First steps taken towards flag referendum

29 October 2014 0 Comments

Cabinet has agreed on the details of the flag referendum process and every political party represented in Parliament has been invited to take part, say Prime Minister John Key and Deputy Prime Minister Bill English.

“Our flag is the most important symbol of our national identity and I believe that this is the right time for New Zealanders to consider changing the design to one that better reflects our status as a modern, independent nation,” Mr Key says.

“However, as I have also said, retaining the current flag is a possible outcome of this process and the consideration of options will be done carefully, respectfully and with no presumption in favour of change.”

Cabinet has agreed that Deputy Prime Minister Bill English will be the minister responsible for the flag consideration process.

Letters were last week sent to each of the political party leaders in Parliament inviting them to nominate an MP to join a cross-party group of MPs which will have two key tasks, Mr English says.

“The first will be nominating suitable candidates for a Flag Consideration Panel, which will be a group of respected New Zealanders who will seek submissions from the public on new flag designs and suggestions.

“The second task will be to review the draft legislation which will enable the proposed two binding referendums on the flag to go ahead. The first referendum, which will be held late next year, will invite the public to choose a preferred design from a range put forward by the Flag Consideration Panel, and the second referendum, to be held in 2016, will be a run-off between the preferred design and the current flag.

“We are today releasing the Cabinet paper which outlines the details and timeframe that Cabinet has agreed on,” Mr English says.

“This includes the principles that will guide the consideration process, the projected timeline and costs. The total cost spread across two financial years is estimated at $25.7 million, with most of that going on the referendums themselves and on the public engagement process which is required to ensure that the public is well-informed and has the opportunity to participate.”

The leaders of political parties have been asked to make their nominations by Monday, November 10. As sole MPs, ACT Leader David Seymour and United Future Leader Peter Dunne have agreed to join the cross-party group to represent their respective parties.

The Cabinet paper is available here: http://www.dpmc.govt.nz/dpmc/publications/nzflag-process

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Crown accounts show steady improvement

07 October 2014 0 Comments

The Government’s operating deficit before gains and losses narrowed for the third consecutive year to $2.9 billion in the 12 months to 30 June – down from $4.4 billion the previous year, Finance Minister Bill English says.

Net government debt increased from $55.8 billion to $59.9 billion in the latest year, but as a proportion of GDP it fell from 26.3 per cent to 26.2 per cent. This was $4.8 billion less than forecast in Budget 2013, with $2.5 billion of this driven by lower capital spending and proceeds from the Government’s share offer programme exceeding forecasts for the latest year.

“The result is further evidence that the Government’s careful fiscal management is producing consistent gains over time,” Mr English says.

“By setting a path back to surplus and running a clear economic plan to support growth, more jobs and higher incomes, the Government is providing opportunities for New Zealanders and their families to get ahead.

“New Zealand’s economic growth of 3.9 per cent in the year to June was the highest for a decade. But one or two years of growth will not change our economic prosperity - we need to stay on course over many years to really lift our long-term economic performance.

“Getting back to surplus this year and building larger surpluses into the future remains a significant challenge. It’s important that we return to surplus so we can start repaying the debt built up to support the most vulnerable New Zealanders through the previous recession and to help the people of Canterbury rebuild their lives.”

The $2.9 billion fiscal deficit for the year to 30 June followed core Crown tax revenue at $61.5 billion being lower than forecast and core Crown expenses at $71.5 billion also being a little below forecast.

“Tax revenue was $2.8 billion higher than the previous year, but it was just over $900 million lower than Treasury forecast in Budget 2013,” Mr English says. “It is possible that revenue will continue to track below forecast in the current financial year, which reinforces the need for the Government to continue controlling its spending.”

The latest OBEGAL deficit was equal to 1.3 per cent of GDP, down from 2.1 per cent of GDP the previous year, and 4.4 per cent of GDP the year before that.

