Finance spokesperson Barbara Edmonds says a re-elected Labour Government would have been willing to expand its planned public sector cuts to protect key programmes.
The tax lawyer turned MP spoke on Interest.co.nz’s Of Interest podcast about the Coalition’s fiscal policy and her role in rebuilding the Labour Party after its election defeat.
Part of that project will be rehabilitating the party’s economic credibility after presiding over a massive cost of living crisis.
Ipsos’ February issues poll showed inflation, or the cost of living, was the number one issue facing New Zealand voters and only 23% saw Labour as being best able to deal with it.
Only 22% thought it was the best party at “managing the economy” down from 31% a year ago and well below the National Party which has climbed from 42% to 47%.
The parties which have formed the Coalition Government campaigned on bringing down spending and therefore inflation, as well as cutting taxes for some groups.
Edmonds agreed there was a need to consolidate spending—which had got ahead of revenue during the past three years—but tax cuts were a bad investment.
Labour’s fiscal plan asked for up to 2% reductions in public sector budgets, while the Coalition Government is asking for up to 7.5%.
She admits her party would have had to make further cuts, given new Treasury forecasts showing tax revenue falling below pre-election forecasts.
“If we had to make more cuts, or look at different savings, in order to ensure that lunches in schools kept going … we would have had to make those decisions,” she said.
“I wouldn't apologize for making those types of choices. But what I wouldn't have done is promised really unaffordable tax cuts”.
Edmonds said the limited money available was better invested in infrastructure, schools, healthcare, public and private transport, and climate action.
Which tax?
Edmonds said she was out meeting with key sector leaders and listening to new ideas she can carry back to Labour's policy council.
Her role was to guide her colleagues through the process of developing a manifesto for 2026 and informing them about the costs and tradeoffs involved.
“If I need to say no, I’ll say no. I’m a mum of eight, I know how to say no,” she said.
“Ultimately, if I believe that it's going to put Labour into a difficult fiscal position going into the next election, I will make those views very clearly known”.
Labour recently voted against a bill put forward by Te Pāti Māori, which would have removed the GST from all food, on the basis that it was too expensive.
But the big policy question is about tax. Political opposition to taxes on capital has been the unslayable dragon of New Zealand politics.
Tax reform is back on the table but Edmonds won’t be drawn on exactly what kind.
She said it was necessary to first ask what the party was trying to achieve and then design a tax model that supported those outcomes.
The country will be facing some serious fiscal challenges by 2060 when superannuation could cost 10% of GDP and healthcare could absorb another 7%.
“2060 looks like ages away, but that’s the next generation. That’s my kids. So, we need to ask, what is the society that we want to leave this generation and how does tax help us get there?”
The Treasury and the International Monetary Fund have both made recommendations about possible reforms, but Labour would be starting from scratch based on its long-term vision for New Zealand.
Edmonds said political parties don’t win elections based on tax policy, anyway.
“You win on committing to a better health system, better education, making sure the vulnerable are supported, and that our businesses are able to grow,” she said.
You can find all episodes of the Of Interest podcast here.
128 Comments
Well then, enjoy National's neoliberalism lite BS.
1) Almost $3bn in tax cuts for landlords.
2) Public sector workers dumped on the unemployment heap screwing over them and their families. (holding public sector staff numbers & salaries & allowing natural attrition is far more humane.)
3) Reduction in flexibility of disability allowances.
4) Tightening up of unemployment benefit criteria. (We run a capitalist system with a price on money, the OCR interest rate, by definition there will always be unemployment. The unemployed are not responsible for their unemployment)
“the true measure of any society can be found in how it treats its most vulnerable members.” - Gandhi
I can't wait until National is voted out.
We run a neo-feudal system with a price on debt, same as it ever was. Capitalism was always only an extension of feudalism only with different titles/labels for the characters/classes involved. The peasants have simply "chosen" servitude and been enslaved in less obvious ways. At least in the past many of them knew they were working for freedom and there was a timeframe in which they could achieve it. There might be more options now to climb the ranks and more baubles to pacify them, but overall the result is still the same.
I agree with the rest of your comment.
I would call this, ‘a good start’. Labour trying to regain credibility is surely a joke. They are always useless with money (and almost everything for that matter). They are the equivalent of a vegan that doesn’t drink apologising for going to the pub and getting pissed and having a lamb kebab on the way home….for the 10th time and telling you it won’t happen again.
