Opposition leader Christopher Luxon says Government spending needs to be more closely tracked so people can measure how effectively public money's being spent.
In a speech to the Auckland Chamber of Commerce on Monday, Luxon announced three new initiatives to encourage fiscal discipline.
A National government would require the Treasury to report on the performance of major spending initiatives, alongside the annual budget documents.
This would provide some insight into the effectiveness of spending in key areas such as health, education, and social development — which need better funding.
“I won’t put up with pouring more money into broken programmes that don’t work; even while we need more funding for frontline services like health and education,” he said.
Secondly, it would link public sector chief executives—and other senior executives—pay packages to the performance of their agencies and programmes they oversee.
Luxon said Wellington needed a culture of high performance and accountability, which would begin with rewarding people based on outcomes.
Second tier executives, or deputy secretaries, would also have their base pay determined in part by performance.
Performance pay in the public sector can be much more complicated than in the private sector, where the primary goal is to turn a profit.
Corporate pay is generally linked to an increase in total shareholder value, while government agencies deal with competing priorities, multiple stakeholders, and goals that can be hard to measure.
Finally, Luxon said a National government would provide every taxpayer with an annual receipt that detailed spending in simple terms. This would increase accountability and make spending more visible to the general public.
“Unless you’ve worked in the machine in Wellington, or you’ve trained for years in accounting or economics, it’s impossible to work out just how much money the Government spends, and where it all goes,” he said in the speech.
Inland Revenue would write the receipt—showing total revenue and spending—while Treasury would produce an annual “Report Card for Taxpayers” that reported revenue, spending, and debt on a per household basis.
Hard times
These new efforts were necessary, Luxon argued, as wasteful government spending had worsened inflation, run up debt levels, and had nothing to show for it.
He criticised the Reserve Bank for printing large sums of money, offering cheap lending to commercial banks, and for "taking an axe to the" Official Cash Rate.
“New Zealand was flooded with money, asset prices exploded, and inflation soared,” he said.
It was now experiencing “whiplash” as the central bank attempted to pull excess demand out of the economy with higher interest rates.
Meanwhile, Government spending rose in response to Covid-19, but wasn’t sufficiently pulled back once lockdowns ended.
“It’s one thing to be spending heavily and operating deficits as you revive an economy with high unemployment and stagnant inflation – as the automatic stabilisers of welfare spending rises and tax receipts fall,” he said.
But responsible governments should cool fiscal pressures at the top of the economic cycle, when unemployment was exceptionally low and inflation was taking off.
The two pillars of National’s economic approach would be firing up NZ’s engine of economic growth—i.e cutting regulation, encouraging immigration, and building infrastructure— and restoring fiscal discipline.
Luxon warned NZ would have to earn its way out of recession, as any Keynesian fiscal rescue spending would run the risk of triggering a credit downgrade, higher interest rates, and a wider trade deficit.
The former Air New Zealand chief executive said while he was a relative newcomer to politics, his corporate experience could be an asset in the Beehive.
“Government isn’t a business, but Wellington could do with some commercial discipline”.
83 Comments
Ran a number of scenarios and relatively inconclusive given the only significant difference is a "Potential Jobs Tax" referring to the unemployment insurance proposal from labour. Interesting it doesn't seem to make a difference if you click 'Yes' landlord or not...
Otherwise, for most NZ households, they'd be looking at ~$1000 per year extra or less. And I say most because the average household income gives ~$1000 back per year.
Single minimum wage earner at $47k is $2 better of per week.
Some childcare lollies too.
I got the same thing.
National is the political party for property investors not wage earners.
The only policy they seam passionate about is removing the new laws bought in on interest deductability on residential property. The rest of their policy platform is fluff.
On a side note, recently on a well known Facebook page for property investors somebody posed a question. If National make it in, would landlords reduce their rent to offset the deduction in "tenant tax". A resounding no, somewhat justified by the fact that rents aren't even keeping up with inflation.