“The Government will continue to focus strongly on managing expenditure tightly and stabilising and then reducing debt – including carefully managing its future capital needs,” Mr English says.

“One of these capital areas is state housing, where we will work closely with community and private providers to provide housing to New Zealanders most in need. This will allow us to draw on outside capital, rather than this being the sole responsibility of taxpayers.”

Mr English says New Zealand’s economic outlook remains positive, particularly compared with those of other developed economies.

“Growth is expected to return to more normal levels, reflecting international economic conditions and lower dairy prices.

“This reinforces our need to focus on the issues we can control, such as our own competitiveness, responsible fiscal and economic policy and delivering better public services.”

The Treasury will update its forecasts in the Half-Year Economic and Fiscal Update on 16 December, alongside the Government’s annual Budget Policy Statement.

The Crown’s annual financial statements are available at: http://www.treasury.govt.nz/government/financialstatements/yearend/jun14

English attends IMF, World Bank meetings in US

07 October 2014 0 Comments

Finance Minister Bill English leaves tomorrow for the United States, where he will attend the annual meetings of the International Monetary Fund and World Bank governors in Washington DC.

He will also meet G20 finance ministers. Australia, as host of the G20 this year, has invited New Zealand to attend a series of meetings as a guest alongside the G20 members.

“The meetings in Washington will provide further opportunities to assess latest global economic developments and their likely impact on New Zealand,” Mr English says.

“New Zealand remains well placed compared with many other developed economies. But we need to be prepared to carefully manage global risks and challenges.

“So I’m keen to hear directly from the policy makers and business leaders dealing directly with these issues.”

During his trip, Mr English will meet Australian Treasurer Joe Hockey, Singapore Finance Minister Tharman Shanmugaratnam and IMF deputy managing Director Min Zhu. He will also hold regular meetings with representatives of the main credit rating agencies.

The IMF and World Bank governors meeting concludes on Saturday and Mr English will return to New Zealand next Monday.

Extension of Solid Energy’s remediation indemnity

18 September 2014 0 Comments

Government officials are working with Solid Energy to extend the company’s remediation indemnity, which will meet the future costs of returning the company’s mining land to its pre-mined condition, Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall say.

“This will extend a similar remediation agreement made in 1987. It will strengthen Solid Energy’s equity position and ensure that it can effectively rehabilitate land after its mining has been completed,” Mr English says.

“It’s clear that Solid Energy’s trading conditions remain difficult and its challenges are still significant. The Government’s decision to extend support for Solid’s remediation obligations is a further demonstration of its commitment to give the company every opportunity to become viable.

“The company’s directors are required to sign off the company’s annual accounts by the end of September and they advised us they need this indemnity for the company to remain in a positive equity position through this financial year.

“We expect this process to be completed in the next week or so – in time for the annual accounts to be signed off.”

The indemnity is a promise by the Crown to reimburse the company for the costs of remediation as and when it is carried out, and it has a present value of $103 million.

Under current forecasts, expenses covered by the indemnity will be $6 million in 2015 and $11 million in 2016.  There will be no overall impact on the Crown’s fiscal position, because the indemnity simply transfers a liability from an entity that is 100 per cent owned by the Crown to the Crown itself.

No change is proposed to the requirements or timing of the remediation work programme, which has been agreed between the company and the relevant local authorities. The only difference is that these costs will now be met directly by the Crown.

Mr Ryall says market conditions remain challenging for Solid Energy and its 700 staff.

“As we said when we announced Solid’s restructure package a year ago, the Government is not prepared to expose taxpayers to ongoing losses if the company’s core business is not considered viable,” he says.

“We also said that we are prepared to provide support for the company if there is a reasonable chance it can be made viable. The extension of this indemnity is part of that support.”

Economy continues to grow, support jobs

18 September 2014 0 Comments

New Zealand continues to enjoy one of the fastest-growing economies in the developed world, confirming that the Government’s sensible economic programme is taking New Zealand in the right direction, Finance Minister Bill English says.

