New Zealand is hurting. The extreme COVID Response has destroyed much of our economy and put us years behind. Massive debt levels bring fear, and the threats of austerity or more asset sales hang over us.
There is no easy way out of this if we continue to keep clause 26 G of the Public Finance Act — the clause that says the government has to balance its books. This is the one used by Labour to justify new and larger taxation, and by National to justify asset sales.
The rest of the world stopped balancing their books in 2008. The USA issues 20% of its GDP every year as quantitative easing — the money given directly to the banking and investment classes. The United Kingdom and Canada are running at 9%.
New Zealand has done the same — breaking the rules to issue huge amounts of money to the area that needs it the least: the banking system.
If we take this existing mechanism, QE, and turn it around so the investment goes directly into infrastructure and areas that grow prosperity, we can come out of this created crisis stronger than ever.
Most importantly, for everyday Kiwis, NZPP will remove GST on food and medicine. We will also implement a 0% level tax rate on the first $35k of income. This is a move that will benefit all workers, and benefits the poorest amongst us the most.
At the same time, NZPP will begin an open and transparent transformation to create an equitable tax system that reduces the number of taxes, eases the complexity of our tax system, and closes loopholes for corporations and individuals.
We will instruct the reserve bank to invest in rebuilding our gold reserves as long-term security against international financial changes.
Policy in brief
- Repeal clause 26 G of the Public Finance Act
- Base spending policy on infrastructure and social need
- Progressively ease the tax and tax administration burden on NZ
- No GST on Food, Medicine, Health and Feminine Products, and Nappies
- Introduce a new 0% income tax rate bracket
- Progressively increase monetary supply
- Lower the OCR to reduce the impact of debt interest
- Increase transport, energy infrastructure, and healthcare spending
- Review the taxation rate of multinational companies and banks
- Close loopholes on multinational companies who pay no tax
- Build Gold Reserves
Since 2008, fears of inflation and theories of prudent fiscal management have been radically overturned. None of the old neo-classical models work. Countries worldwide have run record budget deficits with record-low interest rates — yet there has been negligible inflation. That is the key point.
There is a worldwide change in the behaviour of governments. If New Zealand does not embrace this new understanding of macro-economics, we will suffer hardship for no reason. The extreme COVID Response has made the need to adapt to the new financial reality even more urgent. Clinging to failed ideas from the past cannot continue.
Repeal clause 26 G of the Public Finance Act
- Linking government expenditure to taxation is the height of fiscal irresponsibility. This one act has crippled New Zealand, driven people to hopelessness, taken our paradise and ground it into the dirt. Our overburdened health systems, our child poverty, our massive public debt all trace back to this one clause. It must be repealed.
Base our spending policy on infrastructure and social need
- Decaying infrastructure hurts our country. When our basic needs are not met, our productivity drops, our health and our outcomes worsen, and our happiness reduces.
- Infrastructure investment, as long as it is not excessive and unnecessary, enables the public to live productive, happy, healthy lives.
- NZPP will direct future QE/deficit spending into infrastructure projects, and invest directly into the success of New Zealanders.
Progressively ease the tax levels and tax administration burden on New Zealand
- We have a lot of taxes: road user tax, fuel tax, income tax, ACC, Capital Gains Tax, Business Tax, GST, fringe benefit tax, and a range of excise taxes. None of these taxes are needed to balance the books, but rather are used to serve political and social purposes.
- We will examine the utility of each tax in managing growth, managing inflation, and guiding social policy implementation. We will simplify the system to meet modern needs.
No GST on Food, Medicine, and Other Items
We will remove all GST on fresh food, non-processed foods, and baby foods. GST will also be removed on all feminine hygiene items and nappies (baby and adult), as well as all Medicines and Health Supplements. We will also completely remove GST on real estate fees.
Introduce a 0% income tax rate for the first $35k of income
- This will provide an immediate boost to low-income families and help to resolve issues where secondary tax hurts the people who depend on multiple jobs to make ends meet.
- NZPP will introduce a lower, flat upper tax rate for individuals and businesses. This is a model that serves Singapore well, and will encourage international investment into New Zealand.
Progressively increase monetary supply
- The growth of private debt: loans, mortgages, etc., demonstrates the need for more money to be available to meet consumer requirements. People have the ability to service these debts, which means the productivity exists to manage a higher monetary supply without driving inflation.
- NZPP will carefully grow the monetary supply through tax relief and infrastructure spending, and move toward full productivity without incurring more unnecessary debt interest.
- This should be seen as an investment in the future of New Zealand, not as a deficit.
Lower the OCR to reduce the impact of debt interest
- New Zealand has a massive amount of private debt — money borrowed by ordinary kiwis in order to be able to own a home, run a car, and operate a business. This debt is, to a large extent, the result of past governments’ misunderstanding of the nature of money and the role it plays in maintaining a healthy economy when issued and invested in its people as needed.
- In order to address the pressure of private debt, we will direct the NZ Reserve Bank to maintain a low OCR, keeping interest rates low while the economy recovers from past abuse. We hope this will free many from the uncertainty that a high level of interest-bearing debt brings.
Increase transport, energy infrastructure, and healthcare spending
- These three areas are essential to the working lives of New Zealanders. We have over 30 years of underinvestment, coupled with a dramatic growth in population that has left us overburdened and under-provisioned.
- NZPP will correct this by directing managed deficit spending / QE into these areas. This will create jobs and enable working New Zealand to reach its potential.
Review the taxation rate of multinational companies and banks
- We will require the Reserve Bank and Commerce Commission to do a review of all banking fees to reduce costs to consumers.
Close loopholes on multinational companies who pay no tax
- We will investigate the laws and agreements which allow multinational companies to operate in New Zealand without paying any tax.
Build Gold Reserves
- Global financial markets have rapidly evolved since the 2008 financial crisis changed the way countries operate.
- Fully utilising Quantitative Easing is part of that, but this must be tempered with the prudent expansion of Gold reserves that will act as a true store-of-value, and help to protect the New Zealand Dollar during turbulent times in international markets.
- NZPP will instruct the Reserve Bank of New Zealand to build Gold stores.