Simon Bridges - Launch of Economic Discussion Document
Thank you so much for that warm welcome.
I’d like to welcome you all here today, I acknowledge everyone who’s taken the time out of their busy Monday morning to be here.
I’d like to especially thank Baker Tilly Staples Rodway for hosting us today and Managing Director David Searle for the introduction.
I’d also like to acknowledge my team from the National party for joining me today.
It’s appropriate to have a New Zealand wide company that specialises in tax hosting us today. I will outline exactly why tax, or less tax, is so important to us later in this speech.
Why the economy matters
A strong economy means New Zealanders have more in their back pockets to afford the things that matter to them.
Whether that is putting more food in the table or being able to afford nice things for your kids.
A strong economy also means we can invest in the things that matter to New Zealanders.
But a strong economy, first and foremost, needs confident thriving businesses that are willing to invest in new technologies, create more jobs and pay higher wages.
National recognises that Government does not drive the economy.
The economy is driven by all of the people who have good ideas, get up early, work hard, invest their time and money, take risks and try and build opportunities for themselves and others. It’s driven by the people in this room.
New Zealanders need a Government that backs them to compete on the world stage and provides the foundations they need to get on with doing business.
We’ve heard a lot lately about business confidence. Baker Tilly Staples Rodway knows something about this. For the past two years it’s been carrying out its own Business Confidence Survey.
This year it found that 63 per cent of business leaders think the Government is managing the economy poorly, up from 48 per cent last year.
Business confidence has continued to plummet even further, it’s now at the same levels as we were in the depths of the Global Financial Crisis. This means businesses are less likely to invest, hire new staff or lift wages.
According to the Government, it’s all because of global headwinds.
Of course there’s some global uncertainty out there, but it doesn’t explain New Zealand’s economic slowdown to date.
The IMF expects global growth to increase from 3.2 per cent this year to 3.5 per cent next year.
And our terms of trade, which reflects the prices we receive for our exports relative to the prices we pay for our imports, is near historical highs.
New Zealand should be booming.
Instead, we’re in danger of stalling. In just three months since the Reserve Bank’s last Monetary Policy Statement it has revised down its growth forecast for 2020 by half a per cent. That’s equivalent to about $1.5 billion of economic activity lost to New Zealand in just three months.
This Government pulled together the so called Business Advisory Group to help address flailing business confidence.
All it’s resulted in is more working groups, more taxes and more buzz words. It hasn’t resulted in any new policies to revitalise the economy.
The Government’s poor policy making decisions has increases costs on business and created massive uncertainty. This Government has also demonstrated profound levels of incompetence.
The Government seems blind to the impact that its anti-growth policies are having on the economy.
Whether it be the union-friendly industrial laws, higher petrol taxes and a Regional Fuel Tax or the huge slowdown in visa-processing times making it more difficult for businesses to get workers.
It’s no wonder businesses are reluctant to invest and take chances when the Government has introduced almost 300 working groups.
Businesses are crippled with uncertainty.
Whether it be the 18 month prospect of a Capital Gains Tax which scared the life out of small business owners, the threat of so-called ‘Fair Pay Agreements’, more restrictive overseas investment changes or even changes to monetary policy which all have the potential to slow New Zealand down.
They have also made reckless decisions like banning new oil and gas exploration and blocking gold mining in Waihi.
It’s also demonstrated its complete inability to deliver on its promises, most famously with KiwiBuild, but also other more important areas like infrastructure development.
Meanwhile it’s wasted billions on a slush fund for Shane Jones and on Fees Free which has resulted in fewer university students.
We will go into the election with a clear set of economic policies that will restore business confidence and revitalise the economy. I will outlines some of those today.
We are announcing in our Discussion Document fifty commitments or proposals we want to take to the election as well as more than thirty questions we want feedback on.
Since we’re being hosted by a tax accountancy firm, it’s only right I begin with tax.
National supports a broad-base, low-rate tax system. We believe New Zealanders should keep more of what they earn.
We believe the tax system should incentivise New Zealanders into work and encourage productivity and investments.
We have already
committed to indexing tax thresholds to the cost of living,
so Kiwis aren’t taxed more by stealth every year, and we
won’t introduce any new taxes in our first term.
We will also repeal the Regional Fuel Tax and not increase petrol excise taxes in our first term.
In our Economic Discussion Document released today we have also asked whether there are some changes to our tax system that could be made.
We have asked whether we should allow savers to deduct inflation from their interest income to help address New Zealand’s low level of private savings and reduce the high effective tax rates on savings.
New Zealand has one of the highest company tax rates in the OECD at 28 per cent and we collect the fourth largest share of tax in the OECD from companies.
Tax is one of the single largest costs for businesses and can be the difference between a business surviving or not. So we’re asking questions about whether the company tax rate is becoming uncompetitive.
We’re asking New Zealanders whether we should introduce accelerated depreciation for business assets.
