The only political party in New Zealand that sees major cuts to government spending as the way out of the Covid-19 economic crisis says it wants “efficiency” not “austerity”.
ACT would like to see the Government’s books returned to surplus by 2024, all the while cutting GST from 15% to 10% in 2021, and permanently cutting the tax rate on income between $48,001 and $70,000 from 30% to 17.5%.
To achieve its goal, ACT would need to cut core Crown expenditure by about $8 billion in 2024. Treasury forecasts expenditure being $113 billion in 2024.
ACT’s year-long GST cut would be worth $6.6 billion, and the income tax cut, about $3 billion a year.
ACT wants the country’s top civil servants’ incomes cut by 20%, interest put back on student loans, benefits cut to pre-Covid levels, and Working for Families and Families Package increases abolished. It also wants to scrap the Winter Energy Payment, fees-free tertiary study, Callaghan Innovation, research and development tax credits, film subsidies, KiwiBuild and government KiwiSaver contributions.
Speaking to interest.co.nz, ACT Leader David Seymour assured he wouldn’t slash health and education spending. Most of what he wanted gone was schemes introduced and boosted since the Helen Clark era.
“Here’s the real danger: By the end of this decade, if we keep borrowing the way we are, we are going to find that the interest on our debt is greater than the cost of the education budget,” Seymour said.
“The only way that you get prosperous is that if people actually work, save and invest and create products and services that people want to buy at prices they can afford. If we don’t do that, then there’s no path to prosperity. All you’re doing is circling money around, and the process of taxing and transferring actually has dead weight losses that make us poorer.”
Seymour said the country’s success hinged on how “efficiently” it used its scarce resources. He maintained individuals were best placed to decide how they spent the money they earned.
As for the GST cut, Seymour said: “If you want to do some stimulus in the short-term, just to keep things ticking over, I think that’s much better than the Prime Minister going to AJ Hackett and giving, effectively, $10 million for a photo op.”
See the video for more on ACT's policies to:
- require councils to make more land available for development once land price inflation hits a certain level
- allow more investment, including in residential property, by people in OECD countries
- introduce an income insurance regime
- monitor some beneficiaries' expenditure