Introductory comments

Most of us are familiar with the phrase that a week is a long time in politics.

So much happens in even one day in Parliament, that it’s easy to get caught up in all that comes with it. Today I will share what really matters to me amongst all of that.

I will also share with you some of the economic and political philosophy that I bring to this role, and to highlight what I see as the big priorities and challenges ahead of us.

I have been the Labour finance spokesperson for precisely 91 days – but that’s not to suggest I have been thrown in the deep end.

During my first term in Parliament, I served as the Economic Development and Revenue Minister, and had Associate roles in Finance and Cyclone Recovery alongside Grant Robertson. Prior to that I was chair of the Finance and Expenditure Select Committee.

I have advised and studied Finance Ministers and Revenue Ministers for many years.

So while the technical role of Finance spokesperson is as familiar as the back of my hand, my new task is the engagement and communication, the delivery and leadership responsibilities that go with that.

This speech is one example of that, and I appreciate the opportunity to speak to you to share my thinking.

Grant Robertson left big shoes to fill. I will be doing that, and in heels for an added degree of difficulty!

Personal story

I look at economic policy as being fundamentally about people, and that will shape my approach in this role. So too do the personal hardships I have experienced throughout my life.

My story is one of a typical Pacific migrant family. My parents came to New Zealand, the land of milk and honey so that me and my siblings could have a better life and better education.

What they couldn’t plan for was my mum being diagnosed with cancer a few years later. My mother passed away when I was four, she was only 35. We buried her on my fifth birthday. My father was a widower at the age of 40 with four kids under the age of 11.

He raised us while on the Domestic Purposes Benefit until I was old enough to go to college and then he retrained as a social worker. It was not uncommon to have bare cupboards in our house, but Dad did his best to ensure we thrived with the little that we had.

I am perhaps the black sheep of the family. Two of my siblings followed in his footsteps and became social workers where as I effectively, went the other way.

A couple of years of working for an insurance company in the areas of fire and general, and commercial insurance, led me to a genuine like of contract law so when my insurance job shifted to Wellington, I stayed in Auckland and went to university to study law.

But as I’ve come to learn life isn’t linear, and I fell pregnant in my second year of law school.

My now husband and I made a conscious decision at that time that I would continue my studies as it was an investment in our family’s future.

Five and half years later as I graduated with both a Bachelor of Laws and Arts, we had had four children and I was pregnant with number five.

We’ve since added three more to that, but the shop is definitely shut.

I had a choice of joining a large law firm or taking on a full-time job with Inland Revenue in their national office. We chose certainty and moved to Wellington just over 15 years ago to begin my career in tax with the IRD.

Through my career I have advised three revenue ministers of both the blue and red variety, advised on small business, fisheries and firearms policy.

I know too much about how interest and penalties apply in the Tax Administration Act, and the various forms of land taxation in the Income Tax Act.

Even dealing with obscure pieces of legislation like how the non-resident withholding tax regime applies to securities, and for my sins provided determinations on how the Commissioner of Inland Revenue would apply an accelerated rate of depreciation for some forms of commercial buildings.

In the world of tax, like business and finance, certainty is key – unintended consequences and the incidence of where the burden falls, all follow closely behind.

It is with this considered approach that I tackle all problems.

Economic and political values

I share much in common with Sir Michael Cullen’s economic and political values.

Like Sir Michael, I agree wealth should not be despised.

In fact, it is a common aspiration for all New Zealanders to seek to be better off, to be more financially comfortable, to not have to worry when the bills arrive.

I do not have disdain for wealth creation – I want people to create wealth, but I also want it to be more widely shared, to help tackle poverty, and reduce the inequality gap.

Labour will always be the party that seeks change for the betterment of every New Zealander. This aligns with my values.

In my role as Labour’s Finance spokesperson, I will be focused on some particular areas of policy:

• Costs for households. Not just right now in a cost of living crisis, but ongoing, good decisions that feed, clothe and home our children.
• A level playing field for small business. Too often governments favour the large end of town at their expense.
• Climate change and adaptation. Any serious finance spokesperson or Minister must have this on their list. It is inevitable and will cost our country far more in the future if we don’t invest responsibly today.
• Infrastructure. It’s much more than roads. Our country must have considered and long-term investment, but also much better planning. Hospitals, schools and basic services like clean drinking water should never be dropped in favour of more palatable political promises. Infrastructure also includes human capital, that is the skills, jobs and training that help people to thrive and help the economy to grow.

As Labour works with people like you to redevelop our policies, economic theory and application is important, but I will also be drawing on all my experience of real-world challenges.

That experience comes from sitting around three different kind of tables – the Kitchen Table, the Boardroom Table, and the Cabinet Table.

• Kitchen table economics is the sort practiced by every young family, mine included.

These were the early years when my husband and I fired up our laptops at 10 o’clock at night when the kids were in bed, to do the household budget, complete uni assignments and do the small business paperwork that went with being an independent contractor. You have my word that compliance costs and provisional tax policy for SMEs is something that Labour will look at carefully;

• Boardroom table economics, the knowledge I gained in the first industry I worked in - the insurance sector. That the business sector was important as it kept people in employment.

