Vic Uni academics and government economists to run debate on possible deposit savings tax break, limit on government spending and bigger SOE floats

A series of debates is being organised by Victoria University and the Government Economics Network to look at a deposit savings tax cut, limits on government spending and selling all 100% of the shares in the state owned power company floats.

In particular, the debates would look at whether New Zealand should follow a Scandinavian policy to tax income from bank deposits at half the rate of income tax.

The Public Finance Debates series, would also look at the rigour behind the rhetoric in arguments for and against asset sales, limits on government spending and other fiscal policies.

Experienced economists, academics and policy advisors from a range of organisations will debate four propositions at the Victoria Business School between August and November, Victoria’s Chair in Public Finance, Professor Norman Gemmell, and the Head of the Government Economics Network, Dr Girol Karacaoglu announced on Thursday.

The debates were designed to highlight the analytical strengths and weaknesses of opposing perspectives on topical issues, they said.

“The debates tackle the types of real-world policy choices and trade-offs that governments are regularly confronted with," Gemmell said.

The first debate would discuss whether it was sensible to have a limit on government spending, a provision in the ACT party’s confidence and supply agreement with the National party.

“It’s a pretty strong constraint, and one that a left-leaning government might be unlikely to buy into. The debate will highlight how much of this policy is about political preference and how much comes from solid reasoning," Gemmell said.

A later debate would discuss New Zealand’s policy of taxing capital income at 28% and whether the rate should be lower.

“In Scandinavia, for example, interest income on deposits in the bank is taxed at about half the rate of earnings to encourage people to save. The Minister of Finance is seeking advice on whether New Zealand should change its tax rate for investments so it’s timely to discuss the issue," he said.

The third debate would examine views for and against the Crown selling 100 percent, rather than 49 percent, of its shareholding in state owned enterprises.

“These are choices that economists have long examined carefully, independently of the political rhetoric that usually accompanies such discussion," Gemmell said.

The final session would cover whether New Zealand should lower the discount rate for public sector projects, something that played an important role in the cost-benefit analysis of public investment projects to decide which should proceed, he said.

The debates would be modelled on a court of law, with one speaker making the case for the proposition and another opposing it. A commentator would sum up at the end and outline middle ground in the argument.

Gemmell said he expected the debates to attract public and private sector economists and policy makers from government departments and Ministers’ offices.

“It’s important that we talk directly to those people as they have a big influence on policy development. Academics understand the research and the literature that underpins the various perspectives," he said.

The first debate, to be held 28 August, will feature Bryce Wilkinson, director of the economic consultancy Capital Economics Limited, arguing in favour of New Zealand retaining a zero percent cap on real per capita government spending growth.Wilkinson, a former director at the New Zealand Treasury, has a background in public policy analysis, capital market research and microeconomic advisory work, Gemmell said.

The opposing argument would be put forward by Bill Rosenberg, an economist and director of policy for the Combined Trade Unions (CTU). A former deputy director of the Centre for Teaching and Learning at the University of Canterbury, Rosenberg was widely published on globalisation, trade and e-learning, he said.

The debates would be a-political and speakers had been chosen because of their expertise and their respect for the way in which research could support policy.