“It’s only through a strong economy that we can provide New Zealanders with new jobs, higher incomes and opportunities to get ahead,” he says. “The Government’s economic programme is successfully delivering those things and families can now look forward to the future with some confidence if we stick with that programme.”

Statistics New Zealand today reported gross domestic product expanded by 0.7 per cent in the June quarter. This took annual growth – from the June quarter 2013 to the June quarter 2014 - to 3.9 per cent – the highest growth rate for 10 years and the highest so far reported by OECD countries. Average annual growth was 3.5 per cent.

Mr English says New Zealand’s challenge is to build on the solid foundations provided by the growing economy.

“It’s pleasing to see the good progress we have made as a country over the past few years. The economy is growing, the Government’s books are on track to surplus and another 83,000 jobs have been created in the past year. But one or two years of growth will not change New Zealand’s economic prosperity. We need to stay on course to really lift our long-term economic performance.”

Growth in the latest quarter was driven by construction activity, up 2.2 per cent, business services, up 4.2 per cent, and retail trade and accommodation, up 1.4 per cent.

New Zealand’s 3.9 per cent GDP growth in the year to June compares with 3.1 per cent in Australia, 3.2 per cent in the United Kingdom, 2.5 per cent in the United States, 2.5 per cent in Canada, no growth in Japan and 1.3 per cent in Germany. Average growth across the OECD was 1.9 per cent.

National’s plan delivering a strong NZ economy

08 September 2014 0 Comments

A re-elected National Government will return to surplus this financial year and stay there so we can reduce debt, reduce ACC levies on households and businesses and start modestly reducing income taxes, Finance Spokesman Bill English says.

“National’s clear economic plan is working for New Zealand by successfully supporting higher wages and more jobs, and ensuring government spending is invested wisely to deliver better results,” he said when issuing National’s Finance Policy today.

“National is working hard to ensure the economy grows sustainably into the future, supported by more savings, productive investment and exports. This will provide opportunities for Kiwi families to get ahead here in New Zealand.”

As set out in the Budget, a National-led Government will restrict average Budget allowances for discretionary new spending and revenue measures to $1.5 billion a year over the next three years. Within this allowance National will:

  • Allow around $1 billion a year for new spending, including between $600 million and $700 million a year more for health and education. This total new spending is consistent with the level of new spending in our last two Budgets and it’s well below the $2 billion to $3 billion spending increases under the last Labour government, which had little to show for them.
  • Reserve the remaining $500 million per Budget for modest tax reductions and further debt repayment, as economic and fiscal conditions permit. This portion of the allowance will be moved between Budgets and accumulated as necessary. Therefore, by the third year there will be around $1.5 billion available for tax cuts and debt repayment.

“It means that over the next four years, National will spend around $10 billion more in total, and most of that on health and education,” Mr English says.

“This is well below the $18 billion in extra spending Labour has already earmarked for the next four years, and that’s not counting the Greens and Dotcom.”

National’s five fiscal priorities for the next three years are:

1.    Return to surplus this year and maintain surpluses over subsequent years. These growing surpluses will enable us to meet the Government’s capital requirements and reduce debt.

2.    Reduce net government debt to 20 per cent of GDP by 2020, including starting to repay net debt in dollar terms in 2017/18. Reducing government debt puts New Zealand in a better position to cope with the next economic shock or natural disaster.

3.    Further reduce ACC levies on households and businesses, starting on 1 April 2016. A National Government will cut levies on all ACC accounts by an average of around 30 per cent. Subject to public consultation, this will reduce levies by between $700 million and $900 million a year – the equivalent of a tax cut for households and businesses.

4.    Begin to reduce income taxes from 1 April 2017, providing economic and fiscal conditions allow, and if the first three priorities have been achieved.  Any tax reductions will be modest, given the fiscal headroom available, and they will focus on low and middle income earners.

