Speech: ACT Leader's Reply to Budget 2019
Thank you, Mr Speaker.
What a sad, sad week for New Zealand.
The Government’s Budget for this coming year is $112 billion dollars, but they can’t build a secure website to put it on.
The National Party, having no other point of difference with the Labour Party, has spent the entire week attacking a website instead of the Government’s Budget.
This is why we need an ACT Party in New Zealand. Somebody has to articulate an alternative vision for New Zealand. Somebody has to stand up for New Zealand as it could be: an aspirational, achieving society. Not New Zealand as this Government casts it, where the best way to get more money is not to work, save and invest – you’ll just get taxed harder – but to try to vote yourself rich.
Government is the great fiction wherein everybody tries to live at the expense of everyone else, said the great French economist Frederic Bastiat. We see that all through this Budget.
The total tax take has risen to $90 billion – that’s nearly $50,000 for each and every household in New Zealand.
Tobacco taxes keep going up. If they were working, and people were quitting, the tax take would be going down. Guess who pays most of the tobacco tax? Poor people, such as those on benefits. Hundreds of millions of dollars are being taken out of the poorest households in New Zealand. This is the great fiction of government in action.
Then there’s income tax. Inflation will push more and more New Zealanders into the top tax bracket, paying a third of their next dollar in tax. Don’t forget their employer’s company taxes. If they spend their next dollar, they lose 15 per cent in GST. That’s not to mention petrol taxes and tobacco and alcohol taxes. The upshot is, if you work, save and invest in New Zealand, chances are more than half of your next dollar will be taken in taxes.
Government is spending an eye-watering $34 billion on social security and welfare.
Already, one in nine working-aged New Zealanders is on a benefit. One in eight New Zealanders is born into a household dependent on a benefit. It is one of our biggest social problems. What does this Government do? It promises to increase benefits so getting off one and working is even less attractive.
Taxpayers are forking out $4.5 billion to the 300,000 people on a main benefit and $2.7 billion in family tax credits. We are becoming a nation of takers rather than makers.
Superannuation payments now account for $14.5 billion. ACT has long advocated for increasing the age of eligibility to reflect the fact that people are living and working longer, to ensure fiscal sustainability and intergenerational fairness.
There’s $2.6 billion dollars spent on accommodation supplements. Never has the cost of the housing crisis been clearer. We are paying taxes to fund the government’s failure to fix housing. That’s not to mention $2 billion tied up in the disastrous KiwiBuild, either.
There will be a new $300 venture capital investment fund for startup businesses and $50 million for a Green Investment Fund. Why would people working for the government know how to invest your money better than you who earned it in the first place? Why would people be better motivated to spend other people’s money than their own? That’s what the government investment funds promise.
Guess who is paying for it? Businesses who make a profit and pay company tax. They will keep paying one of the highest company taxes in the OECD so that hundreds of millions can be given to the businesses who convinced the bureaucrats to invest their competitors’ money in them. That is the great fiction, business trying to live off business.
The Government’s R&D tax credit will cost taxpayers $158 million. Although New Zealand has 530,000 firms, the vast bulk of tax credits will be hoovered up by just 330 firms, and the scheme is unlikely to increase the overall levels of R&D.
Labour will fork out another $350 million for the failing Fees-Free scheme which represents a transfer of wealth to middle and upper-income families. The Provincial Growth Fund delivers $1.1 billion to marginal projects in provincial seats in order to boost NZ First’s electoral prospects.
That’s not the marker of an aspirational, achieving society. The message of this Budget is simple: If you work, save, and invest, you will be punished. If you do nothing, you will be rewarded. It is a Budget designed for mediocrity.
The National Party’s big problem is that they agree. There is nothing in this Budget that National couldn’t have done. They even had the same systems for government websites such as the Treasury site that hosts the Budget.
The tobacco taxes, the welfare increases, the corporate welfare, the middle-class welfare, the bracket creep, National did it all, and are reduced to attacking a website instead of providing an alternative agenda. That job must fall to ACT.
The first thing we need is to scrap wasteful spending.
This Budget should have pared back Working for Families. It should have got rid of the Provincial Growth Fund. It should not have introduced new corporate welfare funds. It should have scrapped the disastrous KiwiBuild. It should have announced increases to the age of eligibility for superannuation in line with increasing life expectancy.
It should have announced serious Resource Management Act reform so that people can afford to build houses.
With all of that, we could have cut taxes by billions. We could have had a top tax rate of 25 cents in the dollar. We could have had a company tax rate the same. That would have sent an unmistakable signal: New Zealand wants to be an aspirational society where you keep more of your next dollar.
The formula is not complicated:
Reduce wasteful spending.
Improve the quality of regulation.
Cut taxes so that people keep more of their next dollar.
This could have been the Budget of an aspirational, achieving society where you get better off by working, saving and investing rather than voting Labour.
Unfortunately, it is another Budget that continues the tradition of Helen Clark, John Key, and Bill English. Ignore the serious problems beneath the surface and try to paper over the cracks with more money.
What a missed opportunity. What a reason to have more ACT MPs in Parliament.