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ACT's Brooke van Velden argues a roadmap to economic recovery should see government spending cut, and feature a growth-led and business-led approach, that doesn’t punish people through tax

ACT's Brooke van Velden argues a roadmap to economic recovery should see government spending cut, and feature a growth-led and business-led approach, that doesn’t punish people through tax

By Brooke van Velden*

The upcoming election is about three things: a real roadmap to recovery from COVID-19, rebuilding the economy and people’s lives; and reuniting the country through accountability and transparency.

These are the big issues that we’re grappling with.

Labour, helped by New Zealand First and the Greens, is borrowing $140 billion. [This is Treasury's forecast government debt increase for the five years to June 2024]. That’s $28,000 for each and every New Zealander. It’s the average credit card debt five times over and it will need to be paid back.

What we really need is policy that will stimulate the economy and return New Zealand to surplus so we’re not piling debt onto future generations.

Last week, the answer we got from Labour was a public holiday. What public holidays mean for businesses are decreased productivity or having to pay time and a half and a day in lieu, if they want to stay open. Businesses are already hurting so much because of COVID-19.  Business owners have been forced to shut down operations and are still facing ongoing restrictions. A new holiday and cost are the last thing they need. The number of people unemployed will skyrocket in the next few months.

What good is a holiday if people fear being unemployed or being taxed more?

It’s not the roadmap to recovery that New Zealand needs.

I have nothing against Matariki. But if it’s about the day, then let’s swap it for Labour Day so we’re not incurring extra costs.

What businesses really need is skilled workers. They’re crying out for them. After ignoring the issue for months, Labour’s answer is now to say that they’ll considering letting people in through the border, if they win the election. What happened to taking the politics out of COVID? This is simply the Government playing politics with people’s lives and livelihoods.

A real roadmap to recovery is also not about piling on debt and taxes. It’s about reducing wasteful spending. We need a growth-led, business-led approach, that doesn’t punish people through tax.

Last week ACT launched an online calculator called the Debt Destroyer, which shows Kiwis the sensible decisions Government could make to lower the debt quickly, without piling on new taxes.

Tax isn’t the answer, there is an alternative. ACT’s Alternative Budget shows how we can reduce wasteful spending to balance the budget in 2024 while also cutting taxes to stimulate the economy.

The Government would like us to believe that more tax is the only solution. [Labour is pledging to introduce a new top income tax rate of 39% for income over $180,000, if re-elected]. ACT’s plan is to cut wasteful spending of more than $7.6 billion and deliver $3.1 billion in tax cuts, reducing the 30% tax rate to 17.5% and cutting GST to 10% for 12 months.

We cannot tax our way back to prosperity, and we can’t regulate our way back to growth. But we can think outside the box and give people and businesses the tax relief they need.

By the time students currently at intermediate and high school start paying tax, we’ll be spending more on interest repayments than education. We need to think about ways to save future generations from being saddled with debt and to be prepared for a rainy day. We need to think about a real roadmap to recovery.


 *Brooke van Velden is the ACT Party's Deputy Leader and Wellington Central candidate. As part of an election series van Velden will be writing regularly for interest.co.nz between now and the October 17 election. Vanushi Walters, the Labour Party's Upper Harbour candidate and 23 on the list, is also writing for interest.co.nz.

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47 Comments

I like the idea of reducing waste and cutting income tax.

BUT...

ACT is unfortunately not offering anything much to actually reduce the debt young people will face or increase their earning power. The policy here is explicitly "open up the immigration taps again" and implicitly "get the economy back to its previous focus" (of crazy debt on housing) instead of this public debt.

ACT is by omission not providing necessary policy input on this approach of high volume immigration and high priced houses as default economic policy. In which case, what really is offered of use?

It's very nice to talk about business growth and productivity led...but what's the plan to encourage that over and above the last unsuccessful 15 years reliant on ever more household debt and high-volume immigration?

