Opposition parties appear to have thrust the government on to the defensive on inflation and the cost-of-living crisis and are widening the attack to find chinks in the Finance Minister’s armour on his handling of the economy.
They have built a platform for the forthcoming budget debate which will ensure it is not as one-sided as in earlier years of the Ardern government.
Robertson even conceded in Parliament yesterday “we know that New Zealanders are doing it tough as global factors push up the cost of living”.
He quickly added that the government is continuing to support low- and middle-income earners through reductions in their fuel bills and income increases.
For National’s relatively new leadership team, the cost-of- living crisis has been the issue that has allowed them to sharpen the parliamentary skills needed to spearhead their roles in exposing weakness in the government policies.
Luxon in particular showed when he first arrived on the front bench how green he was at the business end of politics, but Nicola Willis has matched him in finding the techniques to go head-to-head with the formidable Finance Minister.
Luxon initially made a hash of it when he launched his attack on the cost-of-living crisis by linking it with tax cuts. Labour laughed it out of the room by contending that the tax cuts proposed would amount to only $2 a week for the bulk of taxpayers, while the rich would get the most.
But the problem for the government is that as they acknowledge New Zealanders are “doing it tough” while the government is spending up large, middle income earners who pay the bulk of income tax are getting no relief at all.
Robertson may well have made a rod for his own back in so frequently setting up “patsy” questions from his own backbenchers to argue that the Ardern government has been so effective in its handling of the economy.
But as daily headlines focus on high food prices, or the effects of rising interest rates on mortgages, the Opposition has the ammunition to make a mess of any government’s defence.
Both Luxon and Willis were on target in the House yesterday.
One of these exchanges was kicked off by Nicola Willis, who asked Robertson if he agreed with Westpac Senior Economist Satish Ranchhod, who said this week that “over the coming year household spending levels will come under pressure from continued increases in the cost of living”; if so, why won’t he provide New Zealanders with income tax relief?
Hon GRANT ROBERTSON (Minister of Finance): In answer to the first part of the question, I’ve acknowledged many times in this House and elsewhere that New Zealanders are doing it tough amid a global energy crisis and ongoing supply chain constraints that are increasing the cost of living pressures. That’s why the Government’s acted, moving quickly to reduce fuel excise and halve public transport fares, to help Kiwis facing the pain of higher pump prices, partly due to the war in the Ukraine.
We’re also supporting New Zealanders by delivering income increases for low- and middle-income earners, which kicked in from 1 April, and we also have the winter energy payment that has come in from 1 May.
A strong health-led response has meant New Zealand does find itself in a strong position to respond further to support New Zealanders, and we will always continue to look at ways of improving resilience of New Zealanders to absorb these types of global shocks.
As to the second part of the member’s question, while her party’s preference is for untargeted tax cuts that would give her and her leader thousands of dollars, while giving low- and middle- income earners just $2 a week, we will not be doing that. As the International Monetary Fund noted in its recent assessment of the New Zealand economy, now is not the time for major tax changes as we emerge from a one-in-100-year economic shock.
Nicola Willis: Why is he persisting with the biggest Budget spend-up in New Zealand history, when Kiwis desperately need income relief and when, in ANZ’s words, “[there are] significant limitations on how much additional government spending can achieve in real terms given the degree of capacity stretch in the economy right now”?
Hon Grant Robertson: When we look at the Government’s spending as a percentage of GDP, which is the consistent measure that we use, the Government is spending just a little above what the former National Government did as New Zealand emerged from the global financial crisis (GFC). The member will also know, when she looks at the Half Yearly Economic and Fiscal Update numbers, that that percentage continues to come down, and obviously that number will be updated at the Budget next week.
Nicola Willis: Well, does he believe there are limitations on how much additional Government spending can achieve?
Hon GRANT ROBERTSON: Good Government spending—targeted Government spending—will achieve good outcomes for New Zealanders. On this side of the House, we have adopted a balanced approach throughout all of the time that we’ve been in office. In every single Budget—including Budgets under the previous Government—Ministers come forward with more Budget bids than there is money available, and prioritisation decisions had to be made; difficult prioritisation decisions. I’d also note that it is the National Party’s policy to spend exactly the same amount as the Government would in this Budget.
Nicola Willis: What is his explanation for delaying the return to surplus, given the tax take is growing, and the assessment by BNZ that “all else equal, a fiscal surplus should have been coming into view earlier, not later”.
Hon GRANT ROBERTSON: As we traversed in the House last week, this Government will get us back into surplus five years after the beginning of this economic crisis, as compared with the National Party that took six years to get back into surplus after the GFC. I’m surprised the member is trashing Bill English’s legacy.
Nicola Willis: Does he agree with BNZ’s assessment that the Government’s tax take from individual taxpayers is up 16 percent year on year, and why is the Minister still unable to balance the books, even while he’s taking more tax from Kiwis than ever before?
Hon GRANT ROBERTSON: Two parts to the question: the first is that, once again, the member is against more New Zealanders being in work, more New Zealanders getting higher wages, more New Zealand businesses making profits and, on this side of the House, we know that a balance in the Budget is important. We’ve kept net debt to some of the lowest levels in the world. We took it lower than where the National Party had it. The member will know, when she sees the Budget next week, that a careful balance has been struck to make sure we invest in public services, and keep a lid on debt.
Nicola Willis: Does he agree with his Tax Working Group that “bracket creep reduces the progressivity of our tax system as average tax rates for low income households increase over time.”, and why won’t he just let Kiwis keep more of what they earn?