“We will consider the details of a possible tax package closer to the time,” Mr English says. “As the Prime Minister and I have said, we won’t be setting out a specific tax package before this election.”

5.    Use any further fiscal headroom – including from positive revenue surprises – to get net debt to 20 per cent of GDP sooner than 2020.

“Once debt gets to 20 per cent of GDP, we will begin to resume contributions to the New Zealand Superannuation Fund,” Mr English says.

“In addition, we will help to keep interest rates lower for longer for New Zealand families by reducing core Crown spending to below 30 per cent of GDP by 2017/18 from 34.4 per cent in 2008/09 under the previous government. And our focus will remain relentlessly on targeting that spending where it delivers better results for New Zealanders.”

National will continue to improve management of the Government’s capital investment programme, which totals around $24 billion over the next four years.

“That includes using the remaining $1.7 billion of proceeds from the Government share offers to reinvest in new public assets like schools, hospitals and regional roads – without having to borrow this money.”

Mr English says New Zealanders have a stark choice this election.

“They can continue to support National and its clear economic plan that is working for New Zealand. It’s delivering a strong economy, it’s getting us back to surplus and it’s getting on top of debt. Under National, we will achieve sustained growth that delivers solid increases in household incomes and new jobs through the next term.

“Or they can put all that at risk by changing course to who knows what direction.

“Under Labour, the Greens and Dotcom, the economy would stall. They would introduce five new and unnecessary taxes and create a surge of wasteful government spending.

“And they would undermine the confidence necessary for businesses to invest now so we get stronger growth later.”

National’s Finance Policy is available at: ntnl.org.nz/1tRZnrp


Labour confirms death tax by stealth

04 September 2014 0 Comments

New Zealand families will be distressed to learn that Labour would force them to sell their deceased parents’ home within a month of their death or face a punitive capital gains tax, National Party Finance Spokesman Bill English says.

“The more David Cunliffe tries to explain his complicated capital gains tax, the more he ties himself in knots and confuses New Zealanders,” Mr English says.

“Last night on NewstalkZB, he contradicted his finance spokesman by saying Labour’s capital gain tax would apply to a family home after the death of a parent, unless it was sold within a month.

“In other words, he would force families to rush through the sale of their parents’ family home at a distressing time in their lives, or penalise them with a new tax.

“Just hours earlier, on RadioLive David Parker said the capital gains tax would not apply.

“If David Cunliffe and David Parker cannot get their story straight, it is little wonder that New Zealanders are confused and uncertain about Labour’s higher tax agenda.

“This is just one of five new taxes Labour and the Greens would impose on New Zealanders. This would stall New Zealand’s good economic momentum, creating uncertainty and costing jobs

“By contrast, National’s clear economic plan is successfully supporting higher wages and more jobs. It is steering New Zealand back to surplus this year and ensuring government spending is invested wisely to deliver better results,” Mr English says.

Cunliffe left stumbling on capital gains tax

03 September 2014 0 Comments

David Cunliffe’s inability to answer the most basic questions about Labour’s proposed capital gains tax underlines key problems identified by successive tax reviews, National Party Finance Spokesman Bill English says.

“David Cunliffe’s failure to explain how he would implement a new capital gains tax, which has now been Labour policy for more than three years, will leave many thousands of New Zealanders confused and uncertain,” Mr English says.

“Nowhere in Labour’s capital gains tax policy does it exclude family homes owned by trusts. In fact, Labour actually says: ‘We will ensure trusts are not used as a means of avoiding a CGT’. David Cunliffe cannot have it both ways.

“And now Labour is trying to say the test for whether a capital gains tax applies is not whether a trust owns the property, but who lives in it. That would require Inland Revenue to confirm the living arrangements of householders in deciding whether the tax would apply.

“This latest confusion follows Labour previously making contradictory claims about whether the KiwiSaver accounts of 2.3 million New Zealanders would be exempt from their new tax. They now claim they would be exempt, but this is not reflected in their policy or their costings.”