I'd find the post and screenshot it but I'd have to trawl through the hoards of "How to I contact WINZ to get my rent benefit on behalf of the tenant?" questions.
Interesting times we live in for sure.
FYI, here is an extract of the thread of that exchange referred to:
Person 1:
Will you also make landlord drop the rent when you do this or do they get to keep the overinflatwd prices?
Person 2:
have you noticed that the cost of interest for a mortgage has gone up, rates have gone up, maintenance costs have gone up, cost of buying a property to provide rental accommodation have gone up, insurance costs have gone up , etc ? What would you say is a fair return to landlords for the money invested, costs involved, and effort required? Try doing the sums. Or is it more fun just to hop on the ‘let’s bash landlords’ bandwagon ( and yes I do acknowledge that there are some dodgy landlords as per any community
Person 1:
if the ability to write off is returned then the accrued expenses drop, with tax offset yes I am aware cost increases I own a business, however some people that happen to be landlords take it as an opportunity it to cash in, that's not bashing landlords it is stating a reality
Person 3:
most landlords are losing hundreds a week (either in real terms or through opportunity cost) and are therefore subsidising their tenants. Rents have a way to increase before landlords are making a reasonable return even after interest deductibility is restored. Rents are largely limited by how much tenants can afford to pay, but as incomes increase, they will gradually rise to this level. If interest deductibility was not restored, this level would be up to $200 a week higher. Rents won't drop when interest deductibility is restored, but it will significantly reduce how much they increase.
Waffle waffle better reports waffle waffle more controls waffle waffle something about peeps in wellington... waffle.
We get bombarded with tons of info.. we need ( in simple terms ) to know how our life is gonna be better if we vote nat. And we need to trust chris to deliver. This didnt help.
Not saying I agree with all of it, but by way of contrast Seymour's alternative budget today was a lot more straightforward.
I would consider myself (somewhat, a bit, maybe) politically astute and when I read this release from National I was confused at the outset that it was their own version of an alternative budget ... took me a moment to figure out what was going on.
To an extent - but a leader must be able to inspire and have people follow them in order to be successful. They’ve got to sell a message and have people implement their vision.
He can’t do that and won’t get buy in across the country. And seems not to have any vision - we’ve all been waiting for a great reveal of policy a long time
Hi agree with you 100% but the reality is nobody gives a shit. People are still having kids, they don't think twice about the impact, plenty cannot even find food for them and loads turn it into someone else's problem when they don't have the money to support them. Its everyone's god given right to have kids didn't you know ?
People in New Zealand aren't having kids though, our birth rate is 1.61.
Thats the problem. A wealthy corporate CEO jist isnt well suited to running a country. Comes across of rich and aloof and focussed on rich peoples problems.
He talks of his plans to public in the way a CEO would talk to the (mid aged well paid educated and wealthy) board.. not how to pitch to 5 million average joes who just need to balance their household weekly shopping budget, have a beer and afford bait for fishing
Truth. National should be creaming the polls, but with Luxon, who comes across as wishy-washy, they'll be lucky to get in. Even worse, he is driving the parties right to ACT, which makes them even more unelectable as a coalition. Neo-liberalism is so last century.
I'd wager he does know.
I'd wager he just doesn't give a 5hit though. Why would he if he thinks he's winning in life?
Which as other commenters are pointing out, you can't run a country like a business. You can't just ignore the non-profitable customer segment. You're meant to govern for all.
Who can we vote for to TIGHTEN immigration settings and break the housing ponzi for the long term benefit of the majority who live and work in NZ. I’ve more respect for Adrian Orr at present than any elected politician…so long as he keeps on track with monetary tightening. Otherwise, God help us.
Based upon recent history (and failures from both sides to do what they say they were going to do), I think the immigration issue is pushed by Treasury and the government of the day just buckles to the pressure when the view the forecasts for our fiscal outlook.
