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National’s big economic policy announcement

Written By: - Date published: 1:42 pm, February 17th, 2020 - 83 comments
Categories: Economy, Living Wage, national, same old national, Simon Bridges, tax, wages - Tags:

This will be a very short post.

The big economic policy announcement has been made by National leader Simon Bridges and it is, how do I put this, underwhelming.

There are five bulletpoint policies which I have summarised for you:

  • Platitiude
  • Platitiude
  • Platitiude
  • Platitiude
  • Platitiude

One of them involves cutting red tape!  Wow what genius thought that one up? They are even talking about a regulations bonfire. Of course every right wing party in English speaking nations in the world have not continuously used that phrase.

There is also this claim about someone on the average wage:

People on the average wage shouldn’t be paying almost 33 per cent in the dollar.

The claim has been thoroughly debunked by those who actually know something on the subject.

I can recall in 2014 David Cunliffe and Labour being attacked mercilessly because of a slight inaccuracy in the detail of a speech.  Yet this is the headline bullet point for National.

It will be interesting to see how our fact checkers handle this claim.  Because its inaccuracy is palpable.

83 comments on “National’s big economic policy announcement ”

  1. Wensleydale 1

    Never let the facts get in the way of scare-mongering and the dissemination of misinformation in the run-up to an election. Even if you don't know what you're talking about, chances are most average punters wouldn't know or care enough to check, so keep those hyperbolic statements and dodgy graphs coming, National. You're on to a winner.

  2. I am sorry if the following metaphor is crude but it is the only way I can simply describe what Simon is doing. He is a burlesque dancer playing to an media and public audience. Pulling in the audience with promises to reveal all but at the last second not. Meanwhile National continues their real campaign strategy of constant negativity towards the government.

    Look what they didn't reveal

    1. The size and nature of the tax cuts they will implement

    2. How they will pay for infrastructure (because they will be a government of infrastructure) like their promised roads when National also promise not to increase taxes and they promise to remove Auckland's regional fuel charge.

    3. Whether they will borrow money to fund tax cuts and therefore what they consider an acceptable level of debt to be.

    It is all BS but National successfully got good publicity which was their purpose…

    • Brendon Harre 2.1

      The media will not call out National. They will enjoy the show whilst never demanding the facts. Unlike with Labour policy announcements there will not be a moment where National is slammed because they did not 'show me the money'.

  3. Gosman 3

    That's it? Your big issue is the figure around who pays the 33% tax rate is wrong is it? Why don't you attack the concept of the tax cut rather than a throw away line used in promoting it?

    • McFlock 3.1

      lol

      Yeah, I hope you don't work in retail:

      "dear ASA, why aren't you attacking the car rather than the throw-away line (that doubled its fuel efficiency) we used in promoting it?"

      "dear ASA, why don't you criticise our product range, rather than the throw-away promotion line that we have the cheapest prices in town?"

      "dear coroner, our claim that the child car seats met safety standards was just a throw-away line used for promotional purposes, why are you focusing on it so much?"

    • Wensleydale 3.2

      Telling lies makes Baby Jebus cry.

    • Brendon Harre 3.3

      What tax cut? Simon didn’t give any details. He certainly didn’t cost it.

      • Incognito 3.3.1

        He doesn’t need to; the well-heeled have heard the whistle and you’ll recognise them by their drooling and heavy panting.

    • Incognito 3.4

      Stand by for Simon’s imminent correction; he’ll blame an emotional junior staffer.

    • I'm more worried about your easy listening chart @The Gozzzz

      stand by your man ching-a-linga-a-ching in perpetuum

    • What else in the speech was there to take issue with, Gosman? Glib platitudes aren't something you can argue with.

  4. AB 4

    My instinct is that there is one big reactionary change left in the NZ electorate. It will be like the final resistance to doing anything meaningful about climate change and the evident failure of neoliberal (globalised, financialised) capitalism to produce societies and economies that work for all citizens. It might last a decade or longer – and by the time it is over it will have made solving the CC problem closer to impossible. Simon Bridges is too unlikeable and preposterous to be its harbinger – whoever follows him might not be.

