Tripwires laid as National prepares to release tax plan
Tripwires laid as National prepares to release tax plan
The government has found $4b to trim from the public service over the next four years and National reveals it will release its fully-costed tax policy this week
Mōrena and welcome to The Bulletin for Tuesday, August 29, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: New Zealand significantly off track in reducing emissions says IMF; Peter Jackson and Fran Walsh donate $2m to Wellington Town Hall; three more cost of living election promises to come from Labour; but first, yesterday’s cuts and saving announcement likely doubles as PREFU prep and political maneuvering
Public sector cuts and consultant spending to reduce
Some might call it cynical; some, the purview and privilege of an incumbent government. Yesterday the government announced that it has found $4b to trim from the public service over the next four years, on top of the $4b saved in the Budget 2023 in May. Finance minister Grant Robertson made the announcement yesterday, saying a “savings and efficiency exercise” was underway with government accounts for the 11 months to the end of May showing tax revenue $2b below forecast. Contractor and consultant spending will be reduced and public sector agencies have been directed to trim one or two percent off their existing baselines. Here’s a breakdown of where savings will come from and where cuts will be made. The news was greeted with a “too little, too late” by the National party.
PREFU preparation amid slowing growth
The move comes ahead of the pre-election opening of the books, or Pre-election Economic and Fiscal Update (PREFU) on September 12. interest.co.nz’s Dan Brunskill writes that “deeper deficits were likely to be revealed in the PREFU that could show Labour failing to meet its own fiscal rules. To prevent that from happening, finance minister Grant Robertson has searched for savings that can be baked into the PREFU numbers and get the Crown accounts back into surplus.” As Tom Pullar-Strecker and Luke Malpass report in The Post this morning, the International Monetary Fund (IMF) is predicting that New Zealand’s economic growth rate in 2024 will be the lowest in the Asia Pacific region and amongst the lowest in the world next year. As an aside, the IMF aren’t fans of Labour’s policy to cut GST on fruit and vegetable and once again requested that we revive the notion of a capital gains tax.
Will this affect National’s plans?
The announcement is potentially something of a double-edged sword for National’s financial spokesperson Nicola Willis. On one hand, it proves that a line of questioning in the House on August 3 from Willis about directives to government departments to save money was not off the mark but, as the Herald’s Thomas Coughlan writes (paywalled), the “exercise shows Robertson using all the perks of incumbency to lay the path ahead with landmines”. Coughlan cites the party’s plan to trim consultant spending to fund its childcare tax credit policy as an example of Robertson robbing National of a potential campaign promise. Brunskill’s report also reveals details of National’s tax policy, which Willis has said will be revealed this week, apparently before Saturday, freeing up fiscal nerds to enjoy their lives, unchained from the shackles of what’s felt like unending speculation. Willis has already said the policy is “fully funded” and “will not require funding from future operating allowances or debt funding”. There’s been some speculation (paywalled) that a carbon dividend paid to households could be involved. That’s money from the Emissions Trading Scheme that’s currently funnelled into climate change projects.
Up the Wahs?
With all the tax and PREFU talk, let’s end with yesterday’s post-cabinet press conference, the last before the House rises on Thursday and the 53rd parliament is adjourned. The prime minister’s last utterance from the podium before signing off? Responding “Why not?” when asked if he’d front a video with Christopher Luxon saying “Up the Wahs” if the Warriors make the NRL grand final. That followed questioning about whether the correct catchcry for supporters was “Up the Wahs” or “Let’s gone Warriors”. Apparently, Hipkins isn't an avid league fan (paywalled) and hedged his bets answering that.
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New Zealand remains significantly off track in reducing emissions
Back to the IMF report released this morning. As Tom Pullar-Strecker reports, the IMF says New Zealand remains significantly off track to meet the promise it made to the United Nations to reduce its net carbon emissions to half of its 2005 gross emissions by 2030. A doubling the real price of carbon credits by 2030, while “politically difficult”, could largely close the gap, it said. In related news, Newsroom’s Marc Daalder reports (paywalled) that climate change minister James Shaw didn’t get a heads-up about $226m in cuts to climate initiatives as part of yesterday’s cost-cutting announcement. Asked about the impact of the cuts on climate, Grant Robertson said he couldn't remember whether cabinet had looked at the climate impacts when it made the call to cut funding.
Peter Jackson and Fran Walsh donate $2m to Wellington Town Hall
Te Herenga Waka (Victoria University of Wellington) and the New Zealand Symphony Orchestra (NZSO) announced yesterday that Sir Peter Jackson and Dame Fran Walsh have made a $2m contribution to the Wellington Town Hall revitalisation project. The contribution will go towards building a state-of-the-art recording studio in the basement of the historic venue. The music for the Hobbit movies was recorded in the old Town Hall with the NZSO and help from London’s Abbey Road studios. A statement from Jackson and Walsh cited praise from Abbey Road engineers who “declared Wellington’s old Town Hall to be ‘one of the best acoustic spaces’ they had ever encountered”.
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Click and Collect
Chris Hipkins says there are three more cost-of-living election promises to come from Labour and reiterates no “big-spending” line
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Former broadcaster and conspiracy theorist Liz Gunn successfully registers her political party and a candidate for Freedoms NZ heckled Christopher Luxon over a fence
“Filmmakers have Cannes. Billionaires have Davos. Economists? They have Jackson Hole.” If you’ve seen news of a speech from US Federal Reserve chair Jerome Powell at Jackson Hole floating past, here’s a great read on exactly what Jackson Hole is.
A party pill industry insider explains why the vaping problem gives them deja vu. Madeleine Holden coined a mega-viral catchphrase ten years ago and it still haunts her today. Toby Manhire satirically gives voice to the wealth tax following a recent political announcement. Joel MacManus outlines what the end of one of the most hated policies in public transport means for commuters. Jennifer Smart investigates and reviews the books young people are studying at school these days.
Sporting snippets
“Not since the Unruly Tourists hit Takapuna four years ago has a single family caused as much carnage on one patch of grass as the Barretts” — Dylan Cleaver on the All Blacks performance against South Africa on
Dame Lisa Carrington won her 15th canoe sprint World Championship title yesterday
“In six days #SeAcabó (it’s over) has replaced the kiss that Hermoso never consented to” — the online and in-stadium response in support of Spanish player Jenni Hermoso in wake of the Rubiales scandal
“The profession of the century”
In three years, membership of the British Association of Counselling and Psychotherapy has increased by 27% and student membership has risen by more than a third. In what might be a pandemic-related doubleheader, more people are seeking more meaningful work, while demand for mental health services increases. This Financial Times report, republished in the Herald (paywalled) dubs counselling “the profession of the century” with anecdotes of farmers, lawyers, investment bankers, nurses and HR professionals investigating counselling as a possible career. This year, a popular training course in the UK has “attracted applicants from journalism and air travel, where workers skilled in analytical thinking or communications have been made redundant.” Good to know journalists and aviation workers have options.
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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