Opposition finance spokesperson Barbara Edmonds says the first announcement from the new Economic Growth Minister should’ve been about helping small businesses access capital.
Nicola Willis, the Minister of Finance and Economic Growth, announced tourists on visitor visas would be allowed to continue working remotely from New Zealand for up to 90 days.
Speaking to reporters at Parliament on Tuesday, Edmonds said the new visa rules were just “tinkering around the edges” of economic policy settings.
“I don't disagree with the digital nomad [visa], allowing people to work here. However, the wider issue is what are the benefits for New Zealand? How does that help our growth?”
“If they actually want to make some changes to productivity growth, I would have expected the first major announcement … from the Economic Growth Minister to be something about access to capital,” she said.
The Government should focus on understanding why banks are lending more to residential property than businesses, and introduce policies that enable more productive lending.
“For most small businesses, they really can only borrow if they have an asset they can leverage off, and generally it's the home,” she said.
“You want to be able to see what risk rules are restricting banks and see how you can change that — which is, kind of, what the select committee inquiry is looking at”.
The ‘yes’ economy
Edmonds said this didn’t necessarily mean instructing the Reserve Bank to relax the capital risk weights it puts on different types of lending, but she would consider it.
“Let’s have a look at the rules. Let's work with the bank to see how businesses can access more capital without having to use a house for it”.
“It was just a surprise that the first major announcement from the Minister was visitor visa tinkering, as opposed to something bigger that will help growth”.
Willis said she was happy to consider changing the Reserve Bank’s risk settings to support access to capital.
“I'm pleased that Labour have joined the party, in which this is a ‘yes’ economy, in which we come up with new ideas. And I have been consistent, in my view, that the Reserve Bank has a critical role to play when it comes to firms accessing capital needed for growth,” she said.
The Government is also looking at other impediments to small businesses' access to capital—including overseas investment rules and tax settings— and the public could expect announcements later in the year.
Own goal
Cameron Bagrie, an economist and director of an advisory firm Chaperon which helps business navigate banking, said New Zealand couldn’t create wealth by trading expensive houses back and forth.
The lack of lending to businesses was primarily due to overcautious Reserve Bank regulations and weak competition in the banking sector. Tackling those two issues would free up access to capital for small or medium-sized businesses.
Over the past five years, the Reserve Bank has introduced higher capital requirements for systemically important banks and set minimum risk weight floors for business and residential lending. This has encouraged banks to lend more on housing because they need to hold less capital on a home lend compared to a business loan.
These stricter rules require banks to hold more capital against business loans than housing loans, likely increasing borrowing costs and reducing access for smaller or higher-risk firms.
Bagrie called these changes an "own goal," saying the sector had just gone through a major economic shock without any signs of trouble. This suggests the rules could be loosened without risking a future financial crisis.
More competition could also encourage banks to lend more to businesses. That’s why the Government should move at “200 miles an hour” to get open banking up and running, he said.
There is only room for a handful of full-service banks in the small NZ market, and so scaling up Kiwibank was unlikely to succeed. But allowing niche open banking firms to enter the market could boost competition, especially in areas like business lending, said Bagrie.
62 Comments
Labour's track record 2017-2023 ...
... growth = a massive ramping up of the public service ; a gigantic increase in government debt ; an explosion of job seeker numbers ; 1000's upon 1000's of people being relocated to motel units in Rotorua ...
Do they think that we've forgotten so quickly ?
A public service regularly crippled by National, resulting in a loss of skill and knowledge I've witnessed through 3 cycles now, inevitably meaning the ramp up is required to try to make sense of flailing systems that were left untethered and unsupported.
A comparatively small increase in government debt by global standards during a pandemic.
The number of people on job-seeker support exploded more in 2024 (40k) than any year previous apart from 2020-2021 (50k) in the throes of C-19.
And yep, people sure were housed. Shocker.
The population increased by 409,000 over that time, and by most accounts the public service was running too lean to handle what needed to be done for covid so a bit of a spike occurred.
Remember Robertson started out trying to freeze their pay, so you can't say he wasn't wary of the cost of it all.
By growth you mean large increase in the level of private debt to make the equation look like growth then sure. Instead we are now dealing with the economic hangover form frivolous spending by govt, lack of action followed by overreaction by the RBNZ, and we are not lookin great the morning after on the slinky, dazed walk home form the party in the same clothes.
My understanding is that there was a large increase in private debt due to reductions in the cost of debt, via the the lower rates at RBNZ as a response to economic difficulty during a global pandemic. This is not a function of parliament by design and the separation of powers. It would be incorrect to state that higher or lower levels of private debt is primarily driven by central government.
Frivolous spending you claim is intelligent spending on infrastructure during an economic downturn while the cost of debt is low. It is wise to issue government bonds and fund infrastructure builds during times of low interest rates as bond yields are also very low, and there is typically a larger pool of available labour and skills for a lower cost than when the market is at its peak.
They proportionally increased debt no more than their predecessors did, and started their term also hamstrung by the interest costs of National's debt. Quite possibly two original-price Dunedin hospitals worth of interest being paid even in 2017.