  5. mosa 5

    Ha and Bridges had the nerve too attack Adern in parliament over her lack of knowledge in economic matters after making a mistake in an interview.

    And he wants to govern the country.

    The amount of red tape that needs cutting is a highly convenient catchphrase too use when you want too appear economically literate.

    Except the National caucus and its leader aren't

  6. Ad 6

    I would frame it around:

    "Since the current government can't execute policy with your tax money, the next government should give it back."

    The onus on both teams must be about policy delivery for New Zealanders.

  7. Wayne 7

    Simon is right. He was not claiming that the average tax is nearly 33%. He was referring to the fact that the tax rate for income from $48,001 to $70,000 is taxed at 30%, only a little less than 33%.

    I am sure the people in the Beehive have understood what the Leader of the Opposition was saying.

    So people on average incomes of $53,000 have $5,000 of their income taxed at 30% and every wage increase is also taxed at that rate. All salaries of teachers, nurses, and police officers, even when starting out, are taxed at the 30% magical rate.

    We have a standard rate of 17.5% for income from $14,001 to $48,000, then a sharp jump to 30%, with a further quite modest jump to 33% at $70,000. It doesn't take a rocket scientist to see that this is not a smooth progression. If it was, the 30% rate would be more like 26%, being 7.5% above the 17.5% rate and 7% less than 33%.

    Obviously there is a fair bit of choice exactly how the pitch the change of the 30% rate, both in terms of the actual rate and also the thresholds where it kicks in and kicks out. Both in terms of the overall impact on the revenue of the state and the impact on wage ad salary earners.

    Rob Salmond on RNZ today said a $10 tax cut per week doesn't cut it. It has to be more.

    On the average wage of $53,000, a reduction from 30% to 25% is a only a $250 tax cut per year. At $60,000 it is $650 per year, which is more worthwhile. Lifting the threshold to $50,000 makes a further difference. Basically another $250 for everyone.

    You can obviously have a variety of options around a middle income tax cut to produce whatever outcome you want. But changing the 17.5% rate is expensive, since just about everyone pays it. However, if the rate was 15%, our average income earner would gain a further $850. That would be a total tax cut of $1,350 for the average earner on $53,000. That is definitely worth having, being over $25 per week.

    One could imagine a simple (and relatively smooth progression) tax system of 15% from $15,000 to $50,000, 25% from $50,000 to $70,000 and 35% above $70,000. So a slight increase for marginal income above $70,000, but significant reductions in the two lower rates, which would benefit everyone. I have not calculated the cost in reduction in government revenue, but I imagine this is around at least a $3 to $4 billion tax package. Five percent of government revenue.

    • tc 7.1

      Yes dear……you'll be a busy boy if that's your role in this campaign

      • Wayne 7.1.1

        tc,

        I have no role in the campaign.

        But I used to lecture on tax at university (same courses that were also taught by Deborah Russell) so I am reasonably across this issue. These are just my own thoughts, informed by my thinking about tax issues over the years.

        As you can see, I like easy to remember numbers, and smooth progressions (although when the rate changes to the next higher rate, it is obviously a jump). I see cricklewood liked the tax threshold at $15,000, though for a different reason. I reckon the public, including higher rate taxpayers would be OK with the top rate being increased to 35%, given the reduction in the two lower rates. Only once you got to around $200,000 plus would anyone be paying more tax.

        OnceWasTim,

        At home, shorts and a T shirt. Never owned a leisure suit, not having ever been a member of Social Credit.

        • Blazer 7.1.1.1

          I saw you on a JetStar flight to Wellington wearing a light blue or pale grey safari suit Wayne.

          Or was it someone who just looked like..you?laugh

        • Craig H 7.1.1.2

          I like a pleasant progression too, but it was National who introduced the current brackets in 2010, so it's not like they didn't have plenty of time to change them. A bit rich now to have their epiphany…

    • "Simon is right…………….."

      Christ! Ain't that the bloody truth.

      Forgive me @ Wayne, but a little google-oogle reminded me why I have a natural aversion to you – aside from your ability to be sage-like by stating the bleeding bloody obvious a few years after it'd become evident to most.