Problem being so is National, despite the quasi religious belief system that they're sound economic managers. At present they're mere property speculators sacrificing the future to feather their nests, and borrowing to do so.
No wonder they're both so reluctant to follow the Electoral Commission's recommendations re threshold and STV.
It seems to be all about property for you. Will you not be happy until all property investors are bankrupt and all the renters are out on the street. The state can’t provide proper housing, remember KiwiBuild? If the state could actually provide this, then property investment would not be the choice of the masses.
Do some research. National keeps selling social housing.
https://thespinoff.co.nz/politics/25-09-2023/did-national-really-just-s…
State homes came into being in the 1930s under the inaugural Labour government, as it attempted to not just accommodate the most vulnerable but also, in the words of historian Ben Schrader, “provide an alternative to private housing”. State housing was to be built at such a scale that it could influence market rents and have “a social status equivalent to home ownership”.
If course it's about property. Social and individual wellbeing is directly influenced by access to a secure home without financial distress.
The fact that we've become a nation of property "investors" including the family home is due largely to a cultural deficiency, and a pervasive economic and "wealth" narrative. Incompetent Govt on both sides and the "separation" of state from the people. Choosing to become a nation of grifters doesn't just happen. It's due to a failing leadership and ignorance, narrow minded thinking and a failure to see the bigger picture.
It’s about education as well. There is no such thing as investing in your own home. Your own home is a place to live. When hopeless enterprises such as MyFoodBag and other loser enterprises are the best we can produce and promote there is little wonder property is where you invest. I don’t invest in property I invest off shore, rather than place My funds with the likes of MFB. Those ‘investors’ lost 90% of their investment and will lose 100%. The crooks that started that venture took their money and ran. That is what is wrong with NZ.
Mainly direct, and indirect investments, in countries that have double tax agreements with NZ and focused on shares where FIF exemptions apply. Around 30-40 investments across 10 countries, diversified across multiple industries including mining, construction, tech, banking etc.
Medium, low risk, good management, little to no debt, increasing earnings. Good dividend payout when compared to historic cost and current price. As Long as they are not killing people or using child labour then all good. Not investing in companies like Tesla that have no dividend and the share price is very volatile.
Yes, quite right. The governments of the post war decades actually did pretty well on housing and today's older generations benefitted from it. John Key included.
Actually encouraging productive business rather than subsidising speculation on exisiting housing would be far better for NZ now.
Folk thinking "you just want property investors to be poor" may be falling prey to victim mentality rather than acknowledging the reality that we need to have actual productive business to raise living standards in a way that isn't just passing the bill to following generations.
I think we're past the ability to create "productive" businesses.
Vulture equity funds, multinational corporations have generally taken over everything. Productivity to these institutions is the ability to extract more. It's one reason the narrative has changed to "investment" the past couple of decades.
Local suppliers and people trying to offer quality, healthier alternatives can't compete on price and are just as encumbered by the debt trap that is having a home.
One problem is that economic productivity is far removed from natural productivity that contributes to individual and societal wellbeing. We don't even have a discussion on what "living standards" are. How do we get everyone to some minimum and what do we do about the extremes? Who's living standards and do we apply this on a wider scale to Nature?
We have too many structural flaws. This more productivity, more busyness is still status quo thinking and doesn't address the underlying phenomena.
We need to rethink what we already have, the why's and how's and way's of doing.
holding public sector staff numbers & salaries & allowing natural attrition is far more humane.
I question the truth of that. By natural attrition, I presume you mean retirement. Is it really in the best long term interests of the country to have an army of overpaid civil servants working either unproductively or counter-productively. Could those worker's productivity be better harnessed? In the long term, isn't it likely that they'd derive greater life satisfaction being employed somewhere where they were really needed?
Labour have little chance of regaining power when their potential coalition partners run to extremes. Extremes of socialism and racism that have become easily discernible to the electorate. The fact that in despite of nigh on thirty years of parliamentary presence, the Greens have never entered cabinet, illustrates that full well. National too, up until 2023, had quite a problem in finding and retaining coalition partners. The 2023 election finally delivered a MMP result in its true sense, three parties not just a major and a lackey. If MMP has in fact found its feet future governments will need to both embrace and reflect it in the form that is due. That in itself provides a big clue to Labour for a way forward.
I don't have any real problems with their "progressive" policies.
Where I have major issues is the dearth of transformational economic policies.
Until they put transformational economic policies front and center, and explain them to our economically illiterate electorate (which relishes the status quo because that's all they understand), they're going nowhere. As are we.
