s primary objective.

The agreement continues the requirement for the Reserve Bank to keep future annual CPI inflation between 1 and 3 percent over the medium-term, with a focus on keeping future inflation near the 2 percent mid-point.

The new PTA now also requires monetary policy to be conducted so that it contributes to supporting maximum levels of sustainable employment within the economy.

“The Reserve Bank Act is nearly 30 years old. While the single focus on price stability has generally served New Zealand well, there have been significant changes to the New Zealand economy and to monetary policy practices since it was enacted,” Grant Robertson said.

“The importance of monetary policy as a tool to support the real, productive, economy has been evolving and will be recognised in New Zealand law by adding employment outcomes alongside price stability as a dual mandate for the Reserve Bank, as seen in countries like the United States, Australia and Norway.

“Work on legislation to codify a dual mandate is underway. In the meantime, the new PTA will ensure the conduct of monetary policy in maintaining price stability will also contribute to employment outcomes.”

A Bill will be introduced to Parliament in the coming months to implement Cabinet’s decisions on recommendations from Phase 1 of the Review. As well as legislating for the dual mandate, this will include the creation of a committee for monetary policy decisions.

“Currently, the Governor of the Reserve Bank has sole authority for monetary policy decisions under the Act. While clear institutional accountability was important for establishing the credibility of the inflation-targeting system when the Act was introduced, there has been greater recognition in recent decades of the benefits of committee decision-making structures,” Grant Robertson said.

“In practice, the Reserve Bank’s decision-making practices for monetary policy have adapted to reflect this, with an internal Governing Committee collectively making decisions on monetary policy. However, the Act has not been updated accordingly.”

The Government has agreed a range of five to seven voting members for a Monetary Policy Committee (MPC) for decision-making. The majority of members will be Reserve Bank internal staff, and a minority will be external members. The Reserve Bank Governor will be the chair.

 

Reserve Bank Governor-Designate, Adrian Orr, said that the PTA recognises the importance of monetary policy to the wellbeing of all New Zealanders.

“The PTA appropriately retains the Reserve Bank’s focus on a price stability objective. The Bank’s annual consumer price inflation target remains at 1 to 3 percent, with the ongoing focus on the mid-point of 2 percent.

“Price stability offers enduring benefits for New Zealanders’ living standards, especially for those on low and fixed incomes. It guards against the erosion of the value of our money and savings, and the misallocation of investment.”

Mr Orr said that the PTA also recognises the role of monetary policy in contributing to supporting maximum sustainable employment, as will be captured formally in an amendment Bill in coming months.

“This PTA provides a bridge in that direction under the constraints of the current Act. The Reserve Bank’s flexible inflation targeting regime has long included employment and output variability in its deliberations on interest rate decisions. What this PTA does is make it an explicit expectation that the Bank accounts for that consideration transparently. Maximum sustainable employment is determined by a wide range of economic factors beyond monetary policy.”

Mr Orr said that he welcomes the intention to use a monetary policy committee decision-making group, including both Bank staff and a minority of external members.

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

Grant Robertson on The Nation

New Minister of Finance Grant Robertson was interviewed on The Nation this morning. From @TheNationNZ:

“We understand the importance of fiscal responsibility, but that can’t be an end in itself.”

He says he’s absolutely confident the Labour-NZF govt can meet its budget responsibility rules.

The Govt will be an active one – will partner with the regions, rather than meddling.

Robertson says the govt wants to invest in the long term – it’s not just about the numbers on the sheet but living standard.

He says the regional development fund is an opportunity to correct under-investment in areas like Northland. It will be a “rigorous” process based on the best projects.

Robertson says there’s a lot more work to do to understand where Auckland’s port would be best placed.

He says Labour was heading in the same direction on the min wage as NZF – $20 by 2020 was NZF policy.

The Tax Working Group will be appointed before the end of the year.

He will always make sure the most vulnerable in society are protected.

As Sports Minister, he says he’s looking forward to a conversation with about pay equity.

Interview: Grant Robertson

There wasn’t much of substance in that going by the summary.

Newshub: Finance Minister Grant Robertson won’t cut ‘core’ spending if economy tanks

New Finance Minister Grant Robertson is backing up Jacinda Ardern’s view the economy has been a “blatant failure” when it comes to helping New Zealand’s most vulnerable.

Mr Robertson told The Nation on Saturday the “days of a hands-off, laissez-faire Government hoping for the best for New Zealand are over”.

“What Jacinda Ardern has said is if you’ve got the world’s worst homelessness, then the form of capitalism that we’ve seen in New Zealand isn’t working for those people – and I would agree with that,” he said.

“That’s the foundation principle of the Labour Party… we believe in the fact there is an obligation on Government to help ensure fairness, to make sure everybody gets a chance to achieve their potential.”

To fix it, he says Labour will lead an “active” Government “that partners in the regions with local government, with business, with iwi”. But he appears to want to avoid the ‘nanny state’ accusations that plagued Labour’s last administration under Helen Clark.

“That’s a different thing entirely from meddling and telling people what to do. We actually want to listen.”

“I came into politics to make sure that we provided better opportunities for New Zealanders, that we protected our most vulnerable. There are certain areas of spending that we must do to be a decent society, to care for other people. I would never compromise on that.”

He praised the National-led Government for continuing to spend during the global financial crisis.

“They made sure those core areas of spending carried on – that’s what responsible Governments do.”

Mr Robertson is confident Mr Peters’ “dark days” won’t happen.

“I don’t think we’re going to need to have that conversation.”

Winston Peters can’t be too concerned about the prospects for our economy either, given that his focus is overseas as Minister of Foreign Affairs, and he has negotiated $1b per year finding for Regional Development.

It’s very early days for Robertson – he has been Minister of Finance for two days – so we will have to wait and see how well he manages New Zealand’s finances. His past experience is largely irrelevant. He has time preparing for the role in Opposition, now he has the opportunity to pout into practice what he and Labour think will will work.