      It was the bit about His college. And thank Christ I managed to escape all that kaka or I'd be like you – stuck on the Ark somewhere dressed in a leisure suit, rehearsing talking points for my next appearance on The Panel, or Q+A

    • He was referring to the fact that the tax rate for income from $48,001 to $70,000 is taxed at 30%…

      It was his choice to disingenuously refer to that 30% as "almost 33%", which invites the casual listener to assume people on $53,000 are paying the top tax rate. Quite deliberate and quite untrue negative spin – in other words, exactly the level of integrity we've come to expect from the man.

    • Sacha 7.4

      are taxed at the 30% magical rate

      Yet he used a different number instead, didn't he. Shades of Steven Joyce and other sad characters prepared to sell their soul for power.

    • "He was referring to the fact that the tax rate for income from $48,001 to $70,000 is taxed at 30%, only a little less than 33%."

      I don't buy that. If he meant some is taxed at 30% he should have been precise. Why didn't he say nearly 32% or nearly 34%? Because he was trying to mislead by quoting an actual but irrelevant higher tax rate for higher earnings above the average or median wage.

      Saying 'nearly 33%' is a bit like saying Bridges was nearly competent on economic issues, or nearly honest.

    • Andre 7.6

      Aren't the tax rates and thresholds still the same as they were under the previous National government? So why are they unfair now? It's not like there's been rampant inflation since then.

      Is it because there has been a lot of income growth since then lifting a lot more people into that top bracket? But isn't income growth a good thing?

      I'm not aware of any credible evidence this (remarkably low by OECD standards) top tax rate is harming New Zealand's economy, but it's for sure there's a lot of things government should be ramping up activity in that need a lot more funding. Particularly after the deliberate strangulation and vandalism perpetrated on public services by the last National government.

      • Pete George 7.6.1

        "Aren't the tax rates and thresholds still the same as they were under the previous National government? So why are they unfair now? It's not like there's been rampant inflation since then. "

        But there has been wage inflation. It has long been considered an unfair tax increase by stealth.

        Michael Cullen got hammered over doing nothing (until too late) about bracket creep. It contributed possibly significantly to Labour losing the 2008 election.

        • Andre 7.6.1.1

          So if it's so unfair, why didn't the previous National government make changes when they were in power? It's not like they were short of time.

          • Pete George 7.6.1.1.1

            They did in 2009, but were partly offset by increasing GST.

            They eventually did later, scheduling tax cuts for the year after the 2017 election. The current Government cancelled them.

            • Andre 7.6.1.1.1.1

              If it was unfair, they could have done it well before the 2017 election. But it doesn't look like fairness they were concerned about, just something they could use as a tawdry election bribe.

              • Yes it could easily be seen as a tawdry election bribe. If it had been implemented a year earlier it would have been much more difficult for the current Government to undo.

                There may yet be something similar in this year's budget.

      • Psycho Milt 7.6.2

        So why are they unfair now?

        For the same reason they were terribly unfair in 2008 but not unfair at all in 2017. National only feels concern about "unfairness" of tax brackets when it's in Opposition.

        • Andre 7.6.2.1

          Is that kinda like how deficits are always really really bad and surpluses are meh when in opposition, but when in government, deficits are a necessary fiscal stimulus prudently applied to overcome external economic headwinds and surpluses are proof of the greatest governmental management ever?

          • Psycho Milt 7.6.2.1.1

            That's the one. They're not stupid, but they think we are. (And to be fair, they're not altogether wrong – half the population is of below-average IQ, for example)

      • Wayne 7.6.3

        Over the last ten years the cumulative wage inflation has been over 30%. So people on average incomes now have a much larger percentage of their income taxed at higher rates.

        At current wage and costs inflation rates, it is reasonable for there to be a substantial tax package, essentially to restore the balance between what a person pays in tax and what they keep.

        I reckon both major parties will have significant tax packages for this election because of the 30% wage inflation effect over the last 10 years. Obviously they will differ.

        I have set out what I think is a reasonable package based on rates of 15%, 25% and 35%, with simple threshold changes. Although I haven't done the detailed calculations as to the overall cost of my proposal, I have enough general knowledge to know it will be in the region of $3 or 4 billion. Around 5% of government revenue. It would cover just about all of the surplus, but fiscal drag effects would quickly restore a substantial surplus.