Agreed. The problem is Labour have put “tax on the table” so many times and reneged after getting in, that I just plain don’t believe them anymore. They just can’t seem to find it within themselves to do it. TOP the only way for me from now on, bugger the big two they have failed us miserably.
"She said it was necessary to first ask what the party was trying to achieve and then design a tax model that supported those outcomes."
A fair tax system would be a damn good start.
a) Capital gains tax
b) Inheritance tax
c) A very low wealth tax on the very richest (these aren't really justified but could be justified on the basis of reflecting capital gains & inheritance not previously captured)
d) Leveling of the playing field for treatment of tax across asset classes
e) Move the age of entitlement upwards for superannuation but keep the right to super at 65 on medical grounds (any other income would be means tested)
f) Using the revenue from a) - f) to progressively lower income/company tax rates
g) Start work on a UBI. We are going to need it with AI coming. Also the unemployed are not unemployed through their own fault. Our capitalist system with a price on money, the OCR %, requires unemployment (unless you want a slave economy). The unemployed deserve society's support and a dignified existence.
A country cannot tax itself into prosperity. As Churchill put it - it s like a man standing in a bucket and trying to lift himself up by the bucket’s handle. NZ’s prosperity rests in being successfully mercantile, by selling itself and what it produces. Way back this bloke was onto it, viz. “Unless our work continues industriously and we all do our best in every way, we are undermining our future and present prosperity.” And as well “Unless goods are produced without interruption, you can have all the money beyond the dreams of avarice and yet the country will still be poor.” As spoken by the PM Fraser of the first Labour government, May 1946 and a reason I voted predominantly for Labour commencing with the government of Nash but as per the above post, David Murray, are unlikely to vote for them again given the almost inexplicable extremes of bad government they presented in their second term at the least.
Precisely, we can't tax work as we do if we want prosperity. Productivity raises living standards, and that means incentivising productive work and business builders.
Rebalancing away from taxing productive work to taxing beneficiaries of policy (e.g. on unimproved land value) and capture betterment productive Kiwis' money has provided to land (as National have also raised) would be help immensely.
Tax the value takers, not the value makers. Stop incentivising lazy speculation on exisiting assets and land, and start incentivising those who actually increase prosperity through raising productivity and thus living standards.
Enough trite sayings that we can't rebalance tax, we actually need to be a bit smarter.
Exactly. I produce more than $1m of exportable goods per year. I get get paid for that and pay tax for my efforts.
Its possible to purchase an existing house, using only borrowed money. Make the occupants pay for the privilege of occupying. Pay absolutely no tax on that income due to write offs. Make loses for ten years and then sell for a massive gain tax free.
As per a recent article on interest.co we are no longer a export trading nation at all. We live off debt. And one of the reasons is our completely f@#$up tax system that concentrates on taxing productive work.
...and to then have to read Chris Bishop going on about landlording being an avenue for mum and dad investors to get ahead and plan for their future. It's just nonsense. How are all the non mum and dad investors meant to get ahead and plan for their future. We can't all be landlords. It's physically not possible.
Yes baloney like that is worrying especially so early on into proceedings . The electorate in the end got heartily sick of the claptrap coming out of the last Labour government and National should remember that and as well it was much the same sort of carry on by National as their last government aged.
Why can't you be a landlord? Not everyone wants to be one for sure, it certainly has its drawbacks, but it is way of saving for the future.
And the whining about the tax deductions for landlords being re-instated is absolute bollocks. Why shouldn't they get the same deductions as commercial/industrial landlords?
No, it’s actually because investing in houses is easy and everyone does it, so it is relatively safe. I don’t invest in houses, I have one of my own obviously, but no investment. There is much more money to be made elsewhere. The simple fact is the most New Zealanders are too dumb to understand alternative investments and that is why we have this fake market in real estate, supported by an army of agents that are even dumber, but totally reliant on people tipping borrowed money into the market for them to survive.
Half of businesses produce stuff, the other half provide services eg bars, cafes, restaurants, hotels, shops, financial services, educational services etc etc. Rentals provide an important service ie a place for people to live, sleep, relax, spend time with family.
Why shouldn't they pay the same rates as commercial/industrial "businesses"? Why should they not be subject to the same market principles of failing if they can't make a profit in the first few years? Commercial/industrial/productive businesses are first and foremost required to serve their customer (their purpose isn't saving for themselves, that's a byproduct), why don't residential landlords operate via this principle? Commercial/industrial landlords are just as bad in many ways but at least they're somewhat restricted by the market, and don't have as big a negative impact on wider sections of society.
