On the weekend my cousin, who is managing a large Auckland restaurant, asked me about an opportunity to invest directly in a large new cafe business by the same partners. My advice was: keep your Kiwisaver as your primary long term goal, but be brave if you want to with a punt that you can manage with your own smarts and experience. Time to back herself.
A more productive economy – and society – has been an elusive goal for many of New Zealand’s previous governments. As we have seen from National’s last nine years of rule, they were not successful.
Ideally, productivity should mean using fewer resources to get better results and more wealth for more New Zealanders, not slaving your guts out. New Zealanders on average work very long hours and don‘t get good pay or pay increases to reward us. Even Treasury says so.
In Grant Robertson’s speech to the Waikato Business Summit of February 8th, he said that this government will be reforming the tax system to ensure greater support for a more productive economy: “For too long our tax system has lacked balance and has encouraged speculation, particularly in housing. We want this to change, and we have charged a Tax Working Group … to make proposals in this regard.”
Australia – to a lesser degree than New Zealand – has relied on bulk and high-mass commodities to sustain its economy, which hasn’t been good for productivity increases. So two recent announcements from Australian Labor’s Bill Shorten caught my eye.
The first is a commitment that, if elected, businesses which invest in Australia will be eligible for new write-off provisions. It’s a promise to introduce an Australian Investment Guarantee that promises an immediate deduction of 20% off any new asset worth more than $20,000.
At almost the same time he has announced that he is going to come down hard on tax benefits for shareholders called dividend imputations used for cash refunds.
Of course this kind of crackdown on about 200,000 self-managed super funds and wealthy retirees is going to get a major backlash from the politically influential superannuation lobby.
But the intended effect upon Australia’s economy is this: encourage many, many more Australians to invest away from the sharemarket and more directly into businesses, and for those businesses to spend a lot more on high performing productive assets.
This puts productivity squarely in the frame for their 2019 federal election, squeezed in a new direction by Labor from both ends of the investment.
I want to see Minister Robertson expand his horizon beyond cooling housing speculation and tax-and-spend happiness, take a step back and ask: what can be done to shift the whole of our working lives for greater reward, more exciting careers in highly innovative companies, and better use of our natural resources. Labor Australia is now very clear about what it will do, well before its 2019 election.