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.

The budget drip feed

The actual 2017 budget will be presented to Parliament on Thursday next week, but the Government has been drip feeding spending announcements over the last couple of weeks.

The days of massive giveth and taketh pronouncements on budge night are so last century. The state of the ‘books’ are fairly well known these days, and announcements of most of the smaller spending decisions are done in advance, presumably to try to maximise publicity leading up to an election.

There will be a few ‘surprises’ or speculations confirmed.The Government will want some good news to come out of their ninth budget, albeit now with a new Minister of Finance, Steven Joyce.

There will be interest in whether tax rates are tweaked slightly or not. Opposition parties will say there should be no cuts but they aren’t big enough.

Budget 2017

 On Thursday 25 May, Finance Minister Steven Joyce will deliver the National-led Government’s ninth Budget.Budget 2017 will invest in the infrastructure and public services needed for a growing country while…

Recent spending and budget announcements:

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$6.7 million Redevelopment for Kaikorai Primary School

Kaikorai Primary School in Dunedin is set to benefit from a $6.7 million redevelopment as part of the Government’s commitment to modernise school infrastructure…

Step closer for new school for Syrian children

Foreign Minister Gerry Brownlee has welcomed the signing of a letter of commitment between New Zealand and Turkey which will see $1.3 million provided for a new school…

Multi-million dollar safety upgrade for Lyttelton Tunnel

Transport Minister Simon Bridges today announced work is set to begin on a multi-million dollar fire deluge system that will improve safety and reduce the risk of lengthy closures…

Govt $333m Urban Cycleways Programme achieves halfway point

Transport Minister Simon Bridges today marked the halfway point for the Government’s $333 million Urban Cycleways Programme (UCP) with the completion of a section on the Little River Link cycleway.

Budget 2017: Irrigation investment to better manage fresh water

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Taranaki walk to support economic development

A $3.4 million investment into the Taranaki Crossing is part of the Government’s plan to boost growth in Taranaki, Economic Development Minister Simon Bridges and Conservation Minister Maggie Barry say.

Key transport project for Taranaki launched

Transport Minister Simon Bridges today officially launched the Awakino Gorge to Mount Messenger Programme in Mokau.The $135 million programme, part of the Government’s Accelerated Regional Roading Programme, is aimed at…

Budget 2017: $5.2m to fund more teachers in priority subjects

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Govt to build 34,000 new houses for Auckland

The Government today has announced a Crown land and building programme that will see tens of thousands of new houses built in Auckland over the next decade. Social Housing Minister…

Budget 2017: $21m to Battle for our Birds

Conservation Minister Maggie Barry says DOC will fight this year’s beech forest mast year increase in rat and stoat numbers with a $21.3 million war chest from Budget 2017 for…

NZ provides further $5m in humanitarian aid

New Zealand will provide a further $5 million in relief assistance to pressing humanitarian crises across Africa and the Middle East, Foreign Minister Gerry Brownlee has announced.

Budget 2017: Double crewing for road ambulance

Budget 2017 invests an additional $59.2 million over four years to ensure all road ambulance call outs are double crewed, Health Minister Jonathan Coleman, Associate Health Minister Peter Dunne and..

Budget 2017: $303.9m for New Zealand Screen grants

Budget 2017 will see $303.9 million allocated to support the continuation of the New Zealand screen industry production grants, both globally and domestically, say Economic Development Minister Simon Bridges…

Budget 2017: $76m for DOC tourism infrastructure

The Government will invest $76 million through Budget 2017 on new and upgraded tourism infrastructure for the Department of Conservation as part of a $178 million tourism infrastructure package, Conservation…

Budget 2017: $178m package for tourism infrastructure

Tourism Minister Paula Bennett has today announced a new $102 million Tourism Infrastructure Fund which has been launched alongside $76 million in new funding for our most important tourism asset,…

Budget 2017: $74.6m to further grow business R&D

Science and Innovation Minister Paul Goldsmith has today announced an additional $74.6 million in funding through the Innovative New Zealand programme in Budget 2017 to meet the growing demand for…