99% of residential landlords, "investors" are all about serving their own selfishness first and foremost and would gladly take the gains without needing tenants if they could. They fail more than most to see the interconnectedness of everything, and obviously rely heavily on their tenant to pay their mortgage but would rather exploit this relationship. They rely on tax refunds to fund the difference and then believe their entitled to all the social services that enable their service (cough, cough) without contributing.
I'm sorry but the imbalances are too great to justify residential landlords existence. And if you and your cohorts are unable, unwilling to see this, you're more the problem than the solution.
"And the whining about the tax deductions for landlords being re-instated is absolute bollocks. Why shouldn't they get the same deductions as commercial/industrial landlords?"
Yet another person that doesn't understand the difference between commercial/industrial landlords (C/I-LL) and a residential landlord (R-LL).
Is housing a basic human right? Yes. (Only ultra-rightwing wackjobs disagree.)
Does a C/I-LL provide housing? No.
Who is competing for housing with a R-LL? Owner Occupiers (OO).
Is it a level playing field for both R-LL and OOs? No.
The R-LL can carry forward losses into the future to reduce tax. The OO can not and has to just suck up the losses.
These are indisputable facts, wingman. You can splutter and rant all you want trying to obfuscate these facts. But they remain ... facts!
Make the banks pay a royalty for the right to print debt.
If someone uses equity to borrow rather than a saved deposit, tax the equity as income.
Maybe unearned income needs to be taxed more than earned income.
Haha tax the politicians more... I still don't see how their income is from anything productive lol
This Churchill?
Winston Churchill – land reformer | Prosper Australia
“It is quite true that land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies – it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
Tax the land only (not wealth) and lower the largest part (housing costs) of the cost-of-living crisis in this country.
Stopping the population growing via immigration like we did during covid is an easy way to lower housing demand/rents within a matter of months.
It’s an interesting read that describes the purpose, resistance and outcomes of Attlee’s Labour government’s attack on the landed gentry in part, simply by “nationalising” coal. That there under your land belongs to the nation, all of us, and we are going to dig it out.
You could do all that, but why not just use a land value tax and offset PAYE / bring in a UBI for the amount collected and keep it simple.
Does it matter if someone has massive wealth in shares or businesses if they aren't hogging all the land (housing and food production)? Okay it might, but those businesses may still be regulated away from monopolistic behaviour.
"Does it matter if someone has massive wealth in shares or businesses if they aren't hogging all the land (housing and food production)?"
It certainly does matter. It matters a lot!
Consider this basic economic equation:
Production = Land + Labor + Capital + Entrepreneurship
If massive wealth (Capital) is hoarded (or locked up in unproductive assets) then what happens to Production?
Further, what happens when massive wealth (Capital) is only used for the purposes and wishes of the owners of massive wealth?
One of the best economic reasons I know of for taxation is to ensure Capital keeps circling around.
Many economists believe we have reached the point where so much wealth is 'hoarded' by the massively wealthy - and is being directed solely by that same group - that our economic systems have become misdirected (global climate change is but one example) and therefore exceedingly fragile.
Thanks Chris, I suspect I'm missing something by the upticks you have. I wasn't really thinking about economic theory but more the cost-of-living crisis per the article and I see land prices and rents as a key component this.
Certainly, I would agree locked up capital in unproductive assets will reduce production. However, I don't agree that capital in shares and business (as I pondered) are by definition going to be unproductive. Paying more and more for the same piece of land/house certainly is an unproductive allocation of capital though, hence, why I advocate for a land tax to ensure 'wealth' isn't hoarded in land.
100% agree with a land tax or something like it. We really must rebalance our tax system.
With regards capital like shares ... These can be used as collateral against which the owner can borrow and invest to create new stuff. When they choose not to borrow and invest using that collateral, or not to sell, that's when it becomes 'hoarding'.
(Note: If they sell and start building something new, it becomes Entrepreneurship as in the equation above. The buyer, assuming they're not going to develop the asset further, again Entrepreneurship, effectively becomes the opposite of, but equally important, the entrepreneur, a Saver. Even Savers expect a return, just way less than the entrepreneur who accepts greater risks. And this is where our tax system screws things up ... The Saver's returns are unnaturally bolstered by not being taxed!)
