Free Press

ACT’s regular bulletin
A Purple Budget
Red and blue mix to make purple, and this budget is a mixture of Labour and National policy, mainly Labour. Nikita Khrushchev said ‘your grandchildren will live under communism.’ Michael Cullen didn’t have to wait two generations, only three terms of National Government. The expansion of his Working For Families Package, once described by John Key as ‘communism by stealth’, was the centerpiece of this budget.

Labour and Greens Beaten at Own Game
Labour and the Greens were snookered. In Parliament, Andrew Little had so little to say that he sat down seventeen minutes into his allocated time. It’s telling that the Greens are voting for parts of the budget in parliament and Labour refused valuable TV time debating it on Saturday morning. How can they top a budget that cuts taxes on low incomes and increases cash hand outs?

The Tax Changes
Free Press has been campaigning for tax threshold adjustments since March 2015. The tax rate will now rise from 10.5 per cent to 17.5 per cent at $22,000 instead of $14,000. The net effect is $420 per year less tax for everyone earning more than $22,000. That is, more or less everyone including superannuitants. The second change is to make the 30 per cent tax rate kick in at $52,000 instead of $48,000, meaning another $500 less tax for everyone earning $52,000 or more.

What ACT Would Have Done
To show how modest these changes are, ACT has prepared an alternative. It would take the $24 billion dollars of surpluses that the Government plans to run over the next four years and let the people who earned it keep it. To find out more about ACT’s package and how much you could save go to www.act.org.nz/tax.

What Was Not Included
The Government pays the Treasury to produce a Long-term Fiscal Outlook every four years, and furnishes a plush office in downtown Auckland for the Retirement Commissioner. Both produce good work but the Government ignores the results. They always tell us that we are transitioning from four taxpayers per Superannuitant to only two, and the age of entitlement to Superannuation must rise to counter that trend.

Fish or Cut Bait?
Given that their work is unheeded, we wonder if the Minister of Finance shouldn’t just cancel these expenditures? ACT would have announced the age of entitlement rising from 2020 instead of 2037, saving taxpayers about $58 billion. If you’re under 40 or care about someone under 40, that’s 58 billion reasons to vote ACT.

What Was Not Included II
There is no doubt a post budget housing announcement to come, but meantime the budget has put fuel on the housing market fire, though an increased accommodation supplement. David Seymour said on budget day that the announcement would be a transfer of wealth from taxpayers to landlords, and it turns out the Government had official advice that pumping more money into a supply constrained market would only push up prices.

What the Budget Should Have Done
ACT has championed sharing half the GST on construction costs with the Council that gave the resource consent. Everybody complains that it’s too difficult to get a resource consent. Just wait until they are getting 7.5 per cent of the construction cost and watch how quickly they give resource consents! More importantly, it would give councils the ability to afford infrastructure. Central government collects $9 for every $1 that councils collect, and we have massive infrastructure shortages wherever there is growth.

What Was Not Included III
President Trump has started a company tax war. He is not interested in cooperating with high tax European jurisdictions, he’s going to take their business and investment by offering lower taxes. New Zealand businesses are already the fourth highest taxed in the OECD, and we are standing still. ACT would have cut corporate welfare ($300 million to the film industry, anyone?) and used the savings to cut the company tax rate to 25 per cent.

The Budget Overall
After eight years of hard slog by taxpayers getting into surplus, the Government has now let it all go. An election year budget so far left in its largesse that the Labour and Green Parties couldn’t bring themselves to debate it or even vote against parts of it. The real issues, productivity, superannuation, housing, and tax were not addressed. A stronger ACT with more seats is needed in the next Parliament to ensure these issues are addressed.

Something Interesting
Some Free Press readers will be old enough to remember Muldoon’s Rise and Fall of Young Turk. Only 42 years late, the Spinoff has an excellent review of the book here. The author observes that even if Muldoon was a bit of a hazardous politician, he at least took the time to lay out his views. David Seymour is releasing his second book in July.

Watch David's speech on Budget here.

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