The spending cuts required to cover the cost of recent tax reductions will leave New Zealand poorer and less productive, Labour’s finance spokesperson says.
Barbara Edmonds made this argument in a speech to the party’s conference in Christchurch on Saturday, which set the scene for a fresh set of policies after last year’s election loss.
She said Finance Minister Nicola Willis had chosen tax breaks for landlords over hiring nurses and that her fiscal policy amounted to “austerity”.
“And forging on with unaffordable tax cuts just to keep her job, that is selfish economic vandalism,” she told party supporters.
Getting the operating balance back into surplus was a “moot point” if Kiwis were not getting the healthcare they needed and other economic investments weren’t being made.
“It’s like making extra repayments on your mortgage when your kids are sick and hungry, and your house is falling apart all around you”.
She said she would be a “pragmatic steward of the public purse” but being pragmatic might mean more—not less—spending on nurses, school buildings, ferries, and hospitals.
Unmentioned in her speech was the prospect of tax increases which may come with these choices to limit debt increases.
The NZ Herald has reported the party membership will vote to continue developing a capital gains or wealth tax policy, while stopping any work on other proposals.
Tax on the floor
In an interview prior to the conference, Edmonds wouldn’t comment on that specific proposal or any others that might be debated by members over the weekend.
“Tax will always be on the floor for Labour, in the respect that we want to see how we can make things more progressive, equitable, and plug some gaps, so to speak — but it’s one small part of [the policy platform],” she said.
The second term MP has held the finance portfolio for less than 10 months and has been reluctant to support any particular tax policy. This is despite having a successful career as a tax lawyer, and even serving a short stint in Cabinet as Minister for Revenue.
She told Interest.co.nz her role was to be a “steward” or advisor, who could help the wider party identify the pros and cons of different policies, and not be the final decision-maker.
Edmonds has spent much of her spare time travelling around New Zealand and meeting with business leaders, who have mostly seemed impressed by her.
For this reason, it is easy to speculate that she might prefer to broaden existing capital gains taxes, rather than set up an unconventional wealth tax.
Remember, that she was given the revenue portfolio while in Government after David Parker resigned the job after then-Prime Minister Chris Hipkins vetoed his wealth tax proposal.
However, Edmonds herself won’t be drawn on taking a public position and the party plans to keep both options on the table until much closer to the election.
Fiscal challenges to meet
While she didn’t talk about tax in her speech, the finance spokesperson said there was “no doubt” New Zealand was facing a serious fiscal challenge.
“By 2060, 10% of our GDP will be spent on health care, and 7% on Superannuation. That is a hefty burden on our economy and we need to start making choices now that prepare us for that challenge,” she warned.
The Treasury has warned in multiple speeches that current tax revenue will not be enough to support these rising costs, and some sort of reform will be needed in the next decade.
“The path we are on of austerity and cuts does not make us a richer country. We need to be ready to invest in our people. That is what will make our country grow and become more productive,” Edmonds said.
She said she would focus on supporting businesses to innovate and adopt new technologies which could boost the productive capacity of the economy, but was sceptical of deregulation as a way to grow the economy.
25 Comments
Lol bit rich coming from Lsbour when they were the ones who have financially crippled NZ with their financial incompetence.
Just shows how out of their depth when they believe that being able to claim a legitimate business expense is a tax break??
Seriously, if the Lefty Lxxxxxx ever get back in then NZ is done!
That may be true, but how daft do you have to be to inherit the books in such a state, and decide the best thing to do is to cut your income?
Would be like someone racking up huge personal debt from a gambling addiction, and deciding to go from full time to part time work to pay it off.
All good if you don’t like Labour, but let’s stick to the facts. The economy was buzzing under Labour until the RBNZ applied the brakes. And here we are under National with a terrible economy and the only hope being the RBNZ taking their foot off the brake. Neither party has anywhere near the influence on the economy that the independent reserve bank does.
