By David Hargeaves and Jenée Tibshraeny
Finance Minister Steven Joyce is keeping the door open to possible tax cuts, confirming in his first major speech as Finance Minister that tax is one of four key areas of consideration in his first Budget to be delivered on May 25.
However, on tax, he has ruled out applying a regional fuel tax in Auckland - something that has already disappointed the Auckland Mayor Phil Goff.
"...We remain committed to reducing the tax burden and in particular the impact of marginal tax rates on lower and middle income earners, when we have the room to do so," Joyce said in a speech to Massey University and the Auckland Chamber of Commerce."
Noting the cost of the Kaikoura earthquakes, he said it was too early to tell whether tax cuts would be delivered in this Budget.
"It is very important to remember that the money the Government spends comes from hard working Kiwi families."
Joyce said the other three areas of consideration for the Budget were:
- First, delivering better public services for a growing country – providing all New Zealanders with the opportunity to lead successful independent lives.
- Second, building the infrastructure we need in growing a modern economy.
- Third, "we need to keep paying down debt as a percentage of GDP. We’ve set a target of reducing net debt to around 20 per cent of GDP by 2020. That’s to make sure that we can manage any shocks that may come along in the future".
Joyce commented on the strength of the Government's financial position.
He said surpluses were predicted to rise to $5.4 billion by 2018/19 and, "provided they come to pass, that provides options for us as a country".
"It’s important though, that those options are considered carefully. As Finance Minister, I believe it is very important to focus on achieving value for taxpayers’ money in every investment we make on their behalf."
Auckland roads
Joyce had plenty to say about Auckland's infrastructure growing pains, but in so doing has immediately put himself at odds with Auckland's new Mayor and former Labour Cabinet Minister Goff.
"So beyond the current building programme we are going to have to look at demand management to reduce the reliance on the road corridors, in favour of better use of buses, trains and ferries," Joyce said.
He said the Government was developing a work programme to look at 'demand management' tools' including electronic road tolling in the medium to long term, or with the next five to 10 years.
"But to be clear, we see this as a way to make the roading system work better – and not as a revenue raising exercise."
Joyce said he would expect that any "road pricing initiative" on existing motorways and highways would be as a replacement for petrol taxes and road user charges not in addition to them.
Asked in a media briefing to expand on this, he said, “All the design features are yet to be discussed.”
Joyce said the Government wasn’t considering electronic tolling on existing roads in other parts of the country with traffic problems at this stage.
"And second, I stress that we are not interested in introducing a regional fuel tax – Simon Bridges and I have reiterated to Auckland Council this morning that we do not see regional fuel taxes as part of the Government’s mix for transport in Auckland because they are administratively difficult, prone to leakage and cost-spreading, and blur the accountabilities between central and local government.
"But we are keen to have a more detailed discussion about demand management tools, and explore further options for longer term funding for new infrastructure, including the use of private finance for certain projects, such as Penlink for example."
Mayor 'disappointed'
Goff expressed disappointment at the Government’s decision "despite Auckland’s worsening traffic congestion".
“While the Government has the power to rule out a fuel tax, it has a duty to the people of Auckland to come back to Council with alternative solutions. Aucklanders are fed up with sitting in their cars on the motorway for hours at a time. It’s lost time for them and lost productivity for the city,” Goff said.
“People want the Government to work with Council to find an agreed solution. In my view a regional fuel tax is a fair, effective and efficient way of helping close the current $400m a year gap in transport funding.”
The Mayor said that putting the burden of resolving the transport funding deficit onto ratepayers would result in a rates increase of about 16% next year.
“I don’t intend to do that. Ratepayers have been shouldering the burden for too long. We must find new revenue streams to fund our much-needed housing and transport infrastructure rather than continuing to load the cost of growth on ratepayers.
“The Auckland Transport Alignment Project was a good start in getting the city and Government working together. However it doesn’t go far enough in solving Auckland’s congestion and already faces a funding gap of $4 billion over 10 years. We need a solution now and can’t afford to wait another 4-6 years to deal with this problem.
“I’m committed to working with the Government to develop new transport funding measures. If they remain adamantly opposed to a regional fuel tax, they need to urgently come up with another workable and sustainable solution,” he said.
'Good progress on housing'
Moving on to other matters in his speech, Joyce said the Government was "now making good progress" on housing supply.
"In both Auckland and across New Zealand we are in our biggest ever construction boom, and housing growth is a very big part of that story.
However Joyce reiterated earlier comments that local councils weren’t making the most of the $1 billion the Government has committed to its Housing Infrastructure Fund.
