Overall pretty encouraging that the Government is going to pursue some economic reform that will increase the size of the national cake, rather than merely get obsessed with how to divide it up as the left do. If we grow the cake, then everyone benefits in time.
Major points by subject:
- GST increase to 15% under careful consideration – this is code for will be announced in May. This is good, as it will allow taxes on income, savings and investment to reduce, encouraging savings and investment instead of consumption
- If GST is increased (and they really have to after not ruling it out) there will be across-the-board reductions in personal taxes, and higher levels of payments for beneficiaries and WFF recipients.
- No capital gains tax – good too complex
- No RFRM for taxing residential property – also good as could cause real cashflow problems
- No land tax – a shame, as I think the one off whack it would cause to land owners would be worth it for the efficiency gains, and also the fact it would bring foreign land owners into the tax base
- There will be changes in the Budget around how property is taxed – almost certainly to include getting rid of claiming depreciation on appreciating buildings.
- Most government agencies to have no additional funding for several years – hear the PSA squeal.
- Changes planned for the way the Crown invests in CRIs
- Science and innovation a priority for new spending in 2010 budget – very good.
- Holidays Act to be amended as per Advisory Group
- Review of personal grievance decisions, and possible amending legislation to give more certainty in this area
- Govt to propose through a discussion document that some land in Section 4 be removed from it, and replaced with some land not currently in Section 4, to allow mining in areas with high mineral wealth but lower environmental value. This is probably the most ballsy move.
- Govt will establish a Conservation Fund from royalty revenue from mining on crown lands to invest in conservation projects, so more mining means more money for conservation. I like it!
- Law changes to remove regulatory roadblocks to water storage and irrigation in Canterbury, and also for the aquaculture industry
- Possible law change for capital restructuring of Fonterra
- Response to Capital Market Development Taskforce to be delivered in the next week or so
- $24 billion of spending in the next five years on capital expenditure
- National Standards will be supported by reform to ensure taxpayer funds make it through to schools and students who need the extra support
- Changes to early childhood funding to get better support to children currently missing out on ECE
- A policy on use of information collected through National Standards to be announced in 2010. Not sure what this means, but so long as they do not amend the OIA, not sure what impact it will have, and will be ropable if they amend the OIA.
- Funding changes for secondary schools to modernise, and ensure they can provide more practical and trades skills.
- Focus in tertiary education is programmes with over 50% drop-out rates
- Whanau Ora to continue to be developed as a new way to fund and co-ordinate social service contracts
- Hint that there will be restrictions on funding for tertiary students who keep failing and/or never leave university – presumably meaning the eternal under-graduate.
- Benefit reforms that focus on helping people get back to work, while supporting those who can not.
- Sickness Benefit criteria and testing to be adjusted
- Reapplication requirements for those on the dole for an extended period
- Work and training requirements for those on the DPB
- A change to the benefit abatement regime to improve incentives to take up part-time work
- Legislation to be introduced to reduce harm from binge drinking by stopping excessive proliferation of liquor outlets. That’s just government by slogans, as there is no proof that it is the number of liquor outlets that cause the binge drinking
- Two prisons to be opened up to private management
There is a nice stat about how moving 100 DPB recipients off their benefit and into work will save close to $10 million over their lifetime. And moving 5% of DPB recipients whose children are aged over six into work will save $200 million over 10 years.
Overall I give the package a solid B. If the GST was 100% confirmed (I judge it 90% confirmed) and they had gone for land tax also, I would have gone for a B+. And if they left out the nonsense about the number of liquor outlets being a problem I may have even gone for an A- after a few rum and cokes 🙂
UPDATE: Phil Goff liked my analysis so much he quoted my “B” grade as almost the first thing in his speech!