To reconcile the two points above ... Consider the land banker. They sit on an under-utilized chunk of land that could be used for more productive things, e.g. services like more rental accommodation, or new dwellings for OOs, or god forbid, a new business! But no. They sit and wait for their un-taxed capital gain. The opportunity costs to society and the economy of this outright hoarding are significant.
Two thumbs up to a land tax as it would make them recognize their hoarding costs us all. Sitting on unproductive assets is favored by our current tax system and this must change.
It is people's demand for credit ,that facilitates the whole private banking systems credit creation process.
So... People are more than receivers....they are quite " active" in the credit creation process.
Ie... Credit creation process is dependent on the private sectors demand for credit
That's my view
Yes, fair, banks create brand new credit money and give it to anyone they deem credit worthy.
Govt creates money when Treasury instructs RBNZ to credit Govt bank accounts.
These are the two 'sources' of new money.
Money is destroyed when (a) people make loan repayments and (b) when people pay taxes.
a) works if applied to family home. Too easy to fudge - buy something small and expensive and sell it overseas.
b) unfair - I leave everything to my wife pay the tax and then she dies a month later. If it doesn't apply to wives then it may help keep families together or create a trade in pseudo wives maried so more inheritance reaches the children
c) make the very richest move overseas. The very richest have ways of disguising wealth - if Trump can do it in NY can NZ IRD do better than USA tax authorities?
d) Yes
e) tie age of entitlement to average life expectancy - it is fairer and the amount needed can be anticipated.
f) other countries have many of these taxes but they rarely raise as much as GST and Income tax
g) UBI for parents with cohabiting children under 18
What's the point of going to work to pay extortionate taxes?
It's all been done before, the marginal tax rate was 66%, but fortunately Roger Douglas, a Labour politician solved the problem.
Why should anyone pay an inheritance tax because they've been left money?...it's outrageous....it's theft.
If someone decides to give me money, or I decide to give my money away on my unfortunate demise, that's nothing to do with the government.
And there's ways around it, as there always is.
That's why thousands of wealthy kiwis left NZ for QLD in the 80's. Never to return...death taxes. I've already paid tax on my money.
GST is a double tax as well. You pay tax on the money you earn, then pay tax to spend it. Something being a "double tax" isn't a valid reason for not utilising potentially effective taxation methods. If an inhertiance tax could take pressure off workers incomes that could be seen as a good move.
They paid tax on their "revenue", now the beneficiary pays tax on their income. It no longer belongs to the dead person. Why can't he/she just be happy they provided a big windfall to someone else? Why can't the beneficiary be happy for the big windfall and not the perceived loss? Is not everyone better off than they were?
The case for inheritance taxes is that on a long enough timescale, the transfer of inherited wealth becomes a real issue. Take the UK or India for instance, where people are divided into classes by the circumstances of their birth. Once wealth is built up enough it becomes self-sustaining regardless of the merit behind it and reduces social mobility and cohesion.
It's fair enough if you save up for your kids, but at what point does it become problematic? Do we return to a feudal system where a select few own everything and rent it out to the lower classes whose parents weren't able to pass down wealth and property? It doesn't happen overnight but we are seeing this kind of thing starting to take route where your lot in life is not determined by merit but by how wealthy your parents are.
When working hard is no longer correlated to higher incomes the disassociation of effort and reward makes society as a whole more fragile.
but at what point does it become problematic?
For me, it's when it is diverted into things other people need and it prices others out of owning at the margin, specifically land and housing. Access to food probably isn't a problem in NZ but could easily be in other countries.
Edmonds said the limited money available was better invested in infrastructure
Barbara. Listen carefully. Govt spending creates money - taxation destroys it. So, the only limit on money is the votes you get in The Beehive.
The country has big challenges with sorting our infrastructure out because we have to remember how to mobilise and coordinate tens of thousands of people, billions of tonnes of materials, and a lot of energy. But money is not the 'limiting' factor.
"So, the only limit on money is the votes you get in The Beehive."
Not completely correct.
Without external (and to a lesser extent internal) confidence of the NZD's 'value' then too much money will create a shitstorm of epic proportions.
But how much is 'too much'? And I'd agree with your basic premise that we are a long way from 'too much'.
Further, if the additional money is invested (i.e. real investment into creating new things that provide an enduring return), the confidence in the NZD could actually increase ... In which case, 'too much' gets even further away. (But creating more money to inflate the prices of existing assets - as has been done for 20+ years - will get us nowhere, even faster.)