        I also reckon a package like I have proposed would have broad general appeal. The big reduction is to the middle rate, from 30% to 25%. There is a small increase in the top rate to 35%. So it meets multiple political objectives.

        Just about everyone gets a tax reduction. However for incomes above $200,000 there would be a modest tax increase. For instance someone on $300,000 would pay around $5,000 more in tax, and on $400,00, $10,000 more as a result of the 2% increase in the top rate.

        I also think it would be sustainable for a good 10 years. Over that time both major parties will be in government. I reckon they would both live with it.

        In ten years time it could be bought up to date by threshold changes to take account of inflation over that timeframe.

        • Kevin 7.6.3.1

          Since when has it become the Governments job to provide meaningful increases in people's income Wayne?

          All tax rate adjustments do is just reinforce NZ's 'low wage' economy and give employers another free pass.

          Landlords of course will love it as they will be able to schedule in rent rises.

          • Wayne 7.6.3.1.1

            Kevin

            Are you seriously suggesting that governments just ignore the cumulative effects of inflation on tax rate thresholds? Even if you don’t believe in automatic inflation adjustments, surely every ten years or so, the government should look at the impact of taxes on incomes, especially average incomes.

            And they should also look at the overall design of income taxes.

            My proposal is, I believe, fairer for the great majority of taxpayers, without being a radical distortion. Any party could take them up. They can be afforded within current overall fiscal settings.

            • Sacha 7.6.3.1.1.1

              Any thoughts on shifting the balance from taxing income towards taxing wealth?

              • Wayne

                Not really. As a general principle I am not a fan of wealth taxes. Usually they are too complicated (lots of exemptions) and hard to implement (shifting asset values).

                My focus here was income tax only. It does require wealthier New Zealanders to pay a bit more, but not dramatically so. That is why I believe that the three rates of 15%, 25% and 35% could be quite enduring. It doesn't impact on high income New Zealanders enough to build a campaign to reduce the 35% rate, but it gives a decent tax cut to virtually all lower and middle income New Zealanders. It does so without buggering up social service provision, that is, it is not a radical reduction.

                • Sacha

                  Thank you. It would be interesting to hear what other parties and organisations could do with 3 to 4 billion dollars each year rather than cutting state income by that amount.

            • Kevin 7.6.3.1.1.2

              Tax rate adjustments are the only meaningful increase in income a large proportion of wager earners get in this country, Wayne. I would be surprised if you were in denial of this. Like I said it provides many employers with free pass.

              We are not a highly taxed country yet it seems to be the National Party's mantra every election campaign.

              • Andre

                At low earned income levels, we levy high rates of tax compared to other developed countries. At high earned income levels we levy low rates of tax compared to other developed countries. At high levels of unearned or passive incomes, our tax rates are zero to very low compared to other countries.

    • aj 7.7

      I have not calculated the cost in reduction in government revenue

      So your comment is only half a story then. Come back with the other half sometime, the cost in revenue and where cuts will be made to pay for it.

    • mickysavage 7.8

      Wayne with the greatest of respect …

      Simon said "People on the average wage shouldn’t be paying almost 33 per cent in the dollar".

      They are not. They are paying half that.

      If he said "People on the average wage shouldn’t be paying almost 33 per cent in the dollar on the last dollar that they earned" he would still be wrong. They do not pay 33c in the dollar until they earn $70k pa.

      • Wayne 7.8.1

        Almost no-one uses the average percentage as the measure of tax they pay. They always look at their marginal rate, as being the one that matters. The reason being that the marginal rate is the one that impacts on any future wage increases. Most New Zealanders on average incomes do not expect to be taxed at a rate (30%) that is near the top marginal rate.

        Now I know that you know that, and that you also know that Simon was referring to the marginal rate.

        When the current thresholds were introduced in 2010, averages incomes were not affected by the 30% rate. That was deliberate. We wanted average income earners to only be affected by the standard rate of 17.5%, including likely wage increases in the next few years. But 10 years later, wage increases have put average incomes into the 30% rate.