Funny, I was just looking at the data for 2016 / 2017. I forgot that RBNZ stopped dropping interest rates in 2016, and house prices fell in real terms in 2017. That was enough to persuade the swing voters to give the red lot a go in October 2017 - helped no doubt by their charismatic new leader. Once Labour got in, RBNZ started dropping rates again and the economy got back to credit-fueled growth! I am not suggesting collusion here - just agreeing with your point.
“Tax will always be on the floor for Labour, in the respect that we want to see how we can make things more progressive, equitable, and plug some gaps, so to speak"
Of course. Because Labour needs institutionalised dependency on the State to generate their future voters.
No clue as to how to create the surplus pie in the first place.
"The problem with socialists is that they eventually run out of other peoples money" Maggie Thatcher
Tax and spend. That’s all they know, that’s all they can do. So the priority would be spending on healthcare. A good priority unquestionably. But the other question is how would they know how to do it. Lest we forget. Their last government, in the midst of a crippling pandemic, when under resourced, ill equipped and undermanned frontline staff were battling just to try and cope, they instead spent cluelessly, $millions on consultants and other paraphernalia, all towards restructuring the MoH headquarters, the ivory tower, in Wellington. On that shocker alone, not to be trusted anywhere near the public purse.
Tax has a parasitic impact on the host. In balance it is tolerated. In excess avoidance is rife, or people go broke or shut up shop and go elsewhere. Lab were sucking the host dry to fund their socialist fantasy's.
Still they chickened out on a land tax or a capital gain tax. How many rentals did Helen have again...
What would help would be the discipline to concentrate on priorities such as health rather than vainglorious projects like cycle harbour bridges which in the circumstances should never have been considered in the first place. Mr Ryan the Auditor General reported in December 202s about $15 billion of uncontrolled and unaccountable spending about which, Finance Minister was obliged to apologise. Now the present government appears to have embarked on the same sort of miscalculations with the Wellington Victoria tunnel. Surely it cannot be too difficult to assess and prioritise essential government services for affordability, before even thinking about the gold plated stuff..
Maybe read some of Bent Flyvbjerg's work on why mega-projects (and this is a mega-project by NZ standards) so often fail to meet time, specification and cost targets.
Reading someone who has actually dug down in to the real data why giant projects are so often epic failures is educational and discouraging: it's kind of miraculous anything gets built at all and the biggest problem seems to be that the projects get politicized and when politicians get involved...
Can you imagine a country without any police, roads, electricity and rule of law? Would people want to live there? Tax is not just 'tolerated'. Unless you pay for the required services with inflation it is essential for modern society.
Why are people on this site so blind to basic facts around governments and society?
Mainstream NZ so happy with coalition there’s no need for alternative input? Measured against the inflation prompting them, those tax cuts were insulting. Fine to address Labours administrative excesses but too many core service are being downgraded. Despite RBNZs positive spin, can’t see too much hope for the domestic economy in short to medium term.
This is disingenuous: six years in power, half of which was with an absolute majority, and where our productivity fell ever-further behind OECD averages, and now they want to talk about improving productivity?
The moment I knew we were in trouble was in 2022 when the then minister in charge of MBIE's was asked "what are you doing to improve productivity?" Her response was: "we've raised the minimum wage".
And not once, but twice.
What hilarious irony! From the team who created mega inflation, drove up the cost of housing, doled out money on wasteful spending and crippled the health system!
Hipkins and the other drunken sailor were true economic vandals!
Edmonds speech makes for a great Saturday afternoon laugh, so much dramala! So unburdened by what has been!
Regular reminder that taxes do not fund Govt spending. Govt spends shiny new tax credits into the economy, which we can use to pay our taxes. If we're lucky, Govt give us more tax credits than we need and we can build up our savings.
Same with banks of course, they issue loan repayment credits, which can be used to settle bank debts.
These tax credit and loan repayment credits are of course denominated in the same currency - the NZ dollar. We have nearly $700bn of tax and loan repayment credits saved up or in circulation now. Thank you banks! Thank you Govt!
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