Questions mount about how tax cuts will be funded and what they will look like
Deputy PM Winston Peters has agreed with an assessment that shows a $5.6b shortfall in paying for the government's campaign promises. The finance minister is denying it.
Mōrena, and welcome to The Bulletin for Tuesday, March 19, written by Anna Rawhiti-Connell.
In today’s edition: Government to get tough on Kainga Ora tenants; China’s foreign minister meets PM; wastewater testing reveals where our biggest drinkers live; but first, the prime minister guarantees tax cuts but won’t rule out introducing new taxes in the Budget to fund them
PM won’t rule out new taxes
At a post-cabinet press conference described by the Herald’s Thomas Coughlan as “slightly chaotic” (paywalled), prime minister Christopher Luxon stuck with the promise of tax cuts being delivered in this year’s Budget on May 30 but would not say whether they would be the size promised in the coalition agreement and would not rule out new taxes to pay for the tax cut plan, including new taxes on working people. That was a question posed in response to a promise by Nicola Willis last year, who told the AM show in August that “[There will be] no new taxes to working people, our view is that the tax system has become unfair because the squeezed middle of everyday working people are paying higher rates of income tax.” Willis ruled out a GST hike earlier this month on the AM show.
Deputy PM agrees with shortfall assessment
As interest.co.nz’s Dan Brunskill reports Luxon said we need to wait for the Budget to see how the tax cuts look and how they might be funded. As Brunskill notes, elsewhere in the press conference, he said the tax package would be funded partly through “revenue raising measures” and partly through “savings that have been identified.” Muddying the waters is deputy prime minister Winston Peters agreeing with an assessment by Vernon Small published in the Sunday Star Times during his state of the nation speech on Sunday. It found the gap between National’s figures from August last year, and estimates now suggest there’s a $5.6b shortfall. The Herald’s assessment is slightly more favourable, suggesting there’s a $3.3b gap.
Willis holding the line
As RNZ’s Katie Scotcher reports, Willis is currently denying suggestions of a $5.6b shortfall, saying she won't guarantee promised tax cuts will arrive in July until the policy has been discussed by the cabinet. Responding to speculation about how the Budget might look by saying cabinet needs to agree and to wait until it’s published is the government’s prerogative. Speaking to RNZ’s First Up this morning, Willis “I remain confident we can fund our tax reduction objectives in a way that's responsible and affordable.” When asked whether the government can afford all its commitments after his state of the nation speech on Sunday, Peters replied, “our ones, yes.” The Post’s Thomas Manch has an astute read this morning on the length of Luxon’s wick in allowing Peters to raise questions about tax cut funding and make comments comparing co-governance to Nazi Germany. “How long will Luxon let this go on for? As long as Luxon wants the coalition to hold,” he writes. “This is quintessential Peters strategy,” he says.
‘It's not the time for tax cuts’ - former Reserve Bank economist
If this is all sounding familiar, the run up to last year’s election was littered with talk of fiscal holes and wonky tax plan costings. Council of Trade Union analysis released last August suggested there was a shortfall of at least $3.3-5.2b in National’s tax and spending plans. It went both ways, with Peters claiming there was a $20b hole in the last government’s books and that public service bosses were being told to cut 10% from budgets to fund it. Three economists from across the political spectrum independently reviewed National’s figures on how much revenue the foreign buyers tax would raise and found it short by $450m. NZ First scotched that tax in its coalition agreement with National. One of the economists who made the independent assessment was former Reserve Bank economist Michael Reddell, who said yesterday, “I think many economists would take the view that we are starting with such a large fiscal deficit bequeathed to them by the Labour government that it's not the time for tax cuts.”
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Government resets expectations on Kāinga Ora’s management of antisocial tenants
In a letter to Kāinga Ora, the housing and finance ministers have reset government expectations on how the housing agency deals with tenants who demonstrate persistently antisocial behaviour. The ministers take aim at the Sustaining Tenancies Framework, saying the framework does not encourage tenants to improve their behaviour or stop damaging the houses. It was introduced in 2017 with the goal of avoiding evictions and exits into homelessness. The letter also set out expectations that Kāinga Ora would make “timely usage” of formal warning notices and relocations and address rental arrears faster. Speaking yesterday after the reset was announced, Prime Minister Christopher Luxon gave examples of violent and anti-social behaviour and said, “Today we’re saying enough is enough.”
This morning on The Spinoff, a longtime Kāinga Ora tenant shares her experience renting a home from New Zealand’s biggest residential landlord.
China’s foreign minister Wang Yi meets Peters and Luxon
China’s foreign minister Wang Yi started his diplomatic tour of Australasia yesterday, meeting with deputy prime minister and foreign minister Winston Peters and prime minister Christopher Luxon in Wellington. It’s Wang’s first trip to New Zealand since 2017. Reuters reports that New Zealand’s concerns about rising tensions in the South China Sea and the Taiwan Strait were shared with Wang. The trip has been covered in the Global Times, a daily tabloid owned by the Chinese Communist Party's flagship paper, the People's Daily. It was noted that “For New Zealand, economic issues are critical, so maintaining productive and constructive relationships with China rather than putting itself on the strategic chessboard of the US is vital for the South Pacific country”
The NZ film legends behind Once Were Warriors and The Convert
Film industry veterans Lee Tamahori and Robin Scholes join Duncan Greive on the latest episode of The Fold to discuss the unintentional political resonance of their new film, The Convert and the financial challenges facing film productions in NZ.
Click and Collect
Wastewater testing reveals New Zealand’s biggest-drinking regions
Doctors call for engineered stone ban
Documents released under the Official Information Act reveal (paywalled) what happened at Te Papa when a protester defaced a panel displaying the English version of Te Tiriti o Waitangi, and the museum’s struggle to decide whether to keep the damaged panel or take it down.
Greens will “have to really review how they're approaching these crises” - former Green MP in wake of MP Darleen Tana’s suspension
Feeling clever? Click here to play 1Q, Aotearoa’s newest, shortest daily quiz.
George Driver debunks a persistent myth about what causes New Zealand's high skin cancer rates. We round up everything new on streaming services this week. Stewart Sowman-Lund reviews a blanket from AliExpress that inexplicably features a low quality print of the Palmerston North council building. Alex Casey investigates whether Justin Timberlake has copied one of the most recognisable New Zealand music videos of all time.
Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.
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I really wish that when commentators say that Labour "bequeathed" a large deficit to National, that they would have the honesty to say that that money was used to keep New Zealanders alive and in jobs during the worst of the Covid-19 pandemic. They could also mention that our trading partners fared much worse.
Tom Cox writes on Substack : Isn’t it amazing the way life can seem too short, and intrinsically magical, yet at the same time feel like a long, uphill road, potholed with fuckwits?
We really need that ministry of potholes, urgently.