Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Cullen on OECD report on New Zealand

Cullen on OECD report on New Zealand

Finance Minister Michael Cullen today welcomed the latest OECD review of New Zealand, saying he agreed with much of the analysis – particularly the importance of maintaining fiscal discipline.

The report says the economy’s strong performance over recent years and the accompanying lift in living standards have put New Zealand on track to achieving the government’s objective of returning to the top half of the OECD.

It is also optimistic about New Zealand’s prospects describing them as bright, with potential growth projected to remain comfortably above 3 per cent a year over the medium term.

But it warns that there are fiscal challenges on the horizon saying: Further out, the country will not be immune to the spending pressures of an ageing population and difficulties in constraining increases in health care coverage and costs. Against this backdrop, it would be regrettable if spending or tax initiatives were implemented that significantly weakened the long-term fiscal outlook.

“That is why the government has been strengthening the Crown accounts by reducing debt with the aim of taking it below 20 per cent of GDP by 2015.

“This is in sharp contrast to National which plans to fund its tax cuts partly from borrowing. There is no way that can be justified given New Zealand’s demographic profile. It would undo the hard work of the last 20 years and our hard won reputation overseas for fiscal prudence,” Dr Cullen said.

The OECD praises large elements of the budget business tax package, saying it addressed important problem areas including the tax treatment of managed unit trusts and the depreciation regime.

“The government agrees with the OECD’s advice that tertiary funding has to be more sharply focused on high quality programmes relevant to New Zealand’s needs and is already moving strongly in that direction.

“We also agree with the OECD’s view that the primary challenge facing New Zealand is to raise productivity growth and to boost participation among groups that remain under-represented in employment.

“The OECD acknowledges that the government is reducing the barriers to work by significantly boosting support for early childhood education and through the new In-Work Payment and more generous abatement provisions in the Working for Families package.

“But it is critical of the high marginal tax rates some income groups still face if they enter the workforce. This misses the point that there are no losers under Working for Families. Everyone who comes within its coverage is better off as a result, and most are substantially better off,” Dr Cullen said.

“The OECD criticism also misses the point that high marginal tax rates are endemic to any targetted system and are no higher now than what existed before. The only difference is that they have moved further up the income chain as support is extended to higher income families.

“Previously, for example in the case of a one-child family, family assistance meant higher marginal tax rates for families whose income ranged from $20,000 to $34,000. With Working for Families that moves to incomes between $27,500 and $52,000.”

Dr Cullen also pointed out that the OECD Employment Outlook 2005, released by the OECD last week, had praised New Zealand’s active labour market policies as a success story, saying they had contributed to the recent sharp fall in the number of people on benefits.

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Sector Opposes Bill: Local Government Bill Timeframe Extended

The Minister of Local Government Peseta Sam Lotu-Iiga has asked the Select Committee to extend the report back date for the Local Government Act 2002 Amendment Bill (No 2). More>>

ALSO:

Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>

ALSO:

Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>

ALSO:

General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>

ALSO:

Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>

ALSO:

Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news