“Eligible councils have so far given us indicative proposals for use of the fund amounting to $1.79 billion for infrastructure. Depending on which final proposals are supported, the Fund could potentially support about 50,000 new dwellings.
“At this stage however only a small number of the 17 proposals received through the expressions of interest phase would result in projects being advanced earlier than previously planned by the councils.
“We want to see more ambitious projects that will have a more positive impact on housing supply over the next five years.”
Joyce said a number of the applications received wouldn’t deliver “enough bang for our buck”.
“We want to bring stuff forward.”
No change to NZ Super
Joyce also confirmed the Government hasn’t changed its stance on keeping the age of eligibility for New Zealand Superannuation at 65.
“We said we’d have another look at it. We’re not anticipating great changes, so if you’re really bullish on it, you’ll be disappointed… But certainly, Prime Minister English has not given the same commitment that John Key did [that he would resign if the age was raised].
“We’re certainly prepared to have a look at it at the margins.”
Joyce said the cost of Super as a portion of GDP isn’t as high as it was projected to be 15 years ago, because the economy has grown more than expected and the participation rate in the workforce - particularly among those over 65 - is greater than expected.
Furthermore: “The current long term fiscal projection is that New Zealand’s cost of Super in 2060 will still be a smaller proportion of our economy than it is on average for OECD countries today.”
Joyce said the bigger challenge we face as our population ages is rising healthcare costs.
59 Comments
More likely Auckland is subsidising roads in other areas of NZ. My rough calculations indicate the Auckland Region got 35% of the NZTA budget and has 33% of the NZ population. However, Auckland region has 36% of national tax take so it is likely Auckland receives less in NZTA funding based on a pro rata allocation of tax take by region.
See NZTA funding by region:
http://www.nzta.govt.nz/assets/userfiles/transport-data/FundAllActiviti…
See Auckland/NZ population:
http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports…
See Auckland Region tax take:
http://www.ird.govt.nz/resources/2/0/20e0792e-d7c5-479e-9de5-bf8b281763…
If you can show facts to show Auckland received in excess of a reasonable allocation basis for road funding please do.
the 80% GDP figure sounds erroneous if Auckland pays 36% of taxes, if they pay 36% of tax then they should get 36% of of govt spend more or less. Also Auckland infrastructure has been under built for decades and they are catching up. Plus over 50% of growth in nz is in akl so akl also has to pay for a swag of new infrastucture for this growth. And National is doing little to pay the governments share
The real story is that AKL has grown by around 120,000 people in the last 3-4 years and still we have record immigration and growth it can't cope with. Akl would be better off if had no population growth at all.
You are talking out of your **** again Murray86. Auckland as at March 2015 was 36.6% of NZ GDP.
See:
http://www.stats.govt.nz/~/media/Statistics/Browse%20for%20stats/Region…
Not wanting to go too off topic, but if look look at just one simple example in Fonterra - they report income and pay tax in Akld but all their income is generated in the rest of NZ. I don't know how we could even calculate the % of where income is generated but 36% GDP is based on company HQ only.
Information indicates it is based on actual production in the area.
See: http://www.stats.govt.nz/browse_for_stats/economic_indicators/NationalA…
Furthermore, in respect of Fonterra you would expect for both GDP and taxation purposes the value of the farms' production would be referrable (for GDP purposes) and taxable (by virtue of their shares in Fonterra commensurate to their milk production) to the farmer.
Perhaps i misunderstood the articles, or incorrectly use the term GDP, but it was clearly stated that 80% of NZs wealth is generated in places that are not Auckland. This means that AK does not deliver to the rest of the country. On top of that I leved there in the 80s and in that time and for some time after the AK politicians were in denial over the transport problems. Indeed Sir Dove-Meyer Robinson was ultimately forced out of his mayoralty because he kept bring it up. Thus the issue has never been addressed until crisis point, and now they are crying woe is me it is too expensive and we cannot afford it!
I now live in the regions, where I have consistently paind significantly higher rates than I paid in AK, and this town has never been able to go the Government for a handout because of the traffic problems. they have always had to pay their way (size will be the primary factor here). So yes I do resent AK expecting the rest of the country to support them.
@Murray86 asserted Auckland received more than its fair share of NZTA funding without any facts to support that assertion. On my cursory digging it appeared Auckland recieved NZTA funding commensurate to both its population and regional tax take. This seemed fair so unless Murray86 can counter my response he has been proven to be just another uneducated JAFA basher (a bit like you really).
Joyce's comments are just dumb ass, lazy policy -road tolls to be called "demand management" will take at least 5 years to implement...which at $400M p.a. leaves an imediate $2Billion shortfall. they will be expensive to setup, run and will only return a percentage of the revenue where it is intended, plus drive traffic off tolled roads to clog up local roads.