We’ll also consider whether there’s merit in targeted tax relief for small businesses, like exists in Australia.
Borrow and spend
We all know you can only keep taxes low and affordable when you spend responsibly.
As our discussion document firmly lays out, National believes that governments should not be measured by how much money they spend but on the outcomes they achieve.
We will re-introduce targets in health, education and law and order that this Government scrapped. We will do that because they have a proven track record of delivering better outcomes for New Zealand families.
We will also continue the Social Investment Approach to government spending, which this Government has largely abandoned.
We will consider amending the Public Finance Act to improve accountability and reporting of results of all government spending.
And we will ensure the Treasury has a greater focus on providing sound advice on the effectiveness of government spending, identifying wasteful spending and driving higher productivity in the public sector.
By reining in wasteful spending and focusing on targeted, measurable outcomes we can afford tax relief for hardworking New Zealanders.
We will also aim to reduce our overall debt burden when the economy is growing so there is capacity to borrow when times are tough.
It’s pretty simple: National will be good economic managers.
It’s frustrating to me to watch what this Government is doing, or not doing around infrastructure.
It’s not just physically slowing us down, it’s slowing down the entire economy.
The Government’s failure to deliver more, high quality infrastructure is slowing the economy and contributed to the Reserve Bank’s historic decision to cut the Official Cash Rate to just one per cent.
In this year’s budget the Government had to trim back its forecast of capital spending by $3.3 billion over the next five years.
This Government has stopped or postponed a dozen roading projects, which were ready to get underway, and replaced them with projects that aren’t ready to go and won’t be for a long time yet.
The Government has admitted it’s not going to start its slow tram down Dominion Road this term. Another failure to deliver.
The failure to deliver a high quality infrastructure plan has destroyed confidence in the construction sector and contributed to New Zealand’s slowing economy.
New Zealand is now closer than ever before to having negative interest rates and unconventional, unreliable monetary policy like quantitative easing, otherwise known as money printing. This is partly because of the infrastructure deficit created by this Government.
National is considering new approaches to infrastructure funding and procurement ranging from commercial revenue schemes, partnerships with the private sector and capital injections from general government spending.
We are also open to exploring pricing mechanisms that will help to efficiently manage the flow of traffic and is revenue neutral.
And as we have already committed, we will overhaul the RMA to make it more efficient and predictable. This will mean that rules are clear and well defined, outcomes adequately balance costs and benefits and timeframes are short and consistent.
In short, National will revive the economy by having a plan for growth that would see confidence bounce back and the economy gain the strength it’s lost under this Government.
Small business package
Today I am also announcing that a National Government will require all government departments and government agencies to pay their contractors on time and within 30 days.
Getting paid on time is a big issue for New Zealand small business owners. Long delays in payments can inhibit their ability to invest and expand. In the past year, only half of all small businesses were cash flow positive in any given month.
National wants to find ways to ease the stress for small business owners and ensure healthier cash flows. We believe the Government should lead by example, instead of punishing others into compliance.
We will also establish a ‘Small Business Payments Guarantee.’ This will be a voluntary initiative committing large New Zealand businesses and not-for-profits to ensure New Zealand small businesses are paid on time and within 30 days.
New Zealand’s economy is driven by hardworking small business owners. Every government should do what it can to reduce costs and uncertainty so that our small businesses have the confidence to take risks, invest, hire new staff and lift wages.
National has committed to implementing these changes in our first hundred days in Government.
National understands the effect that excessive regulations can have on competitiveness and productivity. We want to encourage an environment where businesses can thrive and don’t get caught up in red tape.
So we will light a regulations bonfire.
A National Government will repeal 100 regulations in our first six months in Government and we’ll eliminate two old regulations for every new one we introduce.
We need to regularly test whether regulations are still needed, remove barriers to new businesses entering markets and streamline unnecessarily slow and expensive bureaucratic procedures.
That’s why we’ll require future governments and regulatory agencies to undertake at least one regulatory simplification process every three years that looks at reducing the complexity and number of regulations.
Over a number of years New Zealand has developed good processes to encourage discipline around the spending of taxpayer money. However, the current Government has lacked that discipline.
When government imposes regulatory costs on New Zealanders it should be held to account.
National understands the importance of moving quickly to introduce new regulations for new technologies to get established, and sometimes to disrupt old patterns. The previous National Government worked quickly to establish a regulatory regime for New Zealand’s growing space industry.
The document we’re releasing today is part of the biggest policy development process by an Opposition ever.
The current Government has no plan to grow the economy and is failing to deliver for New Zealanders.
I hope you all take the chance to submit your thoughts to us.
We’re doing the work now in Opposition so we’re ready to hit the ground running in 2020.
I’d now like to hand over to my colleague Paul Goldsmith, our spokesperson for Finance to add some more detail to National’s economic policies.