Hon GRANT ROBERTSON: As we discussed in the House yesterday, bracket creep issues have confronted all Governments in the past. What the Government has to do is assess the balance in making sure that we invest properly in public services. We’re also coming out of a one-in-100-year economic shock. As the IMF indicated, now is not the time for major tax changes; now is the time to keep supporting New Zealanders, invest in public services, and look to the long term.
Nicola Willis: Why is the finance Minister taking more tax from Kiwis when they need that cash more than ever, and can he explain to this House why, in the middle of a cost of living crisis, he intends to bake in more future Government spending than at any time in New Zealand’s history?
Hon GRANT ROBERTSON: As we have discussed in this House, putting a Budget together requires prioritisation; it requires difficult choices. On this side of the House, we’ve prioritised supporting low and middle income New Zealanders through this crisis by making—
Nicola Willis: Your choice is a spend-up.
Hon GRANT ROBERTSON: —sure that we lift benefits, by making sure that we increase the family tax credit, by making sure that we lifted student allowances. All of those initiatives to support people through a cost of living crisis have been opposed by the National Party. So the reality is, actually, we have got the balance right over here; the member and her party would rather see that those on the highest incomes receive thousands of dollars a year while they would give those on low and middle incomes $2 a week while opposing all of the initiatives to actually lift New Zealanders’ incomes.
Luxon’s focus was on the hefty increase of staff in the New Zealand Transport Agency.
Christopher Luxon: Why have the number of back-office staff at the New Zealand Transport Agency (NZTA) more than doubled from just 345 in 2017 to over 800 last year; and does she believe that taxpayers have got good value for money from a doubling of back office staff?
Hon GRANT ROBERTSON on behalf of the Prime Minister: New Zealanders know that to deliver good quality, strong public services requires a range of different staff. Some of them work in front-facing roles, some of them work in back office roles—all of them are important to making sure New Zealanders get the services they deserve.
Christopher Luxon: Why has total spending on consultants by NZTA also more than doubled over the same period, from just $31 million in 2017 to over $75 million last year; and does she believe taxpayers have got a good return from spending twice as much on consultants?
Hon GRANT ROBERTSON: When it comes to the work of Waka Kotahi NZTA, it is important that they are able to draw on the best expertise around the country, and indeed around the world, to be able to put in place the transport policies of the Government.
Christopher Luxon: Why has the number of communications staff at NZTA earning more than $100,000 increased from just 6.6 FTEs in 2017 to almost 65 last year; and does she believe taxpayers are getting good value for money from a 10-fold increase in highly-paid comms staff?
Hon GRANT ROBERTSON on behalf of the Prime Minister: All of the staff who work at Waka Kotahi NZTA play an important role in making sure that we achieve the transport outcomes that are here for New Zealand. I don’t have a specific answer to that question; the member might choose to put it down in writing. What I do know is it took a lot of effort to communicate just how much National stuffed up the public-private partnership on Transmission Gully.
Hon Michael Wood: Does the Prime Minister stand by the Government’s investment in back office regulatory staff at Waka Kotahi, in response to the significant regulatory failure that was established in 2018, 2019 after years of under-investment?
Hon GRANT ROBERTSON: Yes, that was one of the issues that Waka Kotahi NZTA had to deal with, was the fact that through the warrant of fitness process there were significant shortcomings, partly, I’m sure, as a result of under-investment under the previous National Government.
Christopher Luxon: What benefits, if any, have taxpayers received from the $10,000 the Government spent on two giant red zeros for the transport Minister to stand next to in photo ops?
Hon GRANT ROBERTSON on behalf of the Prime Minister: The transport Minister has already made clear his views to Waka Kotahi around that matter, and as the member will be well aware, from time to time agencies do do things that don’t always meet the expectations of Ministers.
Christopher Luxon: What have taxpayers got from the $50 million her Government spent on the Auckland bike bridge, or the $600,000 it is spending to rent an empty—empty—waterfront office to manage the cancelled bike bridge project?
Hon GRANT ROBERTSON on behalf of the Prime Minister: The Government continues to make sure that we’re investigating mode-shift options; that we’re investigating ways in which people can actually move around Auckland; that will actually invest in transport. On this side of the House, we remain proud of our record in making sure that New Zealanders have transport options.
Christopher Luxon: Doesn’t this show that her Government has created a culture of wasteful spending in the public sector, and taxpayers deserve a Government focused on delivering outcomes, not spin?
Hon GRANT ROBERTSON: No, what it shows is the Government continues to invest in making sure that public services are what New Zealanders deserve, and that we keep New Zealanders safe. For instance, that’s why we’ve invested in 940 more corrections officers, 735 Department of Work and Income case officers, 510 social workers, 520 education advisers for teachers in schools, 350 scientists working in biosecurity, customs office, special education teachers, and more. We know that it takes a lot of work to provide the public services we need, especially after significant under-investment in those areas.
Luxon then asked why the PM thinks it’s OK for Government agencies to spend taxpayer money, when up and down the country, every day, Kiwis are having to make tough decisions about their own household spending?
Hon GRANT ROBERTSON: It is in fact the job of Government agencies to spend taxpayer money—that’s what it’s about. On this side of the House, we work very hard every day to make sure that New Zealanders are getting value for money. It’s interesting that the member hasn’t focused on the investment that the Government made in delivering things like the wage subsidy scheme, and making sure that New Zealanders are staying safe through more corrections officers, or indeed the funding of 1,800 more police. On this side of the House, we take seriously our responsibility to make sure New Zealanders have the public services they deserve, unlike the National Party who spent years in Government cutting those public services.