It is absolutely true that the Govt can set its annual expenditure by Vote - and choose to leave any net spending (net of taxation revenue) in excess settlement account balances (or Govt bonds) as they see fit. It is also true that our current trade balance means that we have to be careful not to start a run on the NZD. As you say, the headroom here is huge. Indeed, one of the things that holds the yields up on our bonds is the lack of NZ bond liquidity - if there were more NZ Govt bonds being traded, Govt would probably pay a little less interest on them.
My strong view - like yours - is that if we set out a clear economic plan to rebalance our economy, then our headroom would be extended further. It's not like a right-leaning Govt couldn't do this - they could go for a super-low corporate tax (tax-haven) strategy, with 100% renewables, amazing digital infrastructure, an increasingly strong academic infrastructure, and a selfish immigration strategy - to basically become the country that companies want to put their data centres / head offices in. I am not saying I agree with all of that of course.
"It's not like a right-leaning Govt couldn't do this - they could go for a super-low corporate tax (tax-haven) strategy..."
I'd not be in favor of this at all. It plays into neo-liberalism far too much. Businesses need to accept that their profits are derived using collective assets that governments, both central and local, provide for them to use free. This subject often surfaces when countries overseas are complaining about anti-competitive behavior as many government assets 'subsidize' production costs. The Yanks in particular use it against Europe, Os and us.
(On a side note, only a one-person business that never uses any of these free assets, and has customers that never use them either, can claim they are paying tax but getting nothing nothing in return. Businesses like this are extremely rare and I have a close one. But even this business has customers in NZ while I personally enjoy many free assets and services, including my education, so I don't begrudge the tax I pay. Software, if you're wondering. But I digress...)
I made the point above that taxation is a mechanism to keep Capital from being hoarded - and that the hoarders get to be the sole directors of where that Capital is utilized (which could be the greater evil). Taxation remains, to me at least, the very best reason why everyone should be paying tax on all income no matter how it is derived.
"I am not saying I agree with all of that of course."
I expect not. ;-) But your point about just how myopic our current government is - is well made.
I remember it..if you wanted a new car you needed overseas funds. If you wanted overseas funds for travel you had to apply cap-in-hand to the government.
Everything was outrageously expensive, inefficient and owned by da gubbermint.
In the '70's I was spending a lot of time overseas, so before I went I had to fill in a form, take it to the bank to access US$10/day allowances while I was absent from NZ.
What a circus!!!
'Everything" wasnt inefficient...a standard 3 bedroom house was built in 12 weeks for example, and we built much of the infrastructure we currently benefit from during the period of the 30s to the 70s, but we threw away all that institutional capability to join the 'free trade globalisation' paradigm in the eighties ...albeit out of immediate necessity.
Now we face time and resource constraints in any attempt to recover that capability, nevermind the expectations of the voting public.
We buy everything from overseas because its was all rubbish made in NZ.
And it's a very good idea, because the cars were crap - they were expensive, the houses that were built were rubbish (I've owned a few), travel was colossally expensive, and that's why we buy everything from China, because mostly it's good quality and it arrives on time.
CKD cars assembled in Nelson, Wellington and Thames....don't start me on that one.
Lucky Roger Douglas turned up, or the future for NZ was very grim indeed.
Plenty of former state houses that are rentals, and plenty of suburbs full of houses from before then that are insisting the houses are too good to ever be allowed to be replaced in more intense form.
Meanwhile, leaky building malpractice cost the country billions.
Indeed we did onshore much of our supply chain (and create domestic industries in the (distant) past)....but I doubt the public appetite for a repeat, though I may be wrong.
Interestingly no political party has formed any policy advocating such a reconfiguration even though I expect it has been focus grouped to hell and back.
Creating the domestic supply chains and manufacturing capability is the only way it could potentially work, alongside some form of disincentive for unnecessary foreign expenditure if we are to gamble with demand for our currency.
Joe...listen carefully ...What u assert is NOT the "truth"..... It is simply another view on things.. pushed hard by the MMters.
I kinda laugh when they also assert that the very people who run the Govt borrowing/spending systems ( IRd, debt management office etc) dont know how it works... ie.. they are "ignorant ".
Im pretty sure you cant "prove " your assertion. ...as its impossible to actually "colour dye" money and watch it flow thru the the economy thru both taxation and spending.... And it gets problematic , in regards to tracking things, because those two Monetary systems that inferface, interact but dont mix. ( inside/outside money)..... Almost Impossible to "see" Tax money getting destroyed and spending money getting "created".
