Ardern: Govt borrowing has ‘cushioned the blow’

Prime Minister Jacinda Ardern says taxing New Zealand’s top earners is a way to keep growing debt under control.

Ardern and other political party leaders spoke to the business community at the Business NZ Leaders’ address yesterday.

Ardern said the Government had borrowed to ‘‘cushion the blow’’ from Covid-19.

‘‘Our debt is lower than many other countries’,’’ Ardern said.

This year had not been easy, she said.

‘‘For business it’s been hard. ‘‘It’s incredibly hard for business to plan. In this environment I want to give business as much certainty as I can.’’

Ardern said the economy rebounded in July after the economic setbacks earlier in the pandemic.

‘‘We moved fast with a no-regrets approach.’’

She said levels of public debt in New Zealand were still relatively low. A new top income tax rate of 39 per cent would help ‘‘keep the lid on debt’’, she said.

Labour is proposing a top tax rate of 39 per cent on income over $180,000 a year. It is estimated that will generate an extra $550 million in revenue a year.

‘‘We have always been seen as clean, green and safe,’’ Ardern said.

That reputation was more important than ever. She cited a Forbes magazine report that ranked the country second-safest in the world.

NZ First leader Winston Peters used his address to tell businesspeople that it was important not to ‘‘stuff the country’’.

‘‘That’s what this election’s about,’’ Peters said.

He said New Zealand First would act as a moderating force in Government. ‘‘We cannot afford big, stupid, inexperienced Government.’’

Peters said his party would champion rail, but not light rail or disruptive projects that caused congestion and chaos in Auckland. He said mass immigration built up huge demand for services in Auckland.

Peters said the Provincial Growth Fund, which his opponents had derided as a ‘‘slush fund’’, was now fashionable policy. ‘‘Now they’re all advocating it.’’

National leader Judith Collins said New Zealand was turning into a ‘‘junkie economy’’ hooked on bailouts, while ‘‘yoyo-ing’’ into lockdown was causing harm to businesses.

The National Party had supported the Government borrowing to pay for the wage subsidy, she said, but it was time to discuss what was coming next.

‘‘This upcoming election is really important for us in New Zealand... The Reserve Bank has described us as about to face the biggest economic crisis in 160 years.’’

Collins voiced concern about the implications of growing government debt and quantitative easing.

‘‘We cannot continue to have this line of economic morphine in our bloodstreams any more.’’

She said borrowing should be done with the checks that a business would use.

A good government would have a hi-tech vision for the future. ‘‘It has to be around infrastructure. It has to be around building.’’

Collins said re-skilling people took time, and time was a luxury some economic sectors didn’t have.

‘‘I know in Central Otago, they’re saying: Who’s going to pick the cherries?’’

‘‘In this environment I want to give business as much certainty as I can.’’ Jacinda Ardern Prime Minister