We have five Finance Spokespersons after Winston pulled out. They are:
- Bill English, National
- Dr Michael Cullen, Labour
- Russel Norman, Greens
- Peter Dunne, United Future
- Sir Roger Douglas, ACT
Each was asked three questions:
- Will you cut company and personal tax and by how much and when?
- Will you have a cap on government spending as a percentage of GDP?
- Will you include labour and environmental restrictions in free trade agreements
- Yes we will lower tax rates. Details soon. Important to do so to put cash in pockets, but more importantly incentives to work, save and invest. Also want a more efficient tax system.
- No as GDP goes up and down. Focus on quality of spending not a set target. Expect PREFU will show Crown is in deficit. So period of restraint needed. Govt spending excluding welfare growing at 8% per annum. Can’t carry on at that rate so will slow growth down, but will still grow in absolute terms.
- Not desired, but US Congress turning protectionist and they may demand them so we may need to be flexible. Generally supportive of Govt work on FTAs.
- Generally comment: no more cheap credit – growth will come from earning it and need to lift productivity.
Personally I think a target for expenditure as a percentage of GDP would be a very good thing.
Sir Roger Douglas
- Could reduce personal and corporate tax to under 20%, maybe even 16%. Also could lower GST to 10%.
- Need to say yes to this, so one can say yes to Q1 (he answered in reverse order). Says Govt expenditure should be held at rate of inflation of 2.5% and population growth of 1%. So an annual 3.6% increase only. Sounds good to me!! Any increase over 3.6% should be met with savings elsewhere. If we hold expenditure to 3.6%, each household will pay $13,000 less in annual taxes in 10 years time. Govt expenditure has increased under Labour by $17 billion, after taking inflation and population growth into account. That is $220 a week per household. What did you get for that $220 a week? Could you have spent it better yourself? No equity or fairness without efficiency in expenditure. Thinks expenditure of 25% of GDP is a good target.
- Support free trade agreements without these restrictions
I have to say Sir Roger was brillant. He may get some very serious support for ACT if enough people hear him. Very smart to not talk about slashing expenditure but just propose keep spending to inflation and population growth. Families can relate to that.
- Would cut personal taxes on April 2010 to 10% for income to $12K, 20% to $38K, above $38K at 30%. Supports income splitting. And align business and trust rates at 30%. Should do regular tax reviews, rather than wait 12 years between tax cuts (hear hear).
- No set cap. GDP not sole measure of wealth of economy. Does have concern over current level of spending but more concerned about quality and direction of spending. Proposes merging some DHB functions centrally such as equipment purchasing. A spending cut may lead to a service cut – $50 million into IRD so it can answer phones quicker as an example.
- Supports FTAs. Don’t need specific standards on environment and labour, as they are dealt with in the wider business environment. We are most trade dependent nation in the world.
Dunne did well also. Some nice specifics.
Dr Russel Norman
- Wants a transition to a sustainable economy. More ecological taxes and reduce taxes on income. Incentive then to reduce scarce resource use and pollution. Wants incentives to use less water. Supports ring fencing of losses on investment propoerties. Not supporting a decrease in overall tax – just how it is made up.
- Does not have a policy for a cap on spending. It is about efficiency.
- Does support standards, but notes usually just involves consultative committees.
- General comment on need to prepare economy for higher oil prices. No other party has policy around this.
Dr Michael Cullen
- Lowered company rate to 30% and legislated for three rounds of personal tax cuts. Also increased depreciation rates and R&D tax credits.
- No. Spending at he moment same as 99/00 as percentage of GDP. Goes up and down. A cap is artificial.
- Yes will try and include these standards as agrees with Bill needed for US Congress
- General comment on the need to lift exports from 30% of GDP. New tertiary funding policy is essential. Backed Clark up on how our bottom 30% of school leavers are very poor. Middle and top are both very good. More rail needed plus more roads. Also roll-out of broadband is important. Higher savings needed and our capital markets are very weak. Sustainability also important.
All five spoke well and knew their stuff. I do have to say I think Sir Roger was by far the best – both his level of detail, his forceful arguments and the actual policy. I would put Peter Dunne second best.
I don’t think Bill English came across that well. Not due to him (Bill was very much on top of the arguments), but because he could not give any details of the tax policy yet (which I think would have been popular). Would have been good though if National had decided to release some sort of business policy today, so there is something new. Maybe that will come in a later session?
Regulatory Responsibility Act
A question on whether they would support a Regulatory responsibility Act.
English says there is support for defining the principles of good regulation, and using the bureaucracy to fight the bureaucracy so regulations can not proceed without ticking all the boxes which justify the regulation. Also said very keen to reform RMA. Bottom line is would support some sort of RRA.
Douglas supports a Minister of Regulatory Reform and an RRA.
Dunne says ironic to use legislation to fight against legislative regulations. Thinsk local govt sector is more of a problem.
Missed what Norman said.
Cullen says will make process too bureaucratic.
Company Tax Rate
EMA Northern advocated cut company tax rate to 20% as lead to more investment and eventually more tax paid over ten years. Cullen attacks dodgy modeling of EMA. Says we have had lower company tax rate for most of last 20 years than Australia. English says 20% rate would be fantastic but priority for now is reducing personal tax rates. If we drop company tax rate to 20% without personl rates going down, many more people will alter their tax affairs to take advantage.
EMA’s Thompson replied that when company tax rate has been cut in the past, the level of company tax has still risen.
Cullen made good point that not all infrastructure contributes to economic growth – new planes for Air Force for example. But roads do.
Dunne strong support of PPPs and infrastructure bonds.
English – planning debt 2% of GDP higher than Labour but still one of lowest in developed world. Govt is running cash deficits also. National’s infrastructure plan is a prudent investment. Also thinks Govt manages assets badly, and there is room for improvement. PPPs not just about money, but about getting private sector skills around risk and management. Bill much better on this stuff. Lots of people commented at the tea break that they thought not enough detail on the earlier stuff, but very strong on infrastructure.