I idea that Govt taxes ...and then spends its tax take..... makes alot more common sense to me.
thats my view.. I think it requires "cashflow analysis" to truly see what is happening...as opposed to simply some kind "balance sheet" analysis.
Also....Fiat Monetary systems are constrained ,in some ways, in regards to Money creation.... I guess the biggest one might be productivity, which NZ is kinda lacking...somewhat.
The RBNZ on its own website displays the fact that all of the currency spent, taxed and borrowed by the government was created by the reserve bank and which is an arm of the government itself and so the spending must happen first.
Figure 3: Stylised base money system, https://www.rbnz.govt.nz/-/media/518b0156a77949d08cfee13723f98974.ashx
TL Vast majority of Money supply is created by the Private Banking sector.... In the form of loans...ie credit money. If the Govt did not tax or spend this process would still continue as it is simply dependent on the "demand for credit" ...hence it is called an endogenous money system.
I pay my taxes with credit money , created thru the private banking system,...and ,I know U might say that my tax money is magically destroyed and new money is created by the govt when it spends my tax money...and..well.....I don't agree with that.
Thats my view.. ..and Id add that the idea of endogenous Money is a Theory, not a Truth..... Likewise MMT ideas are simply theories...and not truth.
‘Outdated and misleading’: is it time to reassess the very concept of money? by Stuart Kells.
"money created through government spending does not persist and circulate indefinitely through the economy. The slightly shocking and dispiriting reality is that, when you pay your taxes, the money doesn’t go into an account or a vault. It is vaporised. The tax payments cancel out the money that was created at the time of the original government spending".
https://www.theguardian.com/books/2024/apr/02/outdated-and-misleading-i…
My name is not 'Joe' and that's not the only thing you've got wrong here.
Your doubt that I am absolutely right on the 'govt spending creates the money to pay taxes' is also incorrect. But I'm not sure what evidence you need that I haven't already given you?
It is correct that net Govt spending + net bank lending creates private sector spending money, and you can't separate the two once they are in circulation. But this doesn't stop govt spending adding to private sector wealth.
Jfoe.... I've always been diligent in following ur links,...etc .. and nowhere have you proven, or. provided evidence that does not require a leap of faith in regards these ideas/theories. .. ie. that govt tax destroys money and govt spending creates money.
Like I said ,your views are in the realm of ideas/theories ... They are not truths.
The truth... or a truth.
Private banks magically create credit out of the ether and to sell it they must create demand for debt. This is how "money" enters the economy. The public don't demand it, they just don't know any better.
That money flows upwards for a variety of reasons and fails to circulate creating the need for more credit creation. A direct influence on purchasing power (or lack of) and inflation.
The more tokens required to buy basic living necessities and services equals "bad" but when applied to "assets" equals "creating" wealth and "good".
To enable all this requires flawed economic thinking, flawed govt. policies, perceived scarcity, miseducation of the masses, propaganda and emotional manipulation.
One doesn't need data to see this, the evidence is all around if one chooses to see.
Capitalism/neoliberal economics is simply a theory that we happen to be actively experimenting. We're just failing to adjust the theory when parts of it are proving to be detrimental. Our hubris and fears are limiting us from applying other theories that may be more beneficial and we won't, can't know unless we try them.
What's the biggest fear? A loss of power and control by those who currently wield the power and control.
Humanity and society is currently ruled/enslaved by a collective fear of "material" loss and is unable to open up to the uncertainty, unknown possibility of an intangible gain. "Poor" is shamed and feared, "rich" is celebrated and "loved", and the inferiority/superiority complexes, ego limits us from attempting to create a dimension where neither exists.
Inflation was a worldwide issue and so it cannot be blamed on the previous government. It was caused by trade disruptions and supply issues because of covid, the war in Ukraine and companies using it as excuse for profit gouging. We also had our own domestic supply disruptions due to weather events.
Government spending only becomes inflationary where the government is competing with the private sector for the same resources and so spending in itself is not inflationary and lets not forget that the banks create the majority of our money through their lending at around $600 billion.
We have got to stop it with the NZ exceptionalism 'presided over a cost of living crisis'?!?
Do we really think that tiny little insignificant NZ would have been able to use dumbass monetary policy tools to stop CPI increasing during 2022 and 2023? The cost of imports, which make up one-third of our consumption, went up by 25%!!! So, should we be surprised when living costs went up by around 8% (what's one third of 25% folks)?!?
