Bridges wants less tax, more growth
National Party leader Simon Bridges wants to stem the tide of New Zealanders heading overseas and cut taxes and regulations to achieve 3 per cent per annum economic growth.
Bridges said the John Key Government reduced the flow of New Zealanders overseas from
42,000 a year in 2008, to 4000. That figure has now jumped up to
10,000.
These goals will be among the five key measures to which a future National-led government would hold itself. They will be announced today at a speech in Auckland. Bridges spoke to Stuff ahead of the speech, calling it ‘‘significant’’.
‘‘Whilst it does not have a specific policy announcement, it quite clearly sets out how I view the economy and the measures the sixth National Government will hold itself to,’’ he said.
He said National wanted to announce them early so the party could campaign on the goals.
Bridges said the party wanted to get growth back to ‘‘at least 3 per cent per annum’’, with per person growth rates ‘‘in the top half of the OECD’’.
He also wanted to reduce the after-tax income gap with Australia, and make ‘‘more New Zealanders feel they can reach their potential at home, rather than overseas’’.
The final goal will be to revive business confidence ‘‘so that businesses feel like they can take more risks and create opportunities for you and your family’’.
The party will announce details of its economic plan in the coming months, which will include five ‘‘planks’’ that will help the country achieve Bridges’ target.
The planks will detail tax cuts, regulation reduction, an infrastructure package, a small business package and a families package.
Bridges’ speech will gesture to where the tax cuts are likely to be found – income tax rates and the 28 per cent corporate rate, signalled in the party’s discussion document last year, look like obvious targets but voters will have to wait a little longer to see how big the cuts will be.
Economic growth has slowed in recent years. This is partly a result of slowing growth internationally, as the trade war and overall economic uncertainty weighed on the economy.
New Zealand is still growing much faster than international competitors. Annual economic growth, measured by GDP (gross domestic product), in the year to September 2019 was 2.7 per cent, compared with 1.7 per cent in Australia, 2.1 per cent in the United States, and 1 per cent in Britain.
But Bridges believes the country could grow faster still.
Average growth has been 2.8 per cent over the past 10 years.
The previous National government averaged 3.4 per cent growth during its last five years in office – the first four years were much slower as the country recovered from the recession.
He also wants to lift GDP per capita, a measurement of how much of a share of economic growth individuals receive.
Annual GDP per capita is currently 0.6 per cent. National averaged 1.8 per cent in its last five years in office. Again, growth was slower in the first period.
Bridges will say that if New Zealand’s GDP per capita were as good as Australia’s ‘‘the average Kiwi would be 35 per cent richer’’.
National has come under pressure to release its fiscal strategy, which will set out highlevel economic settings that it plans to govern by, including how much it plans to borrow.
The Labour and Green parties released their version of this, the Budget Responsibility Rules in March of 2017 before the election which was held in September.
Bridges said he would ‘‘absolutely’’ be releasing a strategy ‘‘including costings of our overall plan well in advance of the election’’.
National has promised to spend more on infrastructure but refused to set a number to their debt target, beyond comments from Paul Goldsmith that the setting of the current
Government was ‘‘about right’’. The Government had set its borrowing limit at a net 20 per cent of GDP and has since moved it to 15-25 per cent of GDP.
At the last election, National campaigned on reducing net debt to 10-15 per cent of GDP by 2025.
Treasury itself has said the Government could allow borrowing to increase to a net 30 per cent of GDP and still allow headroom for absorbing economic shocks.
Bridges comments indicate National still plans to keep debt low. ‘‘We have to be careful about debt even in low-interest environments.’’
He said the current Government had not made the case for increasing debt.
‘‘They have not made the case on the spending side of it,’’ he said, pointing to KiwiBuild, the recipient of $2.1 billion at the 2017 mini-budget, and its $3b Provincial Growth Fund.
But the Government has also announced some popular largely debt-financed packages, including its $12b New Zealand Upgrade Package, which includes several National Governmentplanned roads.
‘‘I acknowledge there is good debt and bad debt,’’ Bridges said.
‘‘We clearly want to invest in infrastructure,’’ Bridges said, ‘‘but I don’t think we should let loose on debt.’’