Mr English says Labour’s proposed capital gains tax was already full of holes, applying only to only a quarter of the housing market, but to every New Zealand business and farm.

“All of this underlines what tax experts and independent reviews have said over the past 20 years. Implementing an extra capital gains tax would be much more complicated and confusing in practice than it appears in theory.

“By contrast, National’s clear economic plan is successfully supporting higher wages and more jobs. It is steering New Zealand back to surplus this year and ensuring government spending is invested wisely to deliver better results.

“The five new taxes promised by Labour and the Greens would stall the New Zealand economy and cost thousands of jobs.”

Labour would hike its new spending to $18.4b

27 August 2014 0 Comments

David Cunliffe and Labour have actually increased their new spending promises for the next four years to $18.4 billion, despite putting some of their proposals such as New Zealand Power on the never-never, National Party Finance Spokesman Bill English says.

“David Cunliffe and David Parker have again been caught out under-costing their expensive promises,” Mr English says. “This is irresponsible and deceptive and confirms that under David Cunliffe, Labour is reverting to its failed spend and tax recipe of the past.

“We saw what happened the last time around – under Labour in 2008, floating mortgage rates reached almost 11 per cent, inflation exceeded 5 per cent and the economy went into recession well before the global financial crisis.”

Labour’s latest costings attempt, which it released on Monday, confirm its untried New Zealand Power proposal, which would give politicians control of the electricity industry and push up power prices, would be postponed until 1 January 2018.

And in another example of it attempting to dress up its numbers, Labour has also pushed back free GP visits for over 65s and other groups to 1 January 2017.

“So while David Cunliffe is going around New Zealand making expensive promises, he is quietly pushing some of them back beyond two elections because he knows they are unaffordable,” Mr English says.

“But he has again failed to hide Labour’s real spending agenda because he has not added in promises made over the last two weeks.

“Even using Labour’s own numbers, the cost of its promises over the next four years is now $17.3 billion – up from its claimed $16.4 billion when it first attempted to cost its policies.

“But when the real costs of its proposed R&D tax credit, compulsory KiwiSaver and New Zealand Power are included, the tally jumps to $18.4 billion – up from around $18 billion the last time around.

“As Labour’s numbers come under scrutiny, they keep changing them,” Mr English says. “David Cunliffe has tried to say he would spend less, but when you add it all up he is actually spending more.”

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Cunliffe’s fiscal backdown nothing like enough

26 August 2014 0 Comments

David Cunliffe and Labour are still committed to irresponsibly spending all of the next four Budgets before the election, despite yesterday attempting – and failing – to recast their ropey fiscal forecasts, National Party Finance Spokesman Bill English says.

“New Zealanders can now see that under David Cunliffe economic history would repeat itself,” he says.

“Having been part of a Labour government that left New Zealand in recession with high interest rates, forecasts of never-ending deficits and ever-rising debt, David Cunliffe has again confirmed he has learnt nothing from the fiscal and economic mess Labour left for New Zealanders.

“Two election campaigns on, he has reverted to form with new spending promises still totalling nearly $18 billion over four years. Having been criticised for being fiscally irresponsible, he belatedly realised he had over-stretched and has attempted to back down. But it hasn’t worked.

“David Cunliffe has scared New Zealanders with his spending plans and he’s scared his partners the Greens. He’s now even scared himself. No wonder the Greens are calling for a full audit of Labour’s numbers.

“The trouble for Labour is that its claims of trimming extra spending just don’t stack up because proper costings of Labour’s tweaked promises still add up to around $18 billion over four years. And that’s before you add the Greens’ promises to spend an extra $10 billion over the same period – and who knows how many billions more by the Dotcom party.

“By contrast, National has committed only a small fraction of future Budgets. This will provide us with flexibility to deal with future shocks, speed up debt repayment or provide future tax reductions should there be room to do so.”