And now National isn't paying off either John Key's or Labour's debt, so it's all a bit moot who's the bad guy. At the next change of government, assuming that's 2032, the interest bill will be able to cover 6 Dunedin hospitals a year. And I suspect you'll have an excuse for that.
I just see it as a tool to promote more tourism. Thats why its just for 90 days and not 1-5 years like overseas. Get some social media people here to start promoting NZ to their followers for free. Instead of threatening to revoke their visas and deport them. Certainly this is going to be more effective than Tourism NZ's advertising campaigns.
Sometimes lots of little adjustments collectively add up to big improvements.
Yeah but IRD required them to become tax resident after 90 days, so more careful planning would be required to go longer to avoid loopholes other non-tourists could exploit. Entirely possible they're welcome to stay a year on a wink-nudge basis only.
I made a Singaporean friend in 2011 who stayed here for over a year while working for her employer back home. I think where there's a mutual taxation treaty in play there was never a problem really.
I certainly haven't seen any tax spies in cafes overseas that I've worked in...
Happy to admit I hadn't delved deep into it beyond the "digital nomad" headline, which I see was unfortunately cribbed from Upston's wording.
You're right that it's a pragmatic change, better late than never, and it should have been sold as such.
Unfortunately from a quick perusal of various DN groups it is clear they've already been entering NZ, lying and working anyway. Most say that this change won't affect their decision to come here because NZ is still "a very expensive country".
LOL. What hypocrites. "Access to capital" when they were the ones who effectively destroyed any chance of NZ attracting capital with their talk of wealth taxes. Nobody is going to come here to build a business now, way too much sovereign risk.
And the ones that are already here are probably busy making sure they wont be.
Few come here to build a business themselves though. Foreign investment usually implies buying a dairy farm or forest and then staying home in Finland and waiting for the profits to arrive.
The new form of foreign investment the govt is trying to encourage is PPP in motorways and hospitals of course. But again that's about cash, not residency. They still can't buy property here, so why would they have any wealth exposed to tax here? Wealth taxes don't apply to businesses, only individuals.
There's not many rational reasons to uproot yourself from what is likely a larger place and set up a business personally here, unless your reasons for doing it are better retirement lifestyle or cleaner air or whatever. In which case taxes probably don't scare them too much.
The nail in the coffin is having to pay such high wages simply so people can pay for lousy accommodation. If our housing was priced at comparable international levels people could afford better lifestyle on lower wages and businesses would be more internationally competitive. Not to mention less lending for housing would free up more lending for productive businesses. Overpriced housing is the root cause of NZ’s economic problems
No, the determination of risk weightings has nothing to do with public preferences for what assets to invest in.
Plain and simply, it suits the banks for risk weightings to dis-incentivize business (i.e., plant, premises, R&D, set up costs, etc.) lending, and in particular, start-up business lending. I think it's a trend the world over.
Its because the regulations require them to hold more Tier 1 capital for business loans than residential lending. The less business lending they do, the less capital is tied up sitting idle.
https://www.happyprime.co.nz/post/the-capital-conundrum-why-banks-lean-…
Yet there was strong economic growth under Labour and the current government is running GDP below where it was at the election. Hardly looks like they're good at this growth thing.
At some point the penny will drop that this isn't Key's second coming and National are no longer the party of good economic management. Not by the numbers anyway, but they still seem to make businesses feel confident, even if they're going under.
Let me translate what this article title should be
"Labour says pretty please vote for us, we have more empty promises and incompetent party members, but we really really like to be the center of attention".
Labour had six years, what did they do apart from taking a wrecking ball to the NZ economy ? Now suddenly they are experts. No thanks.
There's a lot of ignorance in this thread.
Firstly, economic growth is really the throughput of energy and resources, multiplied exponentially. Small wonder it has tailed off of recent years, and small wonder the poor are hurting enough to vote for anything promising something other than the status-quo.
Secondly, both main political groupings in this country - as in the US - are about the same thing with tweaks; economic growth.
As said, it cannot be had. So they (both) go further and further into unrepayable debt, just slightly favouring different cohorts as they do so. Put simply; Neither have an answer to the trending degrowth, which is a permanent arrangement - this being a finite planet and the Second Law of Thermodynamics being what it is.
Perhaps we could have a journalistic piece - balanced, is the word I think applies, or would - about how Edmonds proposed to deal with the Limits to Growth? She's heard me asking Hipkins that very question, and of course she'll have done her homework...
Why did you stop then?
Somewhere in your 20s, presumably.
There is an ecological and physics reason why you did.
Pity it was involuntary - but obviously that was the only way it could work...
Ditto exponential growth on a finite planet.
One thing which seems in endless supply, is ignorance. Maybe you could suggest the capitalise on that?
As Luxon put it, we need to stop being the type of people who say no to things.
https://thespinoff.co.nz/politics/28-01-2025/windbag-luxons-culture-of-…
An ignorant person making an ignorant comment and getting away with it because of a chosenly-ignorant media.
If growth was perpetually possible, it would still be happening. It wouldn't need a low-brow ideology-tainted government making desperate moves.
Ask why it isn't? If you do, you'll be streets ahead of the NZ MSM.
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