Unless we increase tax take (by increasing tax pool), then the boomer retirement is going to cripple the country.
Voting National or Labour won't change this.
Given a large percentage of that cohort own their own home - plus possibly a number of income-generating rentals, and the average super recipient is working till 70 (5 years receiving super and earnings), we could:
1. Increase age of eligibility to 70. 65-70 make up approximately 1/3 of those on super. 65-70 who can't work for medical reasons go on sickness benefit - just like everyone else.
2. Means test super.
Super currently dwarfs all other handouts combined, and at least two of those handouts (WFF & AS) shouldn't exist.
PS. I see your $4B 'saving' Grant, and raise it to a real saving of $11B/year. I think this *might* be enough to re-index PAYE brackets.
Then perhaps we can look at the other unfair aspects of tax evasion (ahem, property investment for capital gains) as well..
Did you listen to that podcast with Raj Manji? Sounds like they know they are not going to get a land tax agreement with any party, he basically said Ilam voters could vote TOP without worrying about land tax. Otherwise they seemed surprisingly right wing.
https://www.nzherald.co.nz/nz/politics/on-the-tiles-raf-manji-on-how-th…
It's irrelevant who's in power, house prices are adjusted by how much people can afford to pay for a property.
What needs to happen is relief for the poorest of us; changing tax brackets so that low income earners have a relief and high income earners can pay a little more is better. It seems outrageous that we have a tax bracket between $0-$14k or having GST on essential services and food. a UBI might work, but giving people money for nothing doesn't incentivise one to actually change what they are doing.
ps tax God he doesn't help anyone.
A Ridiculous Post for a Ridiculous Announcement:
It's nice to get a receipt, I have a whole box of them, so I must be a fan! Heads up, both PB Tech and Mighty Ape have receipt printers going pretty cheap - they're user friendly, work over wifi and DONOT require a team of bureaucrats to operate.
- Dose National want house prices to go UP or DOWN?
- What 'broken programs' are on the chopping block?
Not so ridiculous. Great questions for any political party right now.
I'd add in "How are we going to better fund a sustainable healthcare, education and emergency services system for our society? Or will these become privatized too?"
I wonder how many tax dollars will be needed to fund a curriculum change focusing on an hour of mafs and words a day.
NZ isn't alone with the dilemma of whom to vote for.
Look at the election results from across the globe this weekend. From Türkiye to Thailand, and they are all pretty much 50/50, like we will be.
To flog the quote just one last time "“Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable.” and in our case we've wasted several decades voting for The Disastrous - we are probably one unforeseen natural event away from the IMF. It's about time we recognised that this time we have to choose The Unpalatable.
Given that the health budget will blow out across the next 10-20 years with the baby boomers needing ever increasing healthcare (not a generational dig, just stating a fact of how the human body ages and needs more treatment as thins go wrong), plus the increase in super, something has to be done to address this and it will not be accepted by the working public to have to shell out while many who are retired with excessive wealth take more and more from the system.
Means testing super is necessary, however IMO it will result in:
- Accountants and lawyers getting a lot more business
- Trusts becoming even further scrutinised as many shift their money to them to try and avoid having their wealth as income
- Wealthy retirees purchasing more properties as companies to offset their wealth if it sums up cheaper for them
It all seems pretty sensible to me - government spends a pile of money and we should see it provides a real return - how can one object to that if one is objective......debt per household is something we should see so I like that too. Accountability will scare many in Government as getting things done is very difficult - I deal with them all the time but perhaps this will focus them on doing less but doing it better
FFS these aren’t fiscal initiatives. What they are is just bureaucratic claptrap. First, performance agreements and reporting is already well established in government (in agencies’ statements of intent, and annual reports, CE’s letters of expectations and performance reviews). Second, performance pay (and bonuses) are also well entrenched. Performance management systems are losing their lustre anyway eg they often provide perverse incentives and can be gamed.
The report card for taxpayers just political theatre that perpetuates the erroneous analogy that government is just like a household.