Additional fuel tax can be implemented immediately and is the fairest way to charge users proportional to their road use, plus it will reduce pollution and carbon emissions by discouraging fuel consumption and encourage public transport use.
But do you really expect anything but dumb ass, lazy, inefficient and inadequate policy from Joyce and National? Housing, immigration settings, carbon emissions, environmental policy, obesity, Christchurch rebuild...the list goes on and on and on.
Any proponents of taxing road users in Auckland should be put back in their hole without further ado.
Just what do they think it will do to the costs of doing business here?
Hundreds of small business owners, tradies , couriers , small medium and heavy commercial vehicles delivering everything from food to building materials are going to get whacked with a tax that will hit consumers hard when its passed through .
Huh , more tax targeting just Aucklanders?
This will end up being a city like Monaco , for the super-rich only , where ordinary folk cannot afford to live or work .
Suits me , but pity those in the middle class like policemen and women , teachers, nurses , fireman, librarians, shop assistants , public servants and the like
This government of boomers is coupled to a two faced council who work hand in fist to screw us over.
Labour Party have an official policy (announced last year) to do away with Rural Urban Boundaries and allow land for Auckland to expand. It is a brilliant policy and it would do most of the heavy lifting on ending the housing crisis. But there is just one tiny flaw...
...they don't need to be in government to implement it. Len Brown and Phil Goff are Labour Party hacks who enforce the strictest (most boomer friendly) Rural Urban Boundary ever. We must infer Labour have no intention of implementing good housing policy, because we elected them to Auckland mayoralty 3 times and they did not do it.
But don't worry, Phil Goff wants to argue with the government about which regressive tax to implement.
It's very important to remember that money earned by hard working kiwi families is flowing rapidly out of New Zealand across the ditch to Australian banks. Like a black hole hollowing out a planet, where are your policies to circumnavigate New Zealand following in the footsteps of Greece? Seriously, get rid of this guy!
What is meant by Regional? Fuel Tax on those from the mouth of the Kaipara Harbour to the mouth of the Waikato River plus the Islands of the Hauraki Gulf? State Highway 1 - the only motorway into Auckland from the South until reaching Manukau. Pukekohe = 100km round trip into and out of the CBD. Meanwhile the ratepayers prop up all Public Transport while Auckland Council spends the majority of rates on CBD infrastructure, and feel good social programmes. The trains do not go where people need to get to for work etc so largely a presumption that the world wants to go to the CBD. Wrong! Something like $2.5 billion pa lost in production for Companies as their trucks sit idling on the motorways going nowhere. Pukekohe commuters allowing 2 hours one way to get to Ellerslie/Newmarket etc. Perfect comment on local page re planned housing today - "10,000 is a massive understatement, that's 10k just in pokeno, 2k in Wesley, 25k from pukekohe, patamahoe, tuakau and waiuku all within the next 5-10". Yep guess that one extra lane each way between Papakura and Mill Road is really going to make a difference - NOT!
Couple with that the fact that PT pricing has arbitrary farebox recovery percentage target (based on Steven Joyce's imagination, not reality), meaning it's cheaper to drive, and you just have to wonder what these muppets are thinking.
Ratepayers are getting fleeced to pay for PT expansion, but PT is so damn expensive patronage is never going to be in adequate numbers, setting Auckland up for a massive rollback of PT in the future when the political environment changes.
Everything is half hearted, worst of both worlds.
I actually agree that super shouldn't be raised. We should be improving our standards of living, not cutting back, Essentially it is like giving everyone over that age a universal wage, and potentially it is something that could be rolled out to everyone.To pay for it, you put taxes up on earnings over certain bands. Plus NZ productivity has improved. The big problem in NZ is private debt, and people buying and selling overpriced sheds. Once demand drops, and prices fall back, the seas will go out.
On the other hand, that super component of social welfare also means that accumulated wealth of oldies is kept OUT of the economy, locked inside expensive properties and other assets.
If young people are being told they have to pay their own pension via Kiwisaver etc. - and can't have affordable home ownership, to boot - why would we want to keep all that wealth locked up in the palaces of people who were luckier to be born at the right time, by paying them a pension they don't need?
A road toll to solve traffic congestion, I'm blinded by the ingenuity of national policy leaders. All you need to do is have a look across the ditch at Sydney with its first class rail network to understand road tolls have done little to solve traffic congestion there. If road tolls are required, use them as an incentive to drive technological and social change. Off the top of my head, tax non EVs and use the revenue to then subsidise the purchase of EVs. Tax revenue losses at the pump can be substituted by enforcing captial gains on property across a wider time horizon and so on and so forth. Point being, where are the creative innovative policies that will support the social wellbeing of New Zealanders well in to the future?
