NZ Election: National’s tax policy

Written By: - Date published: 9:07 am, September 21st, 2023 - 7 comments
Categories: business, conservatives, economy, Economy, election 2023, national, tax, uk politics - Tags: , , , ,

A year ago this month, the Liz Truss/Kwasi Kwarteng mini-budget destroyed once and for all the myth that the Tories are better at managing the economy. The New Zealand National Party could not even wait until they were in government to prove the same applies to them.

National, the main centre-right party in NZ politics have released a policy which economists claim does not add up. National argues their proposed foreign buyer’s tax will raise $2.9 billion. However, analysis from three independent economists does not back this claim. Instead, they estimate a $2.1 billion shortfall over a four-year period.

National are under increasing pressure to explain how they will fund their other tax cut policies. The foreign buyer tax policy was supposed to explain the shortfall. National has not released the fully costed workings of their policy and instead has fallen back on sound bites and slogans.

Like in the UK a year ago, there are real fears that cutting taxes during a cost of living crisis will drive up inflation. Further, if the so-called foreign buyer tax will not cover the shortfall, the only other option is severe spending cuts on public services or heavy borrowing. Or both.

National has raised considerably more money than Labour in the lead-up to this election. Much of this is from business. Many in the business sector were unhappy with the strict lockdowns during the pandemic, especially in 2021. Many of them believe the myth that the centre-right is better at managing the economy, so are supporting the National Party. More than a few of National’s business backers must now be questioning their investment in a party whose numbers simply do not add up.

In an interview with the NZ Herald, Opposition Finance Spokesperson and National’s deputy leader Nicola Willis, on seeing the alternative costings said it was “hardly surprising to have different economists disagreeing about things. National is confident in our figures. They have been independently assessed by Castalia economic advisors.”

Yet the full Castalia assessment has not been released. While the economists may have each produced their own different assessment of her party’s policy, they all agree National have grossly overestimated the revenue this new tax would raise.

If current polling is to be believed, in one month Willis will be the NZ Finance Minister and her party running the country. Given she and National are yet to produce more than opposition slogans and policies that do not add up, this is concerning.

Even the ACT Party, who are historically to the right of National, have now said they will be dialling back their tax cut policies due to the current economic situation in New Zealand. This is not entirely surprising. In the first term of the Thatcher Government, which started the New Right economic reforms in the UK, there were no tax cuts due to the high level of inflation in the late 1970s and early 1980s. By contrast, The NZ National Party, do not even understand their own economic theories. Their analysis seems to be little more than tax cuts = good, government spending = bad.

Willis and National said one way their numbers will add up is by cutting waste. They recently highlighted a story where a senior public servant was given a $40,000 farewell party. This is clearly unacceptable, and the official concerned was rightly made to pay this money back. But putting this in context, the total NZ health budget for 2022-23 was $14.9 billion. A handful of cases of waste, ordering fewer paperclips and turning off office heating at weekends will still just be a drop in the ocean.

At the time of writing, National are the favourites in this election. What is increasingly clear is they are not ready to govern. And increasingly, economists, even those sympathetic to centre-right politics are publically saying as much. Anyone who still thinks a National-led government will improve New Zealand’s economic situation need only look at the evidence. Like the UK Conservatives under Truss, they simply are not up to the task.

7 comments on “NZ Election: National’s tax policy ”

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  1. Dennis Frank 1
    21 September 2023 at 9:51 am

    You bet. Nats are teetering on a slippery slope of credibility & the PM failed to dramatise that in his debate response.

    Castalia: We solve complex, strategic assignments and deliver sustainable, measurable results. https://castalia-advisors.com/about/

    So how can independent validation happen if their advice is secret? Presuming their stance is neolib, they will claim privacy as privilege. Is that democratic? Of course not: the privileged design of our democracy does not allow public verification.

    Or not. If this company of 50 decides to release it to the public, we may deem them credible as participants in the election campaign…

  2. adam 2
    21 September 2023 at 9:54 am

    We have no city of London to stop this madness.

    Let me remind kiwis, we have no group who can stop a government after implementing a totally ideological policy.

    We just get to collapse.

  3. Ad 3
    21 September 2023 at 9:57 am

    I hope this is the last election that Labour and Greens go into an election with separate tax policies. Labour and Greens need a common tax position.

    It has been so easy for National to make Greens the bogeyman, just as Labour are doing with Act.

    It just requires actual grown-up leaders to talk and hammer it out.

    We're not going to win while National continue to have a more compelling tax platform than the left. We will win again when we do.

  4. Peter Bradley 4
    21 September 2023 at 1:39 pm

    New Zealand voters are morons. Under Nationals proposed tax policy the average income earner will be better off by about $7 a week while those of us on high incomes and with assets will benefit to the tune of 10's of thousands a year. This is by design and the fact that it is effective politically is an indictment of the voting public.

    The shortfall in Nationals tax policy is not some overlooked modelling error but part of a "starve the state" strategy that all center right parties wet their pants over. If you want to know how this works look at the UK which has been able to smash redistributive investment in local and national government under the guise of a shortfall in tax revenue – following tax cuts for corporations and the wealthy.

    But don't blame National for this – they are doing what their donors and the high wealth individuals in NZ want. Blame the majority of ordinary Kiwi's who think this is a good idea and then get annoyed when the health system stops working or their schools are underfunded or the economy shrinks. Complete fucking idiots.

    It enrages me and I'm someone who will financially benefit from Nationals policies. I really don't want to because I know what it's going to cost the ordinary New Zealanders voting for it.

    • tc 4.1
      22 September 2023 at 9:02 am

      Sadly correct except the public rely on the media to inform them and that's where we've all been let down for many years now.

      This and other sites, which hold robust debate, aren't mainstream enough with TVNZ/RNZ so lightweight when heft is required.

      This is all by design, dumb it down, reproduce the spin, demonise and indulge in phoney culture wars etc. The msm is a very large part of the problem

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