Give us the policy lowdown

CEOs have expressed major scepticism over Labour’s tax policies and lack of details, reports Graham Skellern

The priority is a clear articulation of policies and how they will be paid for. No more `we’ll leave it to a working group’. Clarity needs to be provided immediately rather than `trust us, we’ll be okay’. Media boss

New Zealand’s top chief executives are clear. They want Labour’s finance spokesman Grant Robertson to concentrate on wealth creation policies, rely less on increasing taxes and provide the detail on Labour’s economic policies.

In the 2017 Mood of the Boardroom Survey, chief executives were asked: What should be Grant Robertson’s major priority as Minister of Finance? They replied: Give us clarity, vision and investment.

It is a measure of their engagement with this pivotal election that 87 of 118 survey respondents gave their personal view to the open-ended question.

A media boss says the priority should be a clear articulation of policies and how they will be paid for. “No more ‘we’ll leave it to a working group’. Clarity needs to be provided immediately rather than ‘ trust us, we’ll be okay’.”

Z Energy CEO Mike Bennetts wants to know what contingencies Labour has, should income be less than projected, and what that would mean for its spend on newly announced and yet-to-be announced policies.

Robertson, a former Labour deputy leader, became finance spokesman in November 2014 in former leader Andrew Little’s shadow cabinet reshuffle. He has been researching international economic policy and is responsible for Labour’s Future of Work Commission. The commission, which engaged an external reference group, wants to develop the vision, direction and policies for an economic and social programme that will enable New Zealanders to confidently face the changing nature of work and have sustainable, fulfilling and well-paid employment in the coming decades.

Policies tackling the changing nature of work would be targeted to ensure decent jobs, lower unemployment, higher wages, greater security in work or out of work, and highly skilled, adaptable and resilient workers.

Business gets that. In this year’s CEO survey, 63 per cent of chief executives predict their companies will change more in the next five years than the preceding five years.

During the campaign, most eyes have been on new Labour leader Jacinda Ardern.

But the spotlight fell on Robertson when his rival, National’s finance spokesman Steven Joyce, claimed Labour had a $11.7b hole in its fiscal plan.

Robertson swept into action, saying `”we have a fiscal plan that has been independently assessed and adds up. What Joyce has done is taken effectively our leftover cash at the end and then tried to accumulate that out as if we're going to spend every dollar of it every year. I've never said that. I've never said that our fiscal plan did that.”

Kirk Hope of BusinessNZ wants more focus on wealth-creation policies rather than increasing taxes.

In its first term, a Labour Government would cancel National’s tax cuts and implement a package to boost Working for Families for those who currently receive it and extend it to more families, introduce a Best Start payment for costs in a child's early years and introduce a Winter Energy Payment for those receiving superannuation. It would also:

Restart contributions to the New Zealand Superannuation Fund;

Begin the construction of a light rail network in Auckland, invest in passenger rail for Hamilton and Tauranga, and restart commuter rail in Christchurch;

Introduce a clean water

royalty on major commercial users of water;

Boost jobs through a Regional Development Fund introduce R&D tax credits

Establish a Tourism and Conservation Infrastructure Fund

Target reducing New Zealand’s unemployment to 4 per cent.

The CEOs want detail on what Labour is not saying. Particularly, the detail on Labour’s expected plan to introduce a fully fledged capital gains regime and various imposts such as water royalties which impact on the productive rural sector. A summary of views include a call for “Clarity on tax changes” (infrastructure boss), “Substance on policies; lacking detail at present” (insurance chief) and “Stop endless new taxation ideas from his party” ( financial services firm boss). “Reign in Labour’s tax grab instincts,” advocates EMA’s Kim Campbell.

A banking boss wants to see a focus on creating an environment where businesses can flourish because that enables Robertson to spend on social programmes.

Don Braid of Mainfreight says Robertson’s priority should be vision and investment in important infrastructure. But a company chairman was more forthright: “I can’t bear to think about it (Robertson’s priority). I don’t rate him so rely on some capable officials to see that he does not get us all into difficulty.”

Labour has said it will ban foreign speculators from buying existing New Zealand homes. This will remove from the market foreign speculators who are pushing prices out of reach of first home buyers.

Labour would extend the bright line test for property speculators who flick houses within five years. Speculators would no longer be able to use tax losses on their rental properties to offset tax on other income which gives them an unfair advantage over people looking to buy their first home.

Robertson said “our fiscal plan shows New Zealanders we will make the investments required to re-build our core public services, reduce inequality and poverty, and invest for the long term benefit of New Zealand, while also responsibly managing our country’s finances.”

He claimed by the end of the first term, unemployment in New Zealand should be among the lowest in the OECD, from the current position of 13th. The New Zealand Superannuation Fund will be growing rapidly again and worth around $63 billion. The infrastructure projects to get the cities moving will be under way, and Labour will be making progress in cleaning up the country’s water.

“While these investments are being made, we will take a breather on immigration until our cities can keep up with rapid population growth.

“By the end of our first term, we expect to see a significant increase in incomes, especially for working families and those in need.”

Steven Joyce needs to drive economic policy at improving productivity growth — and that means modifying policy across a broad range of policies, not all of them popular. For example, there would be merit in scrapping all controls on inbound foreign direct investment, possibly with the exception of land purchases. It shouldn’t take three months to approve a Chinese investment in a dairy factory (as it did in the case of Yili). The corporate tax rate needs to be reduced — it is now well above the OECD average. The Resource Management Act needs radical reform — it is ridiculous that it now often takes months, sometime years, to get approval to some pretty basic things.” — Don Brash, ICBC Chairman and former Reserve Bank Governor,