EVs are not a panacea, may not actually result in a significant reduction in CO2 emissions, as because we do not have a surplus of electricity fossil fuels have to be burned to make the electricity, and the infrastructure, and the batteries etc.
EVs are already grossly overpriced and their manufacturers definitely don't need subsidies.
They would result in a reduction in urban air pollution by a small amount, but not congestion.
EVs are a headline grabbing Green party policy stunt without science behind them, as usual.
over 85% of NZ electricity is renewable and it could be 100%, with all new power coming from renewables. EV's, solar and home batteries are all coming down in price (10% p.a.approx) and are already competitive...EV's and renewables are the future, less pollution as well.
This country burns zero fossil fuels at the moment. 85-90% of energy produced is through renewable sources (hydro, geothermal, wind), the rest by burning natural gas. Go look at MIBEs site for that data. Go read about lithium air batteries and Teslas patent for it or perhaps any of the many other battery advancement technologies on the verge of commercailisation right now by a range of businesses. Search on trade me for Nissan Leaf, you can pick one up for 15-20k, assuming your manhood is still intact at having to drive one. I find facts as opposed to outdated opinions helpful in discussions like this, and look, after all it is 2017. For the record, I've never voted for the Green party and am yet to find a compelling reason to do so.
Many people reach a use by date when it comes to working. For many it is well before 65. People maybe living longer, but that doesn't mean they should and can work longer.
I believe they have worked out that peoples bodies will wear out befor 100, even when in the best health. Some people do live longer, but that don't expect the human life expectancy to increase, as our bodies deteriorate with age.
"we need to keep paying down debt as a percentage of GDP. We’ve set a target of reducing net debt to around 20 per cent of GDP by 2020. That’s to make sure that we can manage any shocks that may come along in the future".
Well we actually haven't paid off any debt under this Government, we are only paying interest on debt.
Bill English and now Joyce want to keep immigration high, raising GDP thus reducing the net debt per cent of GDP.
Key held super age at 65, and that was certainly a part of his popularity .Your dead right Rob - you're in decline physically at that age, and younger people you work with don't want you around forever either. With emerging labour saving technology, we need to figure out who shouldn't be working, as well as help those who should find work. It'd be a good idea to make KiwiSaver compulsory as well though.
Key held super age at 65, and that was certainly a part of his popularity .Your dead right Rob - you're in decline physically at that age, and younger people you work with don't want you around forever either. With emerging labour saving technology, we need to figure out who shouldn't be working, as well as help those who should find work. It'd be a good idea to make KiwiSaver compulsory as well though.
What Joyce is really saying is the government wants to pay the minimum it can get away with in Auckland whilst loading up the city with over half the growth in NZ and grinding it to a halt on the roads and other infrastructure it won't fund. Auckland will become increasingly unlivable so hopefully those that can will leave. A fuel tax is the fairest measure to tax all those driving proportional to how much they drive, incentivises more fuel efficient cars /commercial vehicles and less driving, reduces pollution. Tolls are expensive to measure and collect, and we need solutions yesterday, not 5-10 years. Hopefully Joyce and National will be out in 2017 anyway...you'd be foolish to vote for them if you live in AKL going on Joyce and Englishes comments.
Wow bravo. I guess this is one of the things the government does to stay relevant. First create the problem by allowing mass immigration. This keeps the wages low which is basically subsidizing businesses at the expense of existing NZer's quality of life. Then take more money off from average NZers via tolls, taxes etc to allow for more mass immigration. When will the government actually start working FOR the people of NZ?
It is no coincidence, in my opinion, that suddenly, in this election year, that National are cranking up the "fixes" for want of a better word. I reckon you re bang on, but it will take the bulk of kiwis twigging to what has gone on and it will take absolute confidence that the next government will walk whatever talk they are talking. It is not going to be easy, as this country has little in the way of a plan B to keep the country prospering without a rapidly growing population.
Agreed National has to go, but who can take over this mess?
Labour want to bring in more people to build the houses needed for the more people we have already let flood into NZ. That is an oxymoron. I can't vote for for yet more people.
Our export earnings have dropped and Auckland needs 100 billion dollars spent on infrastructure for the already enlarged population.
Whoever takes over government is inheriting a financial disaster that they will get the blame for.
Meanwhile National is patting themselves on the back because the country has a small surplus after 10 yrs of massive borrowing. The dept is still there and has to get bigger to build infrastructure to get Auckland out of gridlock.
