Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Business Roundtable Questions Treasury on Spending Cap Bill

Business Roundtable Questions ‘Strange’ Treasury Advice re Spending Cap Bill and Proposes Strengthening Measures

The Treasury’s advice to the government on the Spending Cap (People’s Veto) Bill constitutes an abandonment of its duty to advise and an inappropriate political judgment, according to a submission on the Bill released today by the New Zealand Business Roundtable. The Bill would, in essence, limit any increase in Crown spending to the annual rate of inflation and population growth, and require a referendum to approve any increases beyond that.

The submission – which assesses the Bill in the context of the big jump in government spending between 2004 and 2008, and analyses Treasury’s reasons in its Regulatory Impact Statement (RIS) for its opposition to the Bill – is strongly supportive of the Bill. It argues that by legislating a spending cap, the government would demonstrate a higher commitment to keeping to its spending plans, which currently lie within the proposed cap, and would raise private sector investor confidence that spending would be similarly restrained in future

The submission also proposes a number of additional measures and complementary arrangements to strengthen and support the Bill.

Acting Business Roundtable executive director Bryce Wilkinson said that had the Bill been in place since 2004 New Zealand would be in much better shape today fiscally and in terms of international competitiveness and external debt.

“Treasury’s RIS on the Bill acknowledges this and makes a good, positive case for the bill and demonstrates that the loss of spending discipline, particularly between 2005 and 2008, was a prime cause of New Zealand's current fiscal problems.

“Strangely though, it goes on to oppose the Bill, citing two reasons: first, that legislated constraints on government could lead to perverse outcomes when governments seek to circumvent them; and second that the Bill would not be effective if it is "likely to be overturned, shortly after its introduction, because it lacked widespread and enduring political support". It then puts forward as an alternative an easily avoided self-nominated rule that entirely lacks credibility.

“It is worrying, to say the least, to see a treasury advising its minister against a measure that its own analysis demonstrates has the potential to provide significant net economic benefits, and even more concerning to see it propose an alternative that could not be expected to prevent a future spending blowout.

“Of deepest concern is Treasury’s abandonment of its duty to advise and its decision to make a political judgment on the matter. It is the minister’s job to assess the politics of the issue, to consider how the debate might be carried and won, and whether it is worth the battle. However the Treasury seems to be saying that any measure that is likely to be opposed in the short term by opposition parties does not merit a supporting Treasury recommendation”, Dr Wilkinson said.

Dr Wilkinson said the Business Roundtable’s submission argues that the credibility of future spending constraints would be further enhanced by measures such as: capping tax revenues per capita and returning excess revenues to taxpayers; a requirement for a supra-majority of voters to approve increases; a ratchet mechanism for reducing the spending base from its existing inflated level; and a referendum requirement for new taxes.

The submission also recommends complementary measures to increase the constraints on alternatives to ill-justified spending, including the Regulatory Standards Bill which would make it harder to get around a spending cap through regulatory means, and better arrangements for vetting capital spending, making it harder to replace poor quality operational spending with poor quality capital spending.

The Spending Cap (People’s Veto) Bill is currently open for public submissions to the finance and expenditure select committee.

The Bill had its origin in the 2004 Business Roundtable report Restraining Leviathan.

The submission can be read here


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Why Welfare Reform Has No Champions In Parliament

Ever since Victorian times, the unemployed have been a problem for those more fortunate, wealthy and powerful. Down the ages, society has been torn between providing for them as victims of misfortune, or dealing to them as the shiftless agents of their own condition. Either way, the poor are commonly regarded as The Other – as a group of outsiders gathered pitifully, reproachfully, or (depending on your POV) threateningly at the gates of polite society.... More>>


National: "Todd Muller Announces Shape Of Next Government"

National Party Leader Todd Muller has announced the line-up of the next Government. “New Zealand is facing perhaps the toughest time that almost anyone alive can remember. “We are borrowing tens of billions of dollars to get us through this crisis. There ... More>>


Lockdown Rules: Timeline For Moving To Level 1 Needed

The BusinessNZ Network is calling for more clarity about the conditions under which businesses can move to Covid level 1. The network is concerned about large numbers of businesses that are at risk of closure if restrictions continue at the current ... More>>

Gordon Campbell: On National’s Day Of Reckoning

Congratulations. You are one of the 55 members of the National caucus being called together tomorrow to choose who will lead you to either (a) catastrophic or (b) honourable defeat on September 19, thereby saving some (but not all) of the jobs currently on the line. Good luck. Your decision process starts NOW... More>>


Budget 2020: Jobs Budget To Get Economy Moving Again

Investments to both save and create jobs in Budget 2020 mean unemployment can be back to pre COVID-19 levels within two years and could see the economy growing again as early as next year. More>>


Covid-19 Response: Law Setting Up Legal Framework For Covid-19 Alert Level 2 Passes

The law establishing a legal framework for the response to Covid-19 has passed its final reading and will become law in time for the move to Alert Level 2 tonight.
This is a bespoke Act designed specifically to stop the spread of COVID-19... More>>


ACT: Parliament Quits MP Cut Pay Debate To Go Home Early

“In an outrageous move, Parliament has today passed voluntary MP pay cuts and avoided any debate over whether to make them compulsory and transparent”, says ACT Leader David Seymour.... More>>


Trans-Tasman Bubble: PMs Jacinda And Morrison Announce Plans

Australia and New Zealand are committed to introducing a trans-Tasman COVID-safe travel zone as soon as it is safe to do so, Prime Minister Rt Hon Jacinda Ardern and Prime Minister the Hon Scott Morrison MP have announced... More>>


Government: New Zealand Joins Global Search For COVID-19 Vaccine

Foreign Affairs Minister Winston Peters, Research, Science and Innovation Minister Megan Woods, and Health Minister David Clark today announced a COVID-19 vaccine strategy, which will enable New Zealand scientists to contribute to global research efforts ... More>>


The Dig: Steady State Economics: We’ve Got Some (systems) Thinking To Do

In this time of impending economic and ecological crises, we urgently need to aim for a sustainable or ‘steady state’ economy. In order to get there, we will need to adopt a ‘systems-thinking’ outlook taking into account the interconnections of our complex world.

In short, we’ve got some systems thinking to do... More>>


Election 2020: Parties Get Into gear

The Green Party is pleased to reveal its candidate list for the upcoming election. With a mix of familiar faces and fresh new talent, this exceptional group of candidates are ready to lead the Greens back into Government. Using the most democratic list ... More>>


Insight Into Regenerative Agriculture In New Zealand

There is a fast growing movement in New Zealand that has been happening out in paddocks, fields, gardens and hill country across the nation. It is a movement that holds the promise to reshape our productive land use industries towards systems that work with the natural environment to regenerate the land. The movement is that of regenerative agriculture. More>>


Covid-19: Tracer App Released To Support Contact Tracing

The Ministry of Health has today formally released the NZ COVID Tracer app to support contact tracing in New Zealand. Kiwis who download the app will create a digital diary of the places they visit by scanning QR codes displayed at the entrances to ... More>>


Gordon Campbell: On The Dodgy Politics Of Easing Level 3

As countries around the world tentatively emerge from lockdown, a lot of political noise is being generated by politically-driven arguments that (a) the safeguards need to be lifted faster and (b) the lockdown itself was an over-reaction likely to leave lasting economic damage in its wake... More>>


Govt: Concern At Introduction Of National Security Legislation For Hong Kong
Foreign Affairs Minister Winston Peters says the New Zealand Government has reacted with concern at the introduction of legislation in China’s National People’s Congress relating to national security in Hong Kong... More>>






InfoPages News Channels