This was complemented by my career as a tax lawyer working alongside some of the finest minds at IRD, the Treasury and the ‘big four’ accountancy and professional services firms;

• Cabinet table economics, where the interplay between fiscal policy and monetary policy is ever present. As I sat around the Cabinet table, every week ministers were aware of all the levers and possibilities under the Public Finance Act and the Public Service Act. These disciplines focus on government debt, the operating balance, expenses, revenue, and net worth. For example, every Cabinet of every government must ensure its decisions on tax reflect concepts of fairness, stability and predictability, and that decisions on spending must take account of future generations.

I will bring a smart-headed and kind-hearted approach to this role. After all, I needed those strengths as we raised eight children!

In politics, as in economics, I am pragmatic and not ideologically fixated.

Current Government

I am not convinced the present Finance Minister has yet learned either the lessons of history or the obligations of public finance management, despite being surrounded by some of the best public servants in the business.

I am not convinced her much vaunted tax cuts meet the public finance tests of fairness or stability.

They certainly do not meet the four tests for tax cuts as first espoused by Sir Michael Cullen:

• that tax cuts must not require borrowing;
• services should not be cut to fund them;
• tax cuts should not exacerbate inflationary pressures; and
• tax cuts should not lead to greater inequalities.

We can look to history for the warnings and precedents, and we can look to future trends for guidance.

The history of National Finance Ministers’ first budgets is instructive. Will the current minister go down the Ruth Richardson route or take the Bill English bypass?

The 4,500 public servants who have been laid off brutally by this government will have a view no doubt.

The current Government doesn’t seem to understand what the public service does. A strong public service delivers services for all New Zealanders. A strong public service supports the private sector.

I’m talking about teachers, nurses, police, the people who answer 111 calls, staff at IRD who answer queries about tax returns, policy advisors who work their guts out providing advice for Ministers, DOC rangers, hut wardens, biosecurity officers who keep our borders safe. I could go on, but you get the gist.

In Government we knew that there were efficiencies to be made to the public service post our COVID-19 response, and a pathway back to black. That work was underway under Grant Robertson.

He had already asked departments to find two percent savings which is a sensible first sweep. These current cuts go too deep, too fast and we are seeing the repercussions already.

We are feeling it right here and right now in our region with economic activity slowing down. I’ve even heard of retailers in the Wairarapa and Kāpiti Coast laying off staff and cutting hours to keep the lights on, so the impact of the cuts is spreading far wider than just the Wellington CBD.

What you will see on Budget Day are big numbers.

But I ask you to be aware of the smoke and mirrors.

Is it really a meaningful budget increase or just what was set aside by the previous Labour Government bundled together to make it look big, plus a little bit more that doesn’t even meet inflation?

You will also likely to see the goal posts shift to make it appear as if the Government is making things better. But like we’ve seen in previous National-led governments, yes the housing wait list may have come down but more people were sleeping in cars, less homes were being built, kids were learning in mouldy, damp classrooms, gyms and hallways, and sewerage was running the down the walls of hospitals.

The devil will be in the detail, which will come out in the weeks after the Budget, and our Labour team will be ensuring the Government is held to account for the choices they make.

Looking ahead – intergenerational view

I mentioned a moment ago that as well as historical precedent for first budgets, we also have guidance as to future trends, in particular demographic trends.

The Wellbeing approach, with evidential backup from the Living Standards Framework, is well articulated by the economic historians and principal advisors who support the Treasury.

That sort of inter-generational thinking has so far been missing from the current government’s economic programme.

The choices they are making will leave deep economic scars which will require careful treatment when we come back into Government.

The New Zealand Super Fund is perhaps the most deliberate intergenerational transfer of our time: $25 billion put aside over most of the last 20 years into a fund now worth around $74 billion, to improve the ability of future governments to pay for superannuation and reduce the tax burden on future generations.

How will we be viewed in 20 years? We can’t assume future generations will be better off than current one. Will we contribute to a growing divide between young and old?

How do we achieve intergenerational equity, as we stare down the barrel of an aging population, climate change, and infrastructure shortfalls.

Cyclone Gabrielle and the Auckland Anniversary floods exposed the threat. Treasury estimated the total asset damage between $9 billion and $14.5 billion, on top of the devastating human costs.

These events – including droughts hitting our farming sector - will get more frequent and extreme. If climate catastrophes trigger irreversible changes, future generations may not enjoy the standard of living, or wealth, that we have.

The Treasury estimates extreme weather events could add around four percent of net debt to GDP over the next 40 years.

It’s not just Budget 2024 that will define the economic credibility of this government, it’s also their response to these intergenerational challenges.

As an eternal optimist, I want to encourage those interested in the future of our economy to embrace a more sophisticated analysis of the challenges facing our country.

They are inter-generational.

This is what Labour’s Wellbeing Budgets aimed to address.

I have been clear that some of the current debates on very narrow aspects of tax policy are actually missing the point.

Revenue and tax bases are only part of the issue, and every decision requires trade-offs.

One policy change by itself will not resolve our long-term challenges and we must look at all the levers at our disposal.

With Sir Michael’s words ringing in my ears - this is not an eat the rich moment.

I do not have a juicy soundbite on wealth tax or a capital gains tax.

I will focus on four foundations or economic priorities:

• cost of living support;
• a level playing field for small and medium businesses, not preferential treatment for those businesses with the flashest lobbyists;
• long-term economic planning that endures beyond one budget cycle or electoral cycle; and
• infrastructure investment that lifts business confidence.

They will guide the choices we make when Labour comes back into Government.

Thank you.

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