National almost deserve another term so that they are at the helm as the ship goes down, John Key has already bolted. He knows where sinking.
interesting reply from minister clueless yesterday in a roundabout way blaming demand for the problem
Hon Dr NICK SMITH: If you look at history, population varies far more quickly than the construction industry is able to respond, and there have been many periods when there has been a lag in getting the new homes built to support that population.
I think the "what viable opposition" thing is also helped by inept and often biased media.
Think Corin Dann's "alternative fact" that the government has invested huge effort over the last year in cracking the housing crisis (you know, the one they don't admit exists). Think Paddy Gower singing praises of how the government MIGHT build tens of thousands of houses over the next seven years. Recent Herald articles on what a great bloke English is.
Labour and Greens seem to struggle for positive coverage in comparison, yet foreign sources can rate their plans re housing higher than anything the Nats have to offer:
http://www.macrobusiness.com.au/2017/02/nz-labour-throws-gauntlet-housi…
Two key things that Labour and Greens would do actually address current demand side:
- Banning foreign buyers from purchasing established homes; and
- Reducing speculative demand in housing via tax reforms.
I'd also like to see a stamp duty on all foreign purchases...
yes I am sure the council could trim a few million dollars here and there delboy. The problem is Auckland needs 100 Billion dollars spent on infrastructure. Auckland city council did not invite or encourage 100's of thousands of people to come and live there this last few years. Our government allowed that to happen and keep telling us how wonderful it is to be popular.
I'm not sure that any of our National leaders have ever run a successful business, If they had, they would understand that increasing your overheads on borrowed money without increasing productivity means bankruptcy.
Yes the costs are ridiculous,
This the same council that controls Auckland Transport - a faceless pack of bureaucrats who have decided they need to move into the prime high visibility downtown Vodafone viaduct site....despite having no competition and not needing "commercial profile" of any sort.
Interestingly Vodafone are moving out and constructing their own building since the landlord DOUBLED the rent of the building making it uneconomic for one of the worlds largest Telco's.....
But AT see no problem with this and are happy to spend all OUR money on new incredibly expensive offices.
I've also know they are spending a fortune on the interior fit out and not following best practice in the procurement of technology for this site and not following normal tender process to get the best price - its been handwritten for a particular vendor.....
This council and its associated divisions are a runaway train spending our rates money and now want more.
The supercity has delivered nothing it has promised..
Road pricing (aka congestion charging) has been used to great success in Sweden. Basically, instead of paying tax at the pump a person pays per km traveled with certain areas and times set higher. It's actually basic economics: supply and demand determine price. Right now it costs the same to drive on the motorway at 8am on a Monday or 3 am on a public holiday - therefore, we have an inefficient market.
No, I don't think that is true per se. It merely changes the way roads are priced. It doesn't have to be about getting people on to PT. Right now we tax fuel which is a very crude way of determine price as fuel efficiency plays a large role; my little 1.3 Daihatsu goes a long way compared to a 6 litre V8 Holden. However, fuel tax makes no distinction as to the time or location of my driving; my little car could actually contribute more to congestion if I drive into town if the Holden driver only drove modestly. Road pricing, as in other countries, does take into account time and location. It can be priced so that the Gov collects no additional tax although there will be winners and losers as there is now.
The point is they are both regressive taxes falling largely on poor people. If there isn't any intensification (which Auckland blocks with high land costs and abysmal planning) then poor people have to live miles away and have high costs getting to their jobs.
Without intensification a regional fuel tax or a road charging system will just be a tax on poor people that indirectly causes their rent to increase.
At a standstill in traffic.
The average car is stationary 96% of the time. That’s a fairly consistent finding around the world. A car is typically parked at home 80% of the time, parked elsewhere 16% of the time, and on the move just 4% of the time. And that doesn’t include the increasing time we spend at a standstill in traffic.
Bill Ford, executive chair of the Ford Motor Company, says we’re heading for “global gridlock”. And he’s not alone in saying we cannot simply keep adding more cars to our roads.
The funny thing is that while we own more cars than ever, we’re using them less. You might think that’s a good thing; that we’re responding to worsening congestion and health, debt and environmental damage by opting to drive fewer kilometres.
https://au.finance.yahoo.com/news/end-of-the-road-why-it-might-be-time-…
Not surprising - we have learnt to be totally proliferate with all resources ... we are as energy rich as ever if you look back through history - You can apply the idleness to lots of must haves ... the chainsaw / weed-trimmer / skillsaw boat etc in the garage, multiple pairs of clothes / shoes .. all stuff we need to acquire to keep consumer ville ticking.
The big problem coming is we need to keep this (energy) consumption growing so that the financial system does not keel over ... but energy limits are starting to fight back
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