        I would have thought that would concern Labour as much as it does National.

        • Sacha 7.8.1.1

          Most New Zealanders on average incomes do not expect to be taxed at a rate (30%) that is near the top marginal rate.

          Increasing the top marginal rate like most comparable nations do would address that.

          And 'average' is doing some hard work in this campaign of deliberately blurring language.

    • lprent 7.9

      Hey Wayne: Starting a tax policy with an outright lie which, even after reframing it to the mid-income tax bracket in your first paragraph, you have just pointed out that Simon Bridges is doing, isn’t exactly the way to inspire confidence.

      My question would be to ask if he will then proceed to carry on with all of the other daft economic myths, like tax cuts for the more affluent increase economic activity, something that has never been noticeable in my lifetime.

      What does increase it is putting in the infrastructure that helps increase it – which National hasn't been noticeable at doing in their 1990s and 2010s run at government. Instead they just made tax cuts, paid for it with way lower than required infrastructure investment that was way lower than even immigration rates, and generally screwed down the economy.

      It is no coincidence that periods of National government show strong decreases in per capita productivity.

      National is the political party of mindless economic morons mostly noticeable for their level of ineffectual economic management

    • Nic the NZer 7.10

      Quick exam style question for you Wayne. Given NZs present progressive taxation and tax rates, does anybody in NZ pay 33% of their income in income tax? (Yes or No).

      • Wayne 7.10.1

        As you well know even someone earning $1 million will have an average tax rate of less than 33% (not by much) since their first $70,000 benefits from the lower rates. But all their income above $70,000 is taxed at 33%. Not unsurprisingly that the 33% rate is the one they focus on.

  8. cricklewood 8

    Hmm since you end up spending every dollar you have on avg wage, factor in gst hes actually pretty close. Guess that's a happy accident.

  9. cricklewood 9

    I'm actually in favor of a massive tax cut. I'd make the first $15000 tax free and pay for it by a new rate over $100000.

    A simple swap that helps everyone on a low income, it also sucks the oxygen right out of Simon Bridges lungs.

    Win Win

  10. alwyn 10

    Can someone please explain what a "platitiude" is?

    MickySavage seems to be very fond of them.

    • Incognito 10.1

      Platitude is the attitude of a platypus. It looks like a duck but barks like a dog at every passing car. It rounds up to 33% but cuts $100k into 7 × $14k + spare change and thinks if itself a better manager of the economy. It prefers to live in billion-dollar holes of its own making.

    • McFlock 10.2

      A cut&paste typo for "platitude".

      Nice catch method for the thrown #chatbotSyntaxError, your programmers should be proud.

    • tc 10.3

      You've made it to the web so stretch a little further to Google…you may learn something.

  11. Anne 11

    One of them involves cutting red tape! …. They are even talking about a regulations bonfire.

    Oh dear. The last time they did that saw the start of the leaky home syndrome in the 1990s which cost billions of NZ dollars to fix. In fact its still in process of being fixed.

    • Ric 11.1

      Exactly!!

    • mosa 11.2

      Yes that kept a lot of cowboy builders in a job fixing the cut corners they were encouraged too cut in the first place.

      And then off course was the patch up jobs too thousands of quake affected homes in Christchurch which caused no end of anguish for the property owners.

      No wonder so many tradies vote National , they keep them in a ongoing guaranteed job

  12. Ed1 12

    The 'error' in the average wage may well be deliberate (in voice he said it was about $62,000 when he was last in government – has it really dropped that much? But there are a lot of other figures – perhaps having corrected one figure nobody will look at the others . . .

    In some countries political statements get fact-checked – it appears that will only happen in New Zealand if sites like the readers of The Standard take it on.

    https://www.national.org.nz/speech_national_s_economic_plan_for_2020

    and some commentary at

    https://www.interest.co.nz/news/103672/simon-bridges-promises-yet-be-detailed-tax-relief-if-nationals-elected-government-saying

    and the first two statements that perhaps needs checking:

    "But our growth has begun slowing before we even start with these international factors.

    "New Zealanders are doing it tougher, facing more tax, cost and red tape, our economy is slowing, and as a result New Zealanders are worse off.