Reducing income tax and GST would have an instant impact

I agree, and a positive one. But mitigated by the mass immigration and non-addressing of centrally-driven house price support we merely continue down the same idiotic economic road.

I think there is already plenty of stimulus floating around in our economy with RBNZ's QE and the government's wage subsidy, among several other handouts.
If injecting 33% of NZ's GDP worth of cash into the economy as newly-printed money isn't doing much other than pumping up house prices, no points for guessing where the cash splash from tax cuts will end up.

I think the govt's shovel-ready projects and re-skilling programme along with other structural changes is a great start to put our economy on the right track. However, Seymour would rather you believe that "stimulating" the economy will solve deeply-entrenched productivity woes, like it very much did [not] in the last couple of decades.

QE doesn't go into the pockets of kiwis no strings attached though does it?

"It's very nice to talk about business growth and productivity led"

Completely agree. Every party is guilty of this, but Act especially as it's their default answer for anything. They talk about these things, and then put some policy announcements out, but what is missing is the bit in the middle - how are they actually going to take us from A to B?

Vote for Act.

No...

Not really surprising.

In the survey, almost two out three (62 percent) ethnic Chinese said they would vote for the National Party.
While still enjoying a healthy lead, that support rate is down 9.1 percent from the 2017 version of the same poll.
National's loss almost exactly mirrors an equivalent rise in Chinese New Zealanders who now say they like David Seymour's Act Party.

poll-shows-large-majority-of-chinese-new-zealanders-still-favour-national-over-labour

I wonder what these voters think of Act's libertarian values?
Prohibition of cannabis has clearly failed. But we need to be sure any particular approach to legalisation will improve matters.

act_welcomes_cannabis

I think one of the great ironies is that the Green parties enthusiasm for mass immigration will ultimately lead to their destruction.
The largest group by country of origin wouldn't touch them with a barge pole.

From that link - “Given the Treasury has estimated the Government could save $500 million a year by taxing cannabis and through reduced policing costs, this decision could have huge implications.

Did ACT, or treasury for that matter consider the billions of dollars that will probably be wasted because of long term mental illness as a result of teenagers smoking pot. How much money does it cost the government when someone becomes a sickness beneficiary for life?

Why you say that?
They are the antithesis of your beloved CCP.

here is another person that doesn't understand how the governments finances work. Study MMT Brooke.

lol Best comment of the day.
AAA+

18
up

So less tax, more migration, let the unemployed fester while bringing in more 'skilled' migrants.
We had nine years of that under Key, and it didn't really solve anything.
Doubling down on failure, much like the Reserve Bank.

Right - someone remind Seymour and his lackeys the definition of insanity again please.

And the one place where that libertarian approach will not be allowed? Property zoning and Kainga Ora in Epsom.

If the unemployed got off their couches and actually gained some skills (learning how to turn up for work offered would be a start) we wouldn't need so many immigrant workers

I'm not opposed to migrant workers that have an elite skill e.g. medicine, engineer etc. But to pick fruit or milk cows for minimum wage isn't it.

I agree on many points. Also going unchallenged is the call for large govt stimulation projects. Overlooking the point that resources are scarce and when govt ensnares them they become unavailable to the productive business orientated entrepreneurs among us. A bit like the USSR.

The author clearly does not understand the concept of productivity.

And to think I was potentially considering a vote for Act....
Having said that, one or two of their cost cutting measures have merit. For example slashing the Wellington bureaucracy.
But cutting benefits, no way, even with Labour's increase they are low.
And cutting GST to 10% for a year. Tokenism.

Cutting Wellington bureaucracy

Outdated public policies and processes desperately need reforms.
We also need a public sector-wide IT infra plan to try and replicate successes such as IRD and ACC's application processing automation.

Jesus, enough of the ACT political adverts!!

Well, according to the blurb at the end of the article we will have some articles from a Labour candidate.

Interest have reached out to all political parties to get some material to publish - perhaps Act are the only ones taking it seriously?

Interest is a great site - I hope others do take it seriously

Agree. I meant taking the time to inform the electorate, however. Apologies, that was not clear.

why ? do you find common sense so unbearable ?

I think the more people read about them , the less likely they are to vote for them , so bring it on .

she has not learned from NZ history, maybe she should study up on the mother of all budgets and what it did to the NZ economy and how many years we took to recover from all the slash and burn policies, ironically it led to MMP and the creation of the ACT party
https://en.wikipedia.org/wiki/Mother_of_all_Budgets#:~:text=The%20Mother....

She will probably be voting Green within 7 years

reading her bio she started as a green then moved right after studying economics to ACT, its like all born again they go to far the other way, is seems to be a flaw in some humans that they very very strong beliefs and no matter what they see hear, see, taste, smell you will never shake that belief and to me nothing is ever always black and white sometimes there are shades of grey

Exactly.
Act's neoliberalism is a fundamentalist belief system.
It can be superficially appealing, but is fundamentally flawed....

unlike communism and capitalism that are without any flaws - give or take colonialism, mass ethnic purges and the removal of all persona freedoms

ACT's central belief is unfettered capitalism.

"we can think outside the box" yet she still uses conventual arguments, whom is to say interest rates will ever recover, they have been dropping since the GFC with no end in sight and in many places heading to negative, if that is the case then the debt erodes over time anyway.
second we now have QE, so we owe a huge amount to ourselves, convention has we pay it back and cancel the money to stop hyper inflation, but apart from asset inflation there is none and has been near zero for years and no inflation on the horizon
so who knows if in the future if we can cancel without payback and consequences.
slash and burn is also conventual thinking and has been proved time and again not to work well,

So Act have ZERO solutions. All Brooke said was Act wants to cut wasteful spending - ZERO examples.

OH and GET THIS:

Brooke says .. quote;
"I have nothing against Matariki. But if it’s about the day, then let’s swap it for Labour Day so we’re not incurring extra costs."

Then Brooke says .. quote;
"What businesses really need is skilled workers. They’re crying out for them."

It's just too funny LMFAO, I've had some good laughs today, but this puff-piece still has me going. Oh we laughed, classic Act.

i have no argument against swapping the day, but i would suggest queens birthday as a less relevant day for NZ, Labour day is still relevant especially nowadays with the battles still going on between employers and employees about conditions of employment, also it is a day that people in NZ have died for, typical young person not learning NZ history
https://nzhistory.govt.nz/keyword/strikes#:~:text=On%20%27Black%20Tuesda....

Exactly my point, u just articulated it better.

The eight hour day is meaningless in this day and age. It doesn't pay the bills and salaried workers are often pushing longer hours without pay, while businesses are importing cheaper labour to suppress wage rates with open approval from Govts. Doesn't seem like we have much to celebrate on Labour Day anymore.

At least the Queen is still our Head of State, with all the historical connections and ties between the UK and NZ that come with her - yet when lives have been lost there, it's apparently easily disregarded. At least apply your own criteria consistently.

Very little substance.

I saw Seymour preaching on Victoria Avenue, Remuera to a bunch of well to do, grey haired people.

He seems to be a hard worker and by all accounts a great employer.

I quite like the guy actually, and he has been more effective in opposition than the Nats.
Won't vote for his party though

For the last couple of months he's been the de facto or spiritual leader of the opposition as National floundered then resorted to Judith, but ACT are like the Greens: some good policies, but as an accompaniment not the main course.

I'll very likely vote ACT

Just been going through Forest and Bird's questions to all parties and the responses by each of them. There were 4 questions. ACT did not respond to 2 of them. With the other 2 they basically just put the economy before the environment. That whole "The environment is important BUT right now what we need is more money..." type argument.

Days to the General Election: 21
See Party Policies here. Party Lists here.