Yep, agree with all that, kiwiana. It's over 20 years ago that I was a central government servant - and we were 'transitioning' from a focus on outputs to outcomes. It was bureaucratic BS then and still is now - an excuse to keep the upper echelon busy bothering the lower echelon to produce words on a page that simply tick the necessary bureaucratic box.
And my immediate thought on performance pay was that it only works when you severely reduce the base salary - such that one is reliant on achievement of some measure to live the lifestyle that you believe you are accustomed to. And it works even better when you can truly aim at even higher achievement in order to make more money than you might have on whatever 'base' salary you need to live the lifestyle you are accustomed to. In other words, if meeting the mortgage payment is dependent on achieving the measure - then performance pay works.
Not sure if that makes sense, but point is - it is totally contrary to public service settings.
No performance pay/bonuses whatsoever in the public service ever improve performance. Much better just to give no salary rises to those who aren't pulling their weight. And where CE's and Deputy CE's are concerned the base salaries are so totally out-of-control - in most cases higher than what these individuals would earn if moving to the private sector where performance pay or commission made up the bulk of their salary.
"Much better just to give no salary rises to those who aren't pulling their weight." Well, it's "other peoples money" so hey, lets tax more high earning net taxpayers to support the driftwood & deadwood. Have you ever heard of people being sacked for failing to do their job properly in the public sector ? In the private sector it encourages the others.
Magnum - Luxon is saying they will provide a receipt for your household. It’s nonsense really. For example, privacy laws will prevent providing individuals income and tax details. There will also be issues around the nature of a household (eg will flatmates get a report card?). So it’s likely to be either bullshit data or totally individualised to each taxpayer, which is also a nonsense if you think about it.
Even to do cash transfers (benefits) and tax paid in each year is problematic and it would be much more difficult and very costly to calculate the amount and cost of directly provided services such as health, education. Im pretty the databases are are not set up for that. There would need to be heaps of assumptions and apportionment of costs, rendering it just political theatre really.
I’d love to see the receipt of a retired landlord from the Key years. Income of a few mill including capital gains, full nz super, gold card, free buses, free healthcare, free retirement home, no tax paid, and a refund on the interest on their investment properties. But I guess they paid tax all their life etc.
Clown show. I don't think it's just his fault. It's the National party. They have lost sight of what they stand for and are pandering to their wealthy donors and grumpy old anti-woke brigade. Genuinely disappointing.
The only actually policy they have talked about in any specific way is reversing the (excellent) Labour policies that are helping address the housing crisis. Like I said clown show.
No they wouldn't have. Say what you want about National, but they’re fiscally responsible. This labour government has been the worst government I can remember in my lifetime. I was a bit annoyed at John Key because of all the foreign buying but that's nothing compared to the absolute catastrophe this government has wrought on the country. Every metric is getting worse. Everything is getting more expensive. The economy is contracting. The media is untrustworthy thanks to Labour. They’ve messed up everything.
Recent history of government debt doesn't really show National borrowing less does it? It looks to me more like borrowing in bad times and paying it off in good.
https://www.macrotrends.net/countries/NZL/new-zealand/debt-to-gdp-ratio
How do you think austerity would help our "metrics" as a country going forward?
I always wonder why disgruntled people say this - as if thinking it is some sort of threat or demeaning statement to those of us that choose to remain in NZ.
It's especially odd given all the problems we face that are related to over-population.
So many "stars" said this about Trump before he got elected - and then I never heard about any "stars" that did leave.
How do you pay LVT on a pension? Or is LVT only second + properties?
It seems with everything going to perpetual monthly costs, I'm never going to be able to retire or I'm going to live a very boring retirement!
Also, my understanding is world population has almost peeked, is in decline in most western countries, so much so, the concern is there is not enough younger people coming through to supply enough labour to the job market for some countries like Japan. So I guess this problem is solving its self to some degree.
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