    • Craig H 12.1

      Average (mean) wage was lower than currently. Median wage is $25.50/hr which is lower than $62000 if that's the trick they're playing.

  13. Sanctuary 13

    If you want proof the establishment media is basically shills for neoliberalism, look no further than how TVNZ reported this last night.

    First, it was the lead story. I assume it was because they were using the 6pm news to push their programming, a crass commercial decision setting the news agenda on the supposedly state TV channel. Bridges speech was reported in gushing terms with no critical analysis. The clear assumption was the public love tax cuts.

    But most tellingly, the news reader used the term "tax relief" to describe Bridge's empty promise – a piece of emotionally loaded language that frames the narrative and implies we are suffering under a great burden and taxes by definition are something we yearn to be free of.

  14. Sacha 14

    Going to be a long campaign of lies..

    • Incognito 14.1

      More like a litany of lies.

      I think National’s Deputy Leader should renounce and denounce the lies by her Leader. It makes her look weak and it is a bad look for the Opposition.

      Eight days to go.

    • WeTheBleeple 14.2

      I'd love it if someone could source Bridges 33% claim from last year that Damian alludes to. Proof to spread about the interwebs to counter the nonsense.

  15. So Simon's "policy plank…". He is hopefully going to "walk it".

  16. No doubt Wayne and the Herald will continue to promote this bull dust.

    The Herald apologists are going to be busy spinning.

  17. Sacha 17

    Average means whatever I want it to, OK. https://www.rnz.co.nz/news/political/409745/finance-minister-questions-national-s-tax-policy

    He said those on the average wage should not be paying 33 cents in the dollar. There are a few problems with that – only earnings over $70,000 are taxed at that rate.

    Speaking to reporters after his speech, Bridges said he was not actually talking about people earning that much, saying in his view an average wage would be around $65,000.

    "What I have been clear about today is I'm very focused on that average income earner, we think at $60,000, $65,000 a year in New Zealand, you're doing it tough at the moment."

    • Incognito 17.1

      The take-home message from Simon’s stunt today is that National will give all of us bigly tax cuts. That’s all we need to know. He’s very focussed on minimum wage earners, beneficiaries, and the homeless staying in cold windy motels too because they pay almost 33% income tax too and that’s not right either. The man has a heart of gold worth about $200k. How can the voters resist such generous offer?

  18. mikesh 18

    Tax is not just income tax. It also includes GST and other indirect taxes such as taxes on motor spirits, tobacco and alcohol.

  19. Andrea 19

    Why is everyone focused on PAYE?

    We all pay too much tax in other areas.

    If Mr Bridges is talking about returning us to parity with Australia's GST rate (10%) – a good start.

    And the excise taxes on fuel. That'd be handy. It isn't as if the money is being used to develop alternatives such as hydrogen and a dedicated electricity supply for electic vehicles, or better train systems for long haul.

    Or even diverting money away from 'highways of significance'. How about reservoirs and pipelines of significance to capture water instead of robbing aquifers and river systems.

    National never likes to forego income. If the tax rates for income from work and interest change down you can guarantee taxes will sneak up somewhere else.

  20. Sacha 20

    Nat tactic pretty clear – clobber the poorest while assuring the 'middle' it is being done to make their life easier, not the employers and owners who will actually benefit: https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12309414

    National is considering scrapping the Government's planned minimum wage increase if it wins this year's election, the party's finance spokesman Paul Goldsmith says.

    "We are focused on making it easier for average wage earners, New Zealanders who are working hard every day and struggling to get ahead."

    Focused, hard-working, get ahead, yadda yadda..

  21. mac1 21

    In the House today at Question Time we learned that the tax paid on the mean NZ income is just under 17%. On the average NZ income tax paid is 19%.

    Here is the knockout blow to Bridges’ claim. In order to pay nearly 33% tax on one's income, you'd have to be earning $3,000,000 per annum, said Minister Nash.

    He was then asked by Dr Russell what the IRD would do if someone tried to divide their $100,000 income into eight parts for taxation purposes…….

    The laugh on Ian Lees-Galloway’s face was a delight to behold!

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