The fact that the commentariat spent months running around saying 'quick, send unemployment to the moon and hike rates to cut off business investment' rather than doing some basic exploration of what was actually driving costs up is really disappointing.
I mean, look at CPI across lots of countries. Everyone is on the same arc. We could have done some different things - hello Denmark, Switzerland, Spain - but that would have involved interfering in the precious market - freezing rents, subsidising energy bills until global gas and oil prices stopped going nuts... you know all that sensible stuff you do to prevent imported price shocks spreading into wages, rents and the wider economy.
Give me an opposition Minister of Finance that asks some obvious questions. Like, 'if inflation spikes everytime the Saudis want to boost the price of oil, what solutions might we come up with to protect our citizens?' Or, 'How much is lower demand actually contributing to moderating prices?'
The issue is any intervention is very hard to unwind... something not helped by the screaming media headlines. Look at the fuel tax discount that was in place for a few months, then a few more, then a few more, and only came off when the CPI headlines would come out after the election.
Can you imagine a 1 year rent freeze in place while interest can't be deducted and insurance is going up 20% pa? The headlines when 70,000 rent increase letters went out all at once at the end of that year would follow the prime minister around for weeks.
"Her role was to guide her colleagues through the process of developing a manifesto for 2026 and informing them about the costs and tradeoffs involved. "
Is a tax lawyer the best person to be guiding Labour's tax policy? I'll reserve judgement for now but will say I expect the status quo won't be changed by anything like it should be ... and needs to be!
Believing Government knows how or are even capable of "managing" the economy is delusional.
The issue is literally a crisis of humanity and we don't have humans in charge anymore - we have corporations, self interest institutions and debt.
A tax model will not solve anything when everyone is adverse to paying tax and a minority have the resources to not pay tax, while everyone else is captured.
Productivity is a non issue no matter how much we talk about, or demand it's reappearance. We are unwilling to understand how it disappeared.
https://archive.nytimes.com/www.nytimes.com/imagepages/2011/09/04/opini…
https://www.epi.org/productivity-pay-gap/
Where's the data for New Zealand.... anyone?
I think most folk don't believe Luxon and Willis can do it. But for our primitive tribal politics in this country, these people bury their concerns and still cheer them on because it's the Blue team and not the Red team. The colour is all that matters. Ardern could've waka-jumped to National and these people would go from scowling and hissing to singing her praises.
Cognitive dissonance.
I look around and try to understand how it is that many retailers can actually turn a profit without a credit supply. Most folk in this country are hooked on debt . Folk are gonna hate me but my opinion is a default OCR that promotes saving and punishes credit users would likely achieve more than tax cuts in the long term.
This is the point that Jfoe and I and others are making.
There really isn't much wrong with government spending (actually creating) its own sovereign currency so long as a) there is an enduring value (rate of return/cost savings) from its spending, and b) the spending doesn't result in rampant inflation or currency devaluation.
With regards roads in general though, one can argue government may be investing in past technologies and/or not really getting a serious rate of return / cost saving. (There are some roading projects that deliver very decent RoR and/or cost savings but vested interests aren't interested in them.)
There really isn't much wrong with government spending (actually creating) its own sovereign currency so long as a) there is an enduring value (rate of return/cost savings) from its spending, and b) the spending doesn't result in rampant inflation or currency devaluation.
So Japan has high public debt but an infrastructure surplus that other nations envy; comparatively low inflation; and a currency that has weakened dramatically (except if all its investment capital flowed back to Japan).
Worth checking the currency strength point - a lot of commentators choose some interesting start dates to make a (bad) point.
True that. Pre-Plaza Accord, JPY was much weaker.
In light of what's happened in the ME, watching JPY with interest. As we know, the unwinding of the carry trade could be very bad for financial stability and positive for JPY strength. NZDJPY / AUDJPY should both be slammed. Not saying ME is a catalyst for anything and how things unfold is unclear to me right now.
Yes, the railway could take the freight way more efficiently, leaving less maintenance required on the roads.ive just walked the railway to the kopuawhara. Monument. It needs maintenance, but has a small footprint compared to a road to carry the same amount of freight.
But what I wouldn't have done is promised really unaffordable tax cut
the issue is that people are paying more taxes, but the services, such as medical cares, schools, roads, water supplies etc, are provided less and less.
maybe the tax cut is 'unaffordable', but it's your fault, not average joe's. they've paid for it!
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