Labour’s finance spokesperson Barbara Edmonds says she will follow the lead of Michael Cullen with moderate, long-term thinking on fiscal and economic policy.
Edmonds gave one of her first public speeches at the Hutt Valley Chamber of Commerce on Tuesday morning, responding to an earlier speech by Nicola Willis with the same hosts.
She used the time both to introduce herself and critique her rival’s upcoming budget.
Willis was stuck on short-term thinking and was pursuing tax cuts which didn’t meet Cullen’s four tests. Cuts shouldn’t add to: public debt, service cuts, inflation pressure, or inequality.
She told the business people gathered in the Hutt Valley that the Coalition Government didn’t understand what the public service does.
“A strong public service delivers services for all New Zealanders. A strong public service supports the private sector,” she said.
Her predecessor, Grant Robertson, had been aware the public service had to be downsized after the pandemic response to get the Crown accounts back into balance.
“He had already asked departments to find 2% savings which is a sensible first sweep. These current cuts go too deep, too fast and we are seeing the repercussions already”.
She told reporters businesses as far away as Wairarapa and Kāpiti Coast had told her they were already laying off staff and cutting hours in response to the public sector job losses.
“The choices they are making will leave deep economic scars which will require careful treatment when we come back into government”.
Future-focused
Edmonds said she would take a much longer-term view of government finances when forming policies for the Labour Party.
“How do we achieve intergenerational equity, as we stare down the barrel of an ageing population, climate change, and infrastructure shortfalls,” she asked.
Treasury had estimated that extreme weather events alone could add about 4% to net debt, as a percentage of the economy, over the next 40 years.
“It’s not just Budget 2024 that will define the economic credibility of this government, it’s also their response to these intergenerational challenges”.
The question of how to achieve intergenerational equity was a rhetorical one. Edmonds wouldn’t be drawn on specific tax and spend policies.
She said the “narrow” debate on specific aspects of tax policy were “missing the point” as a single policy change couldn’t solve these long term challenges — all levers must be looked at.
However, she hinted her credentials as tax policy expert and Cullen disciple meant she was not reaching for the most populist policies.
“With Sir Michael’s words ringing in my ears — this is not an eat the rich moment,” she said.
Instead of a “juicy soundbite” on wealth or capital gains taxes, Edmonds gave the audience four foundations on which policy will be decided.
These were cost of living support, leveling the playing field for small and medium businesses, long-term economic planning, and steady infrastructure investment.
Great and small
The closest thing to a policy announcement in the speech was a firm promise to help reduce compliance costs and tackle provisional tax policy for small and medium businesses.
She said her sympathy for small operators dated back to her time as an independent contractor, when she would do her compliance paperwork on the kitchen table at 10pm.
Businesses, particularly smaller ones, were critical to employment and the wellbeing of New Zealand and would be looked after by a Labour Government.
“In the world of tax, like business and finance, certainty is key — unintended consequences and the incidence of where the burden falls, all follow closely behind”.
Governments often listened too closely to large businesses, which could afford flash lobbyists, and didn’t do enough for the smaller ones. She wouldn’t make the same mistake.
“I do not have disdain for wealth creation – I want people to create wealth, but I also want it to be more widely shared, to help tackle poverty, and reduce the inequality gap”.
A member of the Hutt Valley Chamber told Interest.co.nz there was “some truth” to the idea that governments could be captured by large business interests, at the expense of small ones.
But they also said that most in the room would agree the Coalition’s cost cutting programme was needed to put the Government finances back on a sustainable path.
*There's more from Edmonds in a recent episode of our Of Interest podcast here.
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