But isn’t that what the country is crying out for?
As the party leaders of National, ACT and NZ First make progress on the framework of the government they are shaping, incoming Finance Minister Nicola Willis has to get to grips with rebalancing the country’s finances and at the same time pull together a mini-budget to present before Xmas.
It wouldn’t be easy for an experienced minister but for one new to the job, the question is: will she get it right?
Authorities like economist Craig Renney are warning that rushing to deliver tax cuts now for ideological purposes is likely to haunt all involved and will likely require painful changes in the future.
For his part, former Reserve Bank economist Michael Reddell is also dubious.
Reddell, who thinks Grant Robertson ends up as the worst Minister of Finance NZ has had in the post-liberalisation decades, notes that Willis comes to the job with relatively limited experience in the portfolio.
“Contrast her 18 months as the spokesperson with the 9 years Michael Cullen had before taking office (having sat in Cabinet for three years before that), or the similar background Bill English had had by 2008,” he says.
Reddell is “not overly optimistic”, among other reasons because of National’s reluctance to put the seriousness of the fiscal situation front and centre during the election campaign. Despite large deficits, it was more a contest of who had had the shiniest new baubles for bribing voters, financed by proposed tax changes that – like Labour’s – had little no economic merit and around which there were serious questions about the revenue they might raise.
“As to the foreign buyers’ tax business, my unease was less about whether or not the revenue estimates are roughly right – in macro terms it was always second order – than about the way she and her leader handled the issue, refusing transparency, and refusing to release any of the modelling,” Reddell said.
The centrepiece of National’s election campaign was $14.6bn of income and landlord tax cuts. Some $3bn of that was financed by a new tax on overseas property buyers.
That’s now all but certainly gone, because it is unlikely NZ First would tolerate the sale of Kiwi houses to overseas buyers. Filling the gap left by the loss of that new tax would require a doubling of the indicated cuts to the public service – to 17%.
Commentators contend that rather than rushing headlong into tax and other changes through a December mini-Budget, some caution and restraint would be appropriate. The parties could spend more time working out what is actually needed, and how they will deliver that, without borrowing extra for tax cuts.
Against those points, it can be argued that after six years of disastrous financial administration and over-spending (but often useless) from a Labour-led government, the NZ business community is desperate for signs a new minister can tidy up the government accounts and set the economy on a track towards recovery.
Some would contend the first step is to instill the confidence that instead of sinking into recession the economy is turning the corner.
What better way to do that by the government than by tax cuts? So, despite the pessimism that it is not the right time for a mini-budget, and whatever the new government presents won’t do what is needed, Willis has a challenge not only to grow confidence in her own capacity but to give NZ a fresh start towards a more prosperous future.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
For his part, former Reserve Bank economist Michael Reddell is also dubious.
Reddell, who thinks Grant Robertson ends up as the worst Minister of Finance NZ has had in the post-liberalisation decades, notes that Willis comes to the job with relatively limited experience in the portfolio.
“Contrast her 18 months as the spokesperson with the 9 years Michael Cullen had before taking office (having sat in Cabinet for three years before that), or the similar background Bill English had had by 2008,” he says.
Reddell is “not overly optimistic”, among other reasons because of National’s reluctance to put the seriousness of the fiscal situation front and centre during the election campaign. Despite large deficits, it was more a contest of who had had the shiniest new baubles for bribing voters, financed by proposed tax changes that – like Labour’s – had little no economic merit and around which there were serious questions about the revenue they might raise.
“As to the foreign buyers’ tax business, my unease was less about whether or not the revenue estimates are roughly right – in macro terms it was always second order – than about the way she and her leader handled the issue, refusing transparency, and refusing to release any of the modelling,” Reddell said.
The centrepiece of National’s election campaign was $14.6bn of income and landlord tax cuts. Some $3bn of that was financed by a new tax on overseas property buyers.
That’s now all but certainly gone, because it is unlikely NZ First would tolerate the sale of Kiwi houses to overseas buyers. Filling the gap left by the loss of that new tax would require a doubling of the indicated cuts to the public service – to 17%.
Commentators contend that rather than rushing headlong into tax and other changes through a December mini-Budget, some caution and restraint would be appropriate. The parties could spend more time working out what is actually needed, and how they will deliver that, without borrowing extra for tax cuts.
Against those points, it can be argued that after six years of disastrous financial administration and over-spending (but often useless) from a Labour-led government, the NZ business community is desperate for signs a new minister can tidy up the government accounts and set the economy on a track towards recovery.
Some would contend the first step is to instill the confidence that instead of sinking into recession the economy is turning the corner.
What better way to do that by the government than by tax cuts? So, despite the pessimism that it is not the right time for a mini-budget, and whatever the new government presents won’t do what is needed, Willis has a challenge not only to grow confidence in her own capacity but to give NZ a fresh start towards a more prosperous future.
Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton
3 comments:
Perhaps it is possible that Nicola Willis may become a co Minister of Finance with either the ACT pairing of David Seymour and or Brooke Van Velden joining Nicola Willis to ensure some relevant courage and practical experience.
Surely she can't do worse that Grant 'the robber" Robertson who must hold the record by a mile for most money wasted with no outcomes.
Grant obviously couldn't balance a budget, or maybe the colour RED at the bottom was a natural political attraction for him.
Why is Andrew Bayley - a former merchant banker and businessman - not closer to holding the finance portfolio?
An Attorney General normally has law qualifications.
How can any Finance Minister operate to optimal level without an extensive economics/finance background?